Overviews of the key concepts from the textbook Operations Management, Supply Chain & Sustainability. Each chapter outline aligns with the Operations University lecture recordings found on YouTube.
Chapter Outlines
Ch 01
Operations & Productivity
Production is the creation of goods and services. Production activities that go on in an organization are referred to as “Operations”. Operations Management is the set of activities that create value in the form of goods and services by transforming inputs into outputs. The principles of Operations Management help one to view a business enterprise as a total system, in which all activities are coordinated, not only vertically throughout the organization, but also horizontally across multiple functions. The three major functions of an organization (Operations, Marketing, and Finance) must work together for the organization to function successfully.
Ch 02
Operations Strategy in a Global Environment
Increasingly, more and more organizations are finding their customers and suppliers located all around the world, which is the result of growing world trade. In response, organizations are extending their distribution channels and supply chains globally. Firms compete not just with their own expertise, but with the talent in the global supply chain. Organizations must be prepared to protect their revenue from competitors in a global environment - and ideally grow it! In order to do so, firms must create a competitive advantage, and then focus on their core competencies to create a global operations strategy.
Ch 03
Project Management
A project is a temporary and often customized initiative that consists of smaller tasks and activities that must be coordinated and completed to finish the entire initiative. Project management involves all of the activities associated with planning, scheduling, and controlling those projects. In this chapter, we learn some of the key tools to help facilitate successful project management. A few of those key tools include the CPM/PERT methods, AON network diagrams and the critical path, Gantt charts for scheduling, and how to crash a project if it is falling behind or needs to be expedited.
Ch 04
Forecasting
Forecasting is the art and science of predicting future events. Forecasting may involve taking historical data (such as past sales) and projecting them into the future with a mathematical model. It may be a subjective or intuitive prediction (e.g., "this new product will sell +20% better than our old one"), or it may be based on demand driven data, such as our customers plans to purchase, and projecting them into the future. Many of the best forecasts involve a combination of quantitative and qualitative inputs, and you will see there is rarely one superior method. Forecasts are influenced by a variety of factors, and constantly change. Because of this we develop methods to measure forecast accuracy, to ensure that our forecasts are as accurate as possible.
Ch 06
Quality Management
Quality is the ability of a product or service to meet customer needs. Quality management is the systematic policies, methods, and procedures used to ensure that goods and services are produced with appropriate levels of quality to meet the needs of customers. There are a lot of implications of quality, including company reputation, product liability, and global impact. Quality Control (QC) is ensuring that a good or service conforms to specifications and meets customer requirements by monitoring and measuring processes and making any necessary adjustments to maintain a specified level of performance. A Quality Control system will have three components, a performance standard or goal, a means of measuring actual performance, and a comparison of actual performance with the standard to form the basis for corrective action.
Ch s6
Statistical Process Control (SPC)
This is the Supplement to Chapter 6 on Statistical Process Control (SPC). SPC is a methodology for monitoring quality of manufacturing and service delivery processes to help identify and eliminate unwanted causes of variation. The essence of statistical process control is to assure that the output of a process is random so that future output will be random. The key learning objective for SPC is learning how to create and interpret a control chart, including X-charts, R-charts, P-charts and C-charts, and then we conclude by discussing process capability and computing Cp and Cpk.
Ch 07
Process Strategies
A process strategy is an organizations approach to transforming resources into goods and services. The objective is to create a process that can produce offerings that meet customer requirements within cost and other managerial constraints. It is critical when designing a process strategy to implement one that matches the organizational strategy and strengthens the firms competitive advantages. The four key process strategies that we will review are a Process focus, Repetitive focus, Product focus, and Mass customization, but within these four strategies there are many ways they can be implemented. We will conclude with a few key concepts from the Supplement to Chapter 7 on Capacity & Bottleneck analysis.
Ch 11
Supply Chain Management
The Supply Chain is a global network of organizations and activities that supplies a firm with goods and services. Members of the supply chain collaborate to achieve high levels of customer satisfaction, efficiency and competitive advantage. In general, the Supply Chain starts with the provider of basic raw materials and continues all the way to the final customer at the retail store. Supply chain management is the coordination of all supply chain activities involved in enhancing customer value. The objective of supply chain management is to coordinate activities within the supply chain to maximize the supply chain’s competitive advantage and benefits to the ultimate customer. Business competition is no longer between companies; it is between supply chains.
Ch 12
Inventory Management
Inventory is any asset held for future use or sale. The financing and maintaining of inventories is a substantial part of the cost of doing business. Inventory Management involves planning, coordinating, and controlling the acquisition, storage, handling, movement, distribution, and possible sale of raw materials, component parts and subassemblies, supplies and tools, replacement parts, and other assets that are needed to meet customer wants and needs. The objective of Inventory Management is to strike a balance between inventory investment and customer service. Inventory serves an important role for organizations. It can help to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand, it can decouple various parts of the production process, it is used to take advantage of quantity discounts, and it is used as a hedge against inflation. When managing inventory there are two fundamental decisions; When to Order items and How Much to order.
Ch 14
Materials Requirements Planning (MRP) & ERP
Materials Requirements Planning (MRP) is a dependent demand technique that uses a bill-of-material, inventory, expected receipts, and a master production schedule to determine material requirements. Essentially MRP helps us to calculate What, When, and How Many of a dependent demand item that we need to buy or make to support our production schedule. MRP has many benefits, including better response to customer orders, faster response to market changes, improved utilization of facilities and labor, and reduced inventory levels. Enterprise Resource Planning (ERP) is the next step in the evolution of MRP. It is the integration of financial information, manufacturing data, capacity planning, and human resources on a single computer system. It is the next step in an evolution that began with MRP. ERP software provides a system to capture and make data available in real time to decision makers and other users in the organization.
Ch 16
Lean Operations
By focusing on continuous improvement we can build world-class operations. The three main approaches for doing so are 1) Just-In-Time (JIT) which is continuous and forced problem solving via a focus on throughput and reduced inventory, 2) the Toyota Production System (TPS) which focuses on continuous improvement, respect for people and standard work practices, and 3) Lean Operations which focuses on eliminating waste through continuous improvement and a focus on exactly what the customer wants. In practice, there is little difference in these approaches, and the terms are often used interchangeably. Lean's emphasis on continuous improvement will yield dramatic process improvements and create a competitive advantage. Organizations use the approaches and techniques that make the most sense for them. We will use the term “lean” to encompass all of the related approaches and techniques and focus on the three key fundamentals of lean, which are Elimination of Waste, