BUS606 Study Guide

Unit 1: Introduction to Operations and Supply Chain Management

1a. Explain the relationship between productivity and optimization

  • What is Operations and Supply Chain Management (OSCM)?
  • How do economic principles of supply and demand affect OSCM?
  • How has concern for environmental issues affected OSCM?
  • How are additive manufacturing techniques affecting OSCM?
The goal of Operations and Supply Chain Management (OSCM) is to transform resources such as people, materials, technology, and information (called inputs) into goods or services (called outputs). OSCM must add value to these resources and optimize this transformation process. Operations and Supply Chain Managers first determine strategic decisions (long-term decisions that are broad) and tactical decisions (short-term decisions that are narrow in scope and focus on day-to-day issues).
An essential aspect of operations management is the three steps of production planning:
  1. Production planning determines where, when, and how production will occur;
  2. Production control is concerned with controlling quality and costs, scheduling, and the day-to-day operations of running the factory or service facility; and
  3. Improving efficiencies.
While once OSCM was a more internal function of an organization, at times producing products that did not meet the consumer's needs, global competitiveness now requires a much more global supply chain with which to transform resources. With the increasing worldwide concern over environmental issues, Green Supply Chain Management is emerging to comply with increasing regulations for environmental protection.
From an economic standpoint, OSCM is affected by the principles of supply and demand. For an organization to match its supply to the exact goods or services that a consumer demands, OSCM must always consider optimizing the supply chain.
Remember, the goal of OSCM is to optimize the transformation of resources into goods and services. At times, optimization may increase costs due to small production runs and the complexity of component parts. However, adaptive manufacturing techniques are increasingly used to reduce some of the costs. Adaptive manufacturing techniques include ideas such as 3D printing one heart valve, manufacturing lighter weight fabrics to reduce weight and lower costs, or even embedding a part within a mechanism to reduce assembly time.
To review, see:

1b. Describe the main tools used to analyze problems in OSCM, such as flowcharts, facility layout design, waiting line analysis, and statistical process control (SPC)

  • What is a flowchart, and how can it be used on OSCM?
  • Why is facility layout design important in OSCM?
  • What is waiting-line analysis?
  • What tools can help us manage the quality of our products?
  • How does statistical process control (SPC) affect OSCM?
A flowchart is a visual representation of a given task's flow, workflow, or process. Flowcharts use standardized symbols so that everyone understands the process. Flowcharts are typically read from left to right and top to bottom. You will learn more about flowcharts in a later unit.
Facility placement and layout are important considerations for both manufacturing and services. The placement of a facility has a dramatic effect on costs, and the purpose of an effective layout is to reduce production costs or increase consumer satisfaction.
Waiting-line analysis is a mathematical tool that can study queuing theory. Queuing theory describes the arrival pattern of customers in a service organization, the structure (layout) of the facility, and the tasks completed in the facility. While we often think of waiting-line analysis when waiting in line for something, we can study queuing theory in operations management to establish an efficient waiting-line system.
Organizations recognize they must provide quality products to consumers. Over the years, methods have been developed to help organizations produce high-quality products. Total Quality Management (TQM), developed by Dr. W. Edwards Deming, focuses on continuous improvement by all employees. Six Sigma strives to measure the defects in the production process and eliminate them, resulting in "zero defects". Lean manufacturing eliminates steps in the production process that do not add the benefits consumers seek. Just-in-Time (JIT) manufacturing requires that production materials arrive at the time needed rather than storing inventory. Statistical Process Control provides a statistical analysis to measure and control quality.
To review, see Improving Production and Operations.

1c. Explain the role of organizational leadership in finding project opportunities and overcoming organizational challenges related to projects

  • How can leaders affect and change productivity issues in the workflow?
  • What internal and external threats exist for the supply chain? How can we implement supply chain security (SCS)?
  • Have you changed how you secure products in the past few years through online shopping, grocery pick-up, and new transportation services?
  • How can organizational leaders control "green" OSCM practices? Would changes affect the profitability of the organization?
Because the goal of OSCM is to optimize the transformation of resources, organizational leaders must understand the basic concepts of workflow and the influences on that workflow. Once a workflow is established, leaders can use cycle time and bottlenecks to affect production and productivity. Inventory of parts and finished products must be controlled, spoilage/scrape, overtime of employees, and overspeed of the production line. Tools discussed in the previous section, such as TQM and Lean Management, can help leaders understand production optimization.
September 11, 2001, forever changed supply chain management and demonstrated the need to secure worldwide supply chains. Supply chain security (SCS) encompasses those practices applied to address threats to the supply chain. The current trend is to take a multi-layered approach to the security of the supply chain. This multi-layered approach includes:
  1. ACI programs to capture cargo information;
  2. Certification or credentialing programs to ensure that supply chain actors are proven to be legitimate;
  3. Technologies such as RFID and GPS tracking; and
  4. ISPS code provides for the security norms for port installations.
Securing supply chains, even the development of new chains, has become increasingly difficult in a world where consumer preferences change very quickly. Operations and supply chains must be designed to respond to these changing preferences. Some of the traditional and new supply chains include (1) full-scale manufacturing and sourcing, (2) benchmarking, (3) ramp-up, and (4) prototype. The rate of changing consumer preferences and the need to control the supply chain affects the type of supply chain needed for organizations. For example, consumer preferences for toys change quickly, while preference for farm equipment changes slowly. Similarly, less control is needed in fashion since shirts can be manufactured globally, while up-scale automobiles require much more control over the supply chain.
Introduced previously in the course is Green Operations and Supply Chain Management. Due to environmental factors like the COVID-19 pandemic, we have seen much uncertainty in supply chains. As supply chains become more uncertain, less emphasis is often placed on internal green practices and external environmental issues. Research has shown us that leaders rarely change their internal green practices; however, they switch their allocation of spending on pollution prevention to pollution control. Research does show that it "pays to be green".
To review, see:

1d. Explain areas of uncertainty in OSCM, such as delays or breaks in supply of production inputs and demand forecasting, and possible methods to deal with them

  • How has changing consumer preferences influenced the task of OSCM?
  • Who in the organization influences the optimization of the supply chain and helps when problems occur in the supply chain?
  • What are the four main links in a supply chain? What happens when one of these links is broken?
  • What are services, and how is the OSCM different for services and goods?
With mass-produced products, the manufacturer chooses the production output, and consumers purchase that output. Henry Ford, the inventor of the Model T Ford in 1908, famously said that the consumer could buy any color of this vehicle as long as it was black. All Model T Fords were black! Now, however, the operations and supply chain managers must be more versatile; they must communicate to the organization the consumer's preferences, and they must develop the flow of goods and services back to the consumer through the management of the supply chain. Said another way, these managers must satisfy customer needs while controlling production and supply chain costs.
While operations and supply chain managers are ultimately responsible to the consumer and the organization, they have help from customer service, marketing, engineering, finance, information technology, and quality control. These functional areas in an organization work together to manage the supply chain normally and when the supply chain is broken or ineffective.
The supply chain consists of 4 major links: (1) manufacturing and operations, (2) transportation, (3) purchasing, and (4) warehouse and distribution centers. If you go to your favorite restaurant and they are out of your favorite dish, which link is broken, and which functional area in the organization is responsible for this break? This short scenario identifies how crucial all functional areas of a business work are in working with OSCM and why all functional areas of an organization flow into the OSCM function.
A good can be stored, transported, resold, and purchased again. A service, however, is intangible. A service is not a tangible product that a consumer can touch. A service cannot be stored, resold, or purchased again. The service is often produced and consumed simultaneously – think haircuts or pedicures! The consumption of these services is inseparable from their production, referred to as inseparability. However, services still have a supply chain that must be managed. In addition to services being inseparable, services have perishability and heterogeneity. One of the most important links in the service supply chain is the client-based relationship.
To review, see:

Unit 1 Vocabulary

This vocabulary list includes the terms that you will need to know to successfully complete the final exam.
  • ACI program
  • adaptive manufacturing techniques
  • benchmarking
  • bottlenecks
  • certification/credentialing
  • client-based relationship
  • continuous improvement
  • customer service
  • cycle time
  • demand
  • engineering
  • finance
  • flowchart
  • full scale manufacturing and sourcing
  • good
  • green supply chain management
  • heterogeneity
  • information technology
  • inseparability
  • ISPS code
  • Just-in-Time inventory (JIT)
  • lean manufacturing
  • manufacturing and operations
  • marketing
  • multi-layered approach
  • overtime/overspeed
  • perishability
  • production control
  • production planning
  • prototype
  • purchasing
  • quality control
  • ramp-up
  • service
  • Six Sigma
  • spoilage/scrape
  • strategic decisions
  • supply
  • Supply Chain Security (SCS)
  • tactical decisions
  • Total Quality Management (TQM)
  • transportation
  • warehouse and distribution centers