What Operations and Supply Chain Managers Do
Operations Function
Evolution of Operations and Supply Chain Management
Globalization and Competitiveness
Operations
Strategy and Organization of the Text
Learning Objectives for This Course
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Chapter 1Introduction to Operations andSupply Chain Management1-1Lecture OutlineWhat Operations and Supply Chain Managers DoOperations FunctionEvolution of Operations and Supply Chain ManagementGlobalization and CompetitivenessOperationsStrategy and Organization of the TextLearning Objectives for This CourseCopyright 2011 John Wiley & Sons, Inc.1-2What Operations and Supply Chain Managers DoWhat is Operations Management?design, operation, and improvement of productive systemsWhat is Operations?a function or system that transforms inputs into outputs of greater valueWhat is a Transformation Process?a series of activities along a value chain extending from supplier to customeractivities that do not add value are superfluous and should be eliminatedCopyright 2011 John Wiley & Sons, Inc.1-3Transformation ProcessPhysical: as in manufacturing operationsLocational: as in transportation or warehouse operationsExchange: as in retail operationsPhysiological: as in health carePsychological: as in entertainmentInformational: as in communicationCopyright 2011 John Wiley & Sons, Inc.1-4Operations as a Transformation ProcessCopyright 2011 John Wiley & Sons, Inc.1-5INPUT MaterialMachinesLaborManagementCapitalTRANSFORMATIONPROCESSOUTPUT GoodsServicesFeedback & RequirementsOperations FunctionOperationsMarketingFinance and AccountingHuman ResourcesOutside Suppliers1-6How is Operations Relevant to my Major?AccountingInformation TechnologyManagement“As an auditor you must understand the fundamentals of operations management.”“IT is a tool, and there’s no better place to apply it than in operations.” “We use so many things you learn in an operations class—scheduling, lean production, theory of constraints, and tons of quality tools.”Copyright 2011 John Wiley & Sons, Inc.1-7How is Operations Relevant to my Major?EconomicsMarketingFinance“It’s all about processes. I live by flowcharts and Pareto analysis.”“How can you do a good job marketing a product if you’re unsure of its quality or delivery status?”“Most of our capital budgeting requests are from operations, and most of our cost savings, too.”Copyright 2011 John Wiley & Sons, Inc.1-8Evolution of Operations and Supply Chain ManagementCraft productionprocess of handcrafting products or services for individual customersDivision of labordividing a job into a series of small tasks each performed by a different workerInterchangeable partsstandardization of parts initially as replacement parts; enabled mass productionCopyright 2011 John Wiley & Sons, Inc.1-9Evolution of Operations and Supply Chain ManagementScientific managementsystematic analysis of work methodsMass productionhigh-volume production of a standardized product for a mass marketLean productionadaptation of mass production that prizes quality and flexibilityCopyright 2011 John Wiley & Sons, Inc.1-10Historical Events in Operations ManagementEraEvents/ConceptsDatesOriginatorIndustrialRevolutionSteam engine1769James WattDivision of labor1776Adam SmithInterchangeable parts1790Eli WhitneyScientific ManagementPrinciples of scientificmanagement1911Frederick W. TaylorTime and motion studies1911Frank and Lillian GilbrethActivity scheduling chart1912Henry GanttMoving assembly line1913Henry FordCopyright 2011 John Wiley & Sons, Inc.1-11Historical Events in Operations ManagementEraEvents/ConceptsDatesOriginatorHuman RelationsHawthorne studies1930Elton MayoMotivation theories1940sAbraham Maslow1950sFrederick Herzberg1960sDouglas McGregorOperations ResearchLinear programming1947George DantzigDigital computer1951Remington RandSimulation, waitingline theory, decisiontheory, PERT/CPM1950sOperations research groupsMRP, EDI, EFT, CIM1960s, 1970sJoseph Orlicky, IBMand othersCopyright 2011 John Wiley & Sons, Inc.1-12Historical Events in Operations ManagementEraEvents/ConceptsDatesOriginatorQualityRevolutionJIT (just-in-time)1970sTaiichi Ohno (Toyota)TQM (total qualitymanagement)1980sW. Edwards Deming, Joseph JuranStrategy andoperations1980sWickham Skinner, Robert HayesReengineering1990sMichael Hammer,James ChampySix Sigma1990sGE, MotorolaCopyright 2011 John Wiley & Sons, Inc.1-13Historical Events in Operations ManagementEraEvents/ConceptsDatesOriginatorInternet RevolutionInternet, WWW, ERP, supply chain management1990sARPANET, TimBerners-Lee SAP,i2 Technologies,ORACLE, DellE-commerce2000sAmazon, Yahoo, eBay, Google, and othersGlobalizationWTO, European Union, Global supply chains, Outsourcing, Service Science1990s2000sChina, India, emerging economiesCopyright 2011 John Wiley & Sons, Inc.1-14Historical Events in Operations ManagementEraEvents/ConceptsDatesOriginatorGreen RevolutionGlobal warming, An Inconvenient Truth, KyotoTodayNumerous scientists, statesmen and governmentsCopyright 2011 John Wiley & Sons, Inc.1-15Evolution of Operations and Supply Chain ManagementSupply chain managementmanagement of the flow of information, products, and services across a network of customers, enterprises, and supply chain partners1-16Copyright 2011 John Wiley & Sons, Inc.GlobalizationWhy “go global”?favorable costaccess to international marketsresponse to changes in demandreliable