Contents
Operations and Supply Chain Management
Rationale
Operations Management is an area of business that is concerned with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient and effective. It is also the management of resources, the distribution of goods and services to customers, and the analysis of queue systems.
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Operations also refers to the production of goods and services, the set of value-added activities that transform inputs into many outputs.[1] Fundamentally, these value-adding creative activities should be aligned with market opportunity (see Marketing) for optimal enterprise performance.
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Supply Chain Management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption. The term supply chain management was coined by consultant Keith Oliver, of strategy consulting firm Booz Allen Hamilton in 1982.
The definition one America professional association put forward is that Supply Chain Management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.
Supply chain event management (abbreviated as SCEM) is a consideration of all possible occurring events and factors that can cause a disruption in a supply chain. With SCEM possible scenarios can be created and solutions can be planned.
Some experts distinguish supply chain management and logistics, while others consider the terms to be interchangeable.
Supply chain management is also a category of software products.
Learning Outcomes
This course is a survey of the major concepts and techniques used to manage the operations function. The course considers both managerial and analytical issues, since an effective manager must be proficient in both areas. Specifically, we will
1. Develop a basic understanding of the manufacturing/operations function and its importance for the smooth operation of the firm.
2. Build an understanding of the integration of the manufacturing and operations function into the corporate strategy.
3. Introduce a representative subset of the basic problem-solving and data analysis techniques to assist the operations manager in making "good" decisions.
The further objectives of this course are: to understand the strategic role of supply chains; to learn about the opportunities and problems faced by supply chain managers in manufacturing and service organizations; to become familiar with common supply chain management principles and decision-making techniques; and to develop the ability to apply these techniques in a variety of settings.
The instructor's role will be to emphasize key insights from the reading and graded homework assignments, elaborate on major concepts and themes, demonstrate analytical techniques, and provide timely feedback about student performance.
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Teaching and Learning Resources
Click on titles for further details
Introduction to Operations Management
- Introduction to Operations Management
- Competitiveness and Operations Strategy
- Operating Leverage: Upside Potential – Downside Risk
- Integrating Finance, Accounting, Marketing and International Business into Supply Chain Management
- Brief Review of Mathematics
The Operating Leverage is a measure of how revenue growth translates into growth in operating income. It can be a ratio of fixed costs to variable costs incurred to generate the revenue. Depending on the product, it can be generated by the ratio of preproduction costs (i.e. design widgets) versus incremental production costs (i.e. produce a widget).
The two, fixed costs and variable costs are the operating expenses. The ratio between the two determines how growth in revenue impacts the operating margin. If the variable costs are all the operating costs, then the operating margin would be constant as sales grow. A 10% increase in revenue generates a 10% increase in operating income. If, however, fixed costs are high, then a 10% increase in revenue will generate quite a bit more than 10% increase in operating earnings, essentially increasing the operating margin.
See also
External links
- Operating Leverage Definition
- Operating Leverage
- Activity-Based Costing
- Change Management/Leadership
- Knowledge Management
- Performance Measurement
- Operations in the Extended Enterprise
Processes in Manufacturing and Services. Financial Analysis in Operations Management. Process Measurement and Analysis
Tutorials
- Basic Process Design
- Intro to Process Analysis
- Process Analysis
- Processes in Manufacturing and Services
- Product Design and Process Selection Manufacturing
- Product Design and Process Selection - Services
- Financial Analysis in Operations Management
- Process Measurement and Analysis
Readings
Manufacturing Process Management (MPM) is a collection of technology and methods used in the manufacture of products. It incorporates such technologies as computer-aided production engineering (CAPE), Advanced Planning & Scheduling (APS) , computer-aided manufacturing (CAM), Manufacturing Execution System (MES) , computer-aided quality assurance (CAQ), the utilization of CAD and AEC tools for factory layout and digital mockup (DMU) and simulation for assembly analysis. As the digital manufacturing part of the PLM process it is the bridge from product design to production planning and on to resource and inventory scheduling. As CAD defines what is to be made; and ERP/MRP defines when it is to be made; MPM defines how it will be made.
A cornerstone of MPM is the central repository for manufacturing data management (MDM) similar to PDM for design data. MPM takes the product data eBOM (engineering Bill of Material) to create the process oriented mBOM (manufacturing) along with a bill of process (BOP). This together with the management of resources such as tools, machines and work centers forms the so called 3PR data (product process plant resources).
The integration of all these tools and activities aids in the exploration of alternative production line scenarios; making assembly lines more efficient with the aim of reduced lead time to product launch, shorter product times and reduced work in progress (WIP) inventories as well as allowing rapid response to product or product changes.
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Business Process Reengineering is a management approach aiming at improvements by means of elevating efficiency and effectiveness of the processes that exist within and across organizations.
Business process reengineering is also known as BPR, Business Process Redesign, Business Transformation, or Business Process Change Management.
- History
- Definition of BPR
- The role of information technology
- Methodology
- BPR - a rebirth of scientific management?
- Successes
- Critique
- Development after 1995
Quality Management. Statistical Quality Control Methods
Tutorials
Readings
Quality Management is a method for ensuring that all the activities necessary to design, develop and implement a product or service are effective and efficient with respect to the system and its performance.
- The Quality Management Network
- American Society for Quality
- TQM and Organisational Development
- Quality Control Charts
- References
Six Sigma is a system of practices originally developed by Motorola to systematically improve processes by eliminating defects.[1] Defects are defined as units that are not members of the intended population. Since it was originally developed, Six Sigma has become an element of many Total Quality Management (TQM) initiatives.
The process was pioneered by Bill Smith at Motorola in 1986[2] and was originally defined[3] as a metric for measuring defects and improving quality, and a methodology to reduce defect levels below 3.4 Defects Per (one) Million Opportunities (DPMO).
Six Sigma is a registered service mark and trademark of Motorola, Inc.[4] Motorola has reported over US$17 billion in savings[5] from Six Sigma as of 2006.
In addition to Motorola, companies which also adopted Six Sigma methodologies early-on and continue to practice it today include Bank of America, Caterpillar, Honeywell International (previously known as Allied Signal), Raytheon and General Electric (introduced by Jack Welch).
Recently Six Sigma has been integrated with the TRIZ methodology for problem solving and product design.
- Key concepts of Six Sigma
- Methodology
- Quality approaches and models
- Statistics and robustness
- Roles required for implementation
- Origin
- Criticism
- Examples of some key tools used
- References
Forecasting
Tutorials
Readings
Forecasting is the process of estimation in unknown situations. Prediction is a similar, but more general term, and usually refers to estimation of time series, cross-sectional or longitudinal data. In more recent years, Forecasting has evolved into the practice of Demand Planning in every day business forecasting for manufacturing companies. The discipline of demand planning, also sometimes referred to as supply chain forecasting, embraces both statistical forecasting and consensus process.
Forecasting is commonly used in discussion of time-series data.
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The Institute of Business Forecasting (IBF) is recognized worldwide as the premier provider of forecasting and planning education, training, and certification. This global organization’s membership includes many of the world’s largest and renowned companies; also, it is known for its flagship publication, the Journal of Business Forecasting (JBF). The IBF has helped organizations improve forecasting accuracy and overall performance for over 25 years. For more information, visit www.ibf.org
[1] The main source of information about forecasting on the internet is the Forecasting Principles site, forecastingprinciples.com. Forecasting Principles summarizes all useful knowledge about forecasting for researchers, practitioners, and educators. It is provided as a public service by the International Institute of Forecasters. The Institute publishes the journals International Journal of Forecasting and Foresight, and organizes International Symposia on Forecasting and forecasting workshops.
- The International Institute of Forecasters
- Forecasting Principles: "Evidence-based forecasting"
- DemandPlanningNet
- Institute of Business Forecasting
- Long-Range Forecasting: "The accumulated wisdom of ages... about forecasting methods"
- Principles of Forecasting Handbook
- http://www.statsoft.com/textbook/sttimser.html
- Applied Forecasting: news on forecasting
Waiting Line Management. Waiting Line Theory
Tutorials
Readings
Queueing Theory (also commonly spelled queuing theory) is the mathematical study of waiting lines (or queues).
The theory enables mathematical analysis of several related processes, including arriving at the (back of the) queue, waiting in the queue (essentially a storage process), and being served by the server(s) at the front of the queue. The theory permits the derivation and calculation of several performance measures including the average waiting time in the queue or the system, the expected number waiting or receiving service and the probability of encountering the system in certain states, such as empty, full, having an available server or having to wait a certain time to be served.
Queueing theory is generally considered a branch of operations research because the results are often used when making business decisions about the resources needed to provide service. It is applicable in a wide variety of situations that may be encountered in business, commerce, industry, public service and engineering. Applications are frequently encountered in customer service situations as well as transport and telecommunication and it is occasionally linked to ride theory. Queueing theory is directly applicable to intelligent transportation systems, call centers, PABXs, networks, telecommunications, server queueing, mainframe computer queueing of telecommunications terminals, advanced telecommunications systems, and traffic flow.
- Spelling
- History
- Notation
- Application of queueing theory to telephony
- Queueing networks
- The role of the Poisson process and exponential distributions
- Limitations of the mathematical approach
- Buzen's algorithm
- Erlang unit
- Jackson Network
- Little's law
- Queue area
- Queueing delay
- Queueing model
- Random early detection (RED)
- Renewal theory
- References
- Further reading
Human Resource Issues in OM. Work Performance Measurement
Tutorials
Readings
Performance Management may mean:
Performance measurement is the process of assessing progress toward achieving predetermined goals, while performance management is building on that process adding the relevant communication and action on the progress achieved against these predetermined goals (Bourne, M.,Franco, M. and Wilkes, J. (2003). Corporate performance management. Measuring Business Excellence; 2003; 7, 3; p. 15)
In network performance management, (a) a set of functions that evaluate and report the behavior of telecommunications equipment and the effectiveness of the network or network element and (b) a set of various subfunctions, such as gathering statistical information, maintaining and examining historical logs, determining system performance under natural and artificial conditions, and altering system modes of operation. Source: from Federal Standard 1037C and from MIL-STD-188.
In organizational development (OD), performance can be thought of as Actual Results vs Desired Results. Any discrepancy, where Actual is less than Desired, could constitute the performance improvement zone. Performance management and improvement can be thought of as a cycle:
Performance planning where goals and objectives are established
Performance coaching where a manager intervenes to give feedback and adjust performance
Performance appraisal where individual performance is formally documented and feedback delivered
A performance problem is any gap between Desired Results and Actual Results. Performance improvement is any effort targeted at closing the gap between Actual Results and Desired Results.
Application Performance Management (APM) refers to the discipline within systems management that focuses on monitoring and managing the performance and availability of software applications. APM can be defined as workflow and related IT tools deployed to detect, diagnose, remedy and report on application performance issues to ensure that application performance meets or exceeds end-users' and businesses' expectations.
Business performance management (BPM) is a set of processes that help businesses discover efficient use of their business units, financial, human and material resources.
Operational performance management (OPM) focus is on creating methodical and predictable ways to improve business results, or performance, across organizations.
Simply put, performance management helps organizations achieve their strategic goals. Rather than discarding the data accessibility previous systems fostered, performance management harnesses it to help ensure that an organization's data works in service to organizational goals to provide information that is actually useful in achieving them. and focus on the Operational Networking Processes between that performance level.
External links
Project Management. Aggregate Planning. Operations Strategy
Tutorials
- Project Management
- Project Management
- Aggregate Planning
- Operations Strategy
- Operations Strategy and Competitiveness
- Production Planning
- Service Operations Strategy
Readings
Project Management is the discipline of organizing and managing resources in such a way that these resources deliver all the work required to complete a project within defined scope, quality, time and cost constraints. A project is a temporary and one-time endeavor undertaken to create a unique product or service, that brings about beneficial change or added value. This property of being a temporary and a one-time undertaking contrasts with processes, or operations, which are permanent or semi-permanent ongoing functional work to create the same product or service over and over again. The management of these two systems is often very different and requires varying technical skills and philosophy, hence requiring the development of project management.
The first challenge of project management is to ensure that a project is delivered within defined constraints. The second, more ambitious challenge is the optimized allocation and integration of inputs needed to meet pre-defined objectives. A project is a carefully defined set of activities that use resources (money, people, materials, energy, space, provisions, communication, quality, risk, etc.) to meet the pre-defined objectives.
- History of Project Management
- Definitions
- The Project Manager
- The Traditional Triple Constraints
- Project Management activities
- Project Objectives
- Project Management artifacts
- Project control variables
- Approaches
- Project systems
- Project Management Associations
- American Academy of Project Management
- Association for Project Management
- History of Project Management
- International Research Network on Organizing by Projects
- International Project Management Association
- International Project Management Commission
- Project Management Association of America
- The Australian Institute of Project Management
- The Institute of Project Management of Ireland
- The Project Management Institute
- The Iranian Institute of Project & Process Management
- The Project Management blog
- MIT Open Courseware
- McKinsey
& Company
Aggregate Planning is an operational activity which does an aggregate plan for the production process, in advance of 2 to 18 months, to give an idea to management as to what quantity of materials and other resources are to be procured and when, so that the total cost of operations of the organisation is kept to the minimum over that period.
The quantity of outsourcing, subcontracting of items, overtime of labour, numbers to be hired and fired in each period and the amount of inventory to be held in stock and to be backlogged for each period are decided. All of these activities are done within the framework of the company ethics, policies, and long term commitment to the society, community and the country of operation.
Aggregate planning has certain prerequired inputs which are inevitable. They include:
1. Information about the resources and the facilities available.
2. Demand forecast for the period for which the planning has to be done.
3. Cost of various alternatives and resources. This includes cost of holding inventory, ordering cost, cost of production through various production alternatives like subcontracting, backordering and overtime.
4. Organisational policies regarding the usage of above alternatives.
Supply Chain Management
Tutorials
- An Introduction to Supply Chain Management
- Creating a Balanced Flow Supply Chain
- Supply Chain Management
- Supply Chain Management
- Supply Chain Management
- Distribution and the Supply Chain
Readings
Supply-Chain Operations Reference (SCOR) is a process reference model that has been developed and endorsed by the Supply-Chain Council (SCC) as the cross-industry standard diagnostic tool for supply chain management. SCOR enables users to address, improve, and communicate supply chain management practices within and between all interested parties.
SCOR is a management tool, spanning from the supplier's supplier to the customer's customer. The model has been developed to describe the business activities associated with all phases of satisfying a customer's demand. By describing supply chains using process building blocks, the model can be used to describe supply chains that are very simple or very complex using a common set of definitions. As a result, disparate industries can be linked to describe the depth and breadth of virtually any supply chain.
SCOR is based on five distinct management processes: Plan, Source, Make, Deliver, and Return.
Plan - Processes that balance aggregate demand and supply to develop a course of action which best meets sourcing, production, and delivery requirements.
Source - Processes that procure goods and services to meet planned or actual demand.
Make - Processes that transform product to a finished state to meet planned or actual demand.
Deliver - Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management.
Return - Processes associated with returning or receiving returned products for any reason. These processes extend into post-delivery customer support.
With all reference models, there is a specific scope that the model addresses. SCOR is no different and the model focuses on the following:
1. All customer interactions, from order entry through paid invoice.
2. All product (physical material and service) transactions, from your supplier’s supplier to your customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc.
3. All market interactions, from the understanding of aggregate demand to the fulfillment of each order.
SCOR does not attempt to describe every business process or activity. Relationships between these processes can be made to the SCOR and some have been noted within the model. Other key assumptions addressed by SCOR include: training, quality, information technology, and administration (not supply chain management). These areas are not explicitly addressed in the model but rather assumed to be a fundamental supporting process throughout the model.
SCOR provides three-levels of process detail. Each level of detail assists a company in defining scope (Level 1), configuration or type of supply chain (Level 2), process element details, including performance attributes (Level 3). Below level 3, companies decompose process elements and start implementing specific supply chain management practices. It is at this stage that companies define practices to achieve a competitive advantage, and adapt to changing business conditions.
SCOR is a process reference model designed for effective communication among supply chain partners. As an industry standard it also facilitates inter and intra supply chain collaboration, horizontal process integration, by explaining the relationships between processes (i.e., Plan-Source, Plan-Make, etc.). It also can be used as a data input to completing an analysis of configuration alternatives (e.g., Level 2) such as: Make-to-Stock or Make-To-Order. SCOR is used to describe, measure, and evaluate supply chains in support of strategic planning and continuous improvement.
External links
- Barriers to and Enablers of Supply Chain Barriers to and Enablers of Supply Chain Management - The Boeing Company
- Integrated Supply Chain Management
- SCOR, Part 1: An Introduction to the Supply Chain Operations Reference Model
- SCOR, Part 2: Supply Chain Management Intelligence and Improvement Roadmap
- SCOR Experience at Intel
- Supply Chain Management Challenges
- Supply Chain Solutions White Papers
- Supply Chain World Conference
Inventory Systems for Independent Demand. Inventory Systems for Dependent Demand.
Tutorials
- Inventory Management
- Inventory Systems for Independent Demand
- Inventory Systems for Dependent Demand
- Just-In-Time Systems
- Just-In-Time Systems
Readings
Inventory is a list of goods and materials held available in stock by a business.
- Business inventory
- The role of a cost accountant on the 21st-century in a manufacturing organization
- National accounts
- References
- Manufacturing
- Purchasing
- Distribution
- Logistics, Transportation
- Wholesaling
- Retailing
- Consignment stock
- Accounting
- Cost accounting
- Throughput accounting
- Eliyahu M. Goldratt
- List of theory of constraints topics
- Just in time
- Vendor-managed inventory
- Economic order quantity
- Operations research
- Distressed inventory
- New old stock
Just In Time (JIT) is an inventory strategy implemented to improve the return on investment of a business by reducing in-process inventory and its associated costs. The process is driven by a series of signals, or Kanban (看板 Kanban?), that tell production processes to make the next part. Kanban are usually simple visual signals, such as the presence or absence of a part on a shelf. When implemented correctly, JIT can lead to dramatic improvements in a manufacturing organization's return on investment, quality, and efficiency.
New stock is ordered when stock reaches the re-order level. This saves warehouse space and costs. However, one drawback of the JIT system is that the re-order level is determined by historical demand. If demand rises above the historical average planning duration demand, the firm could deplete inventory and cause customer service issues. To meet a 95% service rate a firm must carry about 2 standard deviations of demand in safety stock. Forecasted shifts in demand should be planned for around the Kanban until trends can be established to reset the appropriate Kanban level. In recent years manufacturers have touted a trailing 13 week average as a better predictor than most forecastors could provide.
A related term is Kaizen which is an approach to productivity improvement literally meaning "continuous improvement" of process.
- Business
- Lean manufacturing
- Preorder Economy
- Logistics
- Liquid Logistics
- Management
- Manufacturing
- Industrial Engineering
- Statistical process control
- Total Quality Management
- Vendor Managed Inventory
- Just in case Manufacturing
- References
“NWLEAN: http://www.nwlean.net/” - The Northwest Lean Networks - A free knowledge-sharing website, with over 10,000 professionals discussing the various aspects of lean implementation.
“Lean Blog” A blog focused on lean manufacturing, Toyota Production System, and lean healthcare news.
Strengths & Weaknesses of Just In Time
“Just In Time drives on” - The Manufacturer Magazine US - An article discussing the continued impact of Just In Time in the automotive sector
“Just in Time Under Fire: The Five Major Constraints Upon JIT Practices” - Published academic paper discusses weakness of JIT Philosophy and names five major areas of concern--customer-driven & economic conditions, logistics, organizational culture & conditions, intractable accounting & finance practices, and small supplier difficulties
The Lean Library The Lean Library includes books reviews, recommendations and more information on lean.
Scheduling
Tutorials
Readings
Scheduling is an important tool for manufacturing and engineering, where it can have a major impact on the productivity of a process. In manufacturing, the purpose of scheduling is to minimize the production time and costs, by telling a production facility what to make, when, with which staff, and on which equipment. Production scheduling aims to maximize the efficiency of the operation and reduce costs.
Production scheduling tools greatly outperform older manual scheduling methods. This provides the production scheduler with powerful graphical interfaces which can be used to visually optimize real-time work loads in various stages of the production, and pattern recognition allows the software to automatically create scheduling opportunities which might not be apparent without this view into the data. For example, an airline might wish to minimize the number of airport gates required for its aircraft, in order to reduce costs, and scheduling software can allow the planners to see how this can be done, by analyzing time tables, aircraft usage, or the flow of passengers.
Companies use backward and forward scheduling to allocate plant and machinery resources, plan human resources, plan production processes and purchase materials.
Forward scheduling is planning the tasks from the date resources become available to determine the shipping date or the due date.
Backward scheduling is planning the tasks from the due date or required-by date to detemine the start date and/or any changes in capacity required.
- Process change-over reduction
- Inventory reduction, leveling
- Reduced scheduling effort
- Increased production efficiency
- Labor load leveling
- Accurate delivery date quotes
- Real time information
- Production Scheduling Portal News, articles, resources and software.
- Planning Engineers Organisation Details all known production scheduling software
- Planning Planet Resources for Planning, Scheduling & Control. Categorised by planning, training, software & recruitment.
- Open source solutions
Recommended
Texts
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Fundamentals of Operations Management, Check the availability and buy your books from our Bookshop
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Organisation
Development and Change Second Pacific Rim Edition Dianne
Waddell – Edith Cowan University Check the availability and buy your books from our Bookshop |
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Operations Scheduling with Applications in Manufacturing and Services
by:
Check the availability and buy your books from our Bookshop |
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Strategic
Management: of Resources and Relationships, Concepts Check the availability and buy your books from our Bookshop |
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Essentials
of Supply Chain Management Check the availability and buy your books from our Bookshop |
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Essentials
of Corporate Performance Measurement Check the availability and buy your books from our Bookshop |
Resources
- Supply Chain Management Books
- Supply Chain Management and Data Mining in Asia-Pacific Region
- Supply Chain World Latin America 2001 Presentations
