WEEKLY QUESTIONS FOR CHAPTER EIGHT- Operations Management and Supply Chain

Q1. Define the term operations management

OM is the management of systems or processes that convert or transform resources (including HR) into goods and services. OM is responsible for managing the core processes used to produce services and manufacture goods.

To learn more about this go to: http://managementhelp.org/ops_mgnt/ops_mgnt.htm

Q2. Explain operations management’s role in business

OM covers a vast number of operations in business including many interrelated activities such as forecasting, capacity planning, managing inventories, assuring quality, motivating employees, deciding where to locate facilities, etc.

The book gives the example of an airline company to show how OM teams add value. The company in this example consists of areoplanes, airport facilities and maintenance facilities. Typical OM activities include:

•  Forecasting: estimating the demand for flights, weather, landing conditions, growth/decline of airline travel to ensure efficency.
• Capacity Planing- essential for the airline to maintain cashflow and increase revenue. Under or over estimating will hurt profits
• Scheduling- the airline needs to operate on strict schedules including flights, attendance, ground maintenance.
• Managing Inventory- inventory of food, drinks, first aid equipment, in flight magazines, pillows, blankets, and life jackets is essential.
• Assuring Quality- quality is the most important in an airline where safety is the highest priority. Customers expect high quality customer service in ticketing, check in, in flight service, efficiency and courtesy.
• Motivating and Training employees- airline hostesses and pilots but be highly trained, and continually motivated. 
• Locating Facilities- the need to decide which cities to offer services, where to host maintenance facilities and where to locate major/ minor hubs.

The success of the business depends on short and long term planning and the ability of its executives and managers to make informed decisions.

To learn more see the video at: http://www.youtube.com/watch?v=LeeTy3YaMu0

Q3. Describe the correlation between operations management and information technology

Managers use IT to heavily influence OM decisions including productivity, costs, flexibility, quality and customer satisfaction. IT allows OM to make operational decisions because OM exerts considerable influence over the degree to which the goals/objectives of the company are realized. Many OM decisions involve many possible alternatives. EG: Whether to fly into Fiji one or twice or three times a day. This can have a very impact on revenue/ expenses. EG: If all three flights would be full then the revenue would increase, but if every flight was only 20% full then the expense wouldn't be worth the expense. OM Information Systems are critical for managers to make these well informed decisions.

Decision Support Systems and executive information systems help organizations perform what if analysis, sensitivity analysis, drill down and consolidation in order to answer these questions. Types of decisions that IT systems help decide include:

• What- What resources will be needed and in what amounts
• When- When will each resource be needed? When should the work be scheduled? When is corrective action needed?
• Where- Where will the work be performed?
• How- How will the product or service be designed? How will the work be done?
• Who- Who will perform the work?

Q4. Explain supply chain management and its role in a business

SCM involves the management of information flows between and among stages in a supply chain to maximise total supply chain effectiveness and profitability. The 5 main components include:

• Plan
• Source
• Make 
• Deliver
• Return

There are many steps required to do the above components. SCM software enables oragnisatiosn to generate efficencies within these steps by automating and improving the information flows throughout and among the different supply chain components.

Effective SCM can enables organisations to:

• decrease the power of its buyers
• increase its own supplier power
• increase switching costs to reduce the threat of substitute products/services
• create entry barriers to reduce the threat of new entrants
• increase effeicencies while seeking a competitive advantage through cost leadership

Today's SC is a complex web of suppliers, assemblers, logistics firms, sales/marketing channels and other business partners. Below is a picture of a sample SC.

  The book identifies 3 main links in the SC:

• materials flow from suppliers and their upstream suppliers at all levels
• transformation of materials info semi finished and finished products- the organization's own production processes
• distribution of products to customers and their downstream customers at all levels.

Businesses must embrace technologies that effectively manage and oversee their supply chains; therefore SCM is increasingly important to create efficiencies, competitive advantages, improved forecasting, improved business operations, improved transparency among the SC. Businesses have access to modeling and simulation tools,a logarithms and applications that combine information from multiple sources to build forecasts in advance.

Q5. List and describe the five components of a typical supply chain

 

 a.Plan- An oragnisation must ahve a strategic plan for managing the resources that that are used towards meeting consumer demand for goods and services. An oragnisation must develop a set of metrics to monitor the SC so that it is effeicent, costs less and dleivers high quality and high value to the customers.

b. Source- Organisations must be careful when choosing suppliers. They need to choose suppliers that are reliable to deliver the goods and services as require. The organisation will need to develop a set of pricing, delivery, and payment processes with suppliers and create metrics for monitoring and improving their relationship.

c. Make- This is when the organisation manufacture their products and services including scheduling activities necessary for production, testing, packaging, and preparation for delivery. This is the most metric intensive portion of the SC, measuring quality levels, production output and worker productivity.

d. Deliver- Aka Logistics (the set of processes that plans for and controls the efficient and effective transportation  and storage of supplies from suppliers to customers). Organisations must concentrate on receiving orders from customers, fulfilling orders via their warehouses, utilizing transport companies to deliver goods and implement a billing/invoicing system to facilitate payments.

e. Return- Organisations must create a system for returning/receiving defective and excess stock. They also must support these customers who have problems with excellent customer service.

 

Q6. Define the relationship between information technology and the supply chain.

The notion of seamless information links within and between organisations is an essential element of integrated supply chains. IT's main role in SCM is creating the tight process and information linkages between functions within a firm (ie marketing, finance, sales, manufacturing, distribution) and between frms, which allow a synchronised flow of information and product between customers, suppliers, and transporters along the SC. IT integrates planning, decision making processes, business operating processes and information sharing for business performance management which results in higher profits. 
Internet based SC collaboration software helped Adaptec Inc reduce inventory levels and lead times.
Advances in IT are increasing visibility, consumer behavior, competition and speed of the SC.

Here is a link to an IBM commercial which is based on new technologies and supply chain management:
http://www.youtube.com/watch?v=LVEPdV_warU