sources of supplylatest trends and technologiesIncreased globalizationresults from the Internet and falling trade barriers1-17Hourly Compensation1-18GDP per Capita1-19Trade in Goods, % of GDPCopyright 2011 John Wiley & Sons, Inc.1-20Productivity and CompetitivenessCompetitivenessdegree to which a nation can produce goods and services that meet the test of international marketsProductivityratio of output to inputOutputsales made, products produced, customers served, meals delivered, or calls answeredInputlabor hours, investment in equipment, material usage, or square footageCopyright 2011 John Wiley & Sons, Inc.1-21Measures of ProductivityCopyright 2011 John Wiley & Sons, Inc.1-22Osborne IndustriesCopyright 2011 John Wiley & Sons, Inc.1-23C6*C8C7*C9C5/C6C5/C7C5/C13Productivity GrowthCopyright 2011 John Wiley & Sons, Inc.1-24Percent Change in Input and OutputCopyright 2011 John Wiley & Sons, Inc.1-25Strategy and OperationsHow the mission of a company is accomplishedProvides direction for achieving a missionUnites the organizationProvides consistency in decisionsKeeps organization moving in the right directionCopyright 2011 John Wiley & Sons, Inc.1-26Strategy FormulationDefining a primary taskWhat is the firm in the business of doing?Assessing core competenciesWhat does the firm do better than anyone else?Determining order winners and order qualifiersWhat qualifies an item to be considered for purchase?What wins the order? Positioning the firmHow will the firm compete?Deploying the strategyCopyright 2011 John Wiley & Sons, Inc.1-27Strategic Planning1-28Missionand VisionCorporateStrategyOperationsStrategyMarketingStrategyFinancialStrategyVoice of theBusinessVoice of the CustomerOrder Winnersand Order QualifiersCopyright 2011 John Wiley & Sons, Inc.1-29Source: Adapted from Nigel Slack, Stuart Chambers, Robert Johnston, and Alan Betts, Operations and Process Management, Prentice Hall, 2006, p. 47Positioning the FirmCostSpeedQualityFlexibility1-30Positioning the Firm: CostWaste eliminationrelentlessly pursuing the removal of all wasteExamination of cost structurelooking at the entire cost structure for reduction potentialLean productionproviding low costs through disciplined operationsCopyright 2011 John Wiley & Sons, Inc.1-31Positioning the Firm: SpeedFast moves, Fast adaptations, Tight linkagesInternetCustomers expect immediate responsesService organizationsalways competed on speed (McDonald’s, LensCrafters, and Federal Express)Manufacturerstime-based competition: build-to-order production and efficient supply chainsFashion industrytwo-week design-to-rack lead time of Spanish retailer, ZaraCopyright 2011 John Wiley & Sons, Inc.1-32Positioning the Firm: QualityMinimizing defect rates or conforming to design specificationsRitz-Carlton - one customer at a timeService system designed to “move heaven and earth” to satisfy customerEmployees empowered to satisfy a guest’s wish Teams set objectives and devise quality action plansEach hotel has a quality leader Copyright 2011 John Wiley & Sons, Inc.1-33Positioning the Firm: FlexibilityAbility to adjust to changes in product mix, production volume, or designMass customization: the mass production of customized partsNational Bicycle Industrial Companyoffers 11,231,862 variationsdelivers within two weeks at costs only 10% above standard modelsCopyright 2011 John Wiley & Sons, Inc.1-34Policy DeploymentPolicy deploymenttranslates corporate strategy into measurable objectivesHoshinsaction plans generated from the policy deployment processCopyright 2011 John Wiley & Sons, Inc.1-35Policy DeploymentDerivation of an Action Plan Using Policy Deployment1-36Copyright 2011 John Wiley & Sons, Inc.Balanced ScorecardBalanced scorecardmeasuring more than financial performancefinancescustomersprocesseslearning and growingKey performance indicatorsset of measures to help managers evaluate performance in critical areasCopyright 2011 John Wiley & Sons, Inc.1-37Balanced Scorecard WorksheetCopyright 2011 John Wiley & Sons, Inc.1-38Balanced Scorecard1-39Copyright 2011 John Wiley & Sons, Inc.Radar ChartDashboardOperations StrategyProducts1-40ServicesProcessandTechnologyCapacityHumanResourcesQualityFacilitiesSourcingOperatingSystemsOrganization of This Text:Part I – Operations ManagementIntro. to Operations and Supply Chain ManagementQuality ManagementStatistical Quality ControlProduct DesignService DesignProcesses and TechnologyCapacity and Facilities DesignHuman ResourcesProject ManagementCopyright 2011 John Wiley & Sons, Inc.1-41Organization of This Text:Part II – Supply Chain ManagementSupply Chain Strategy and DesignGlobal Supply Chain Procurement and DistributionForecastingInventory ManagementSales and Operations PlanningResource PlanningLean SystemsSchedulingCopyright 2011 John Wiley & Sons, Inc.1-42Learning Objectives of this CourseGain an appreciation of strategic importance of operations and supply chain management in a global business environmentUnderstand how operations relates to other business functionsDevelop a working knowledge of concepts and methods related to designing and managing operations and supply chainsDevelop a skill set for continuous improvementCopyright 2011 John Wiley & Sons, Inc.1-43Copyright 2011 John Wiley & Sons, Inc.1-44Copyright 2011 John Wiley & Sons, Inc.All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein.
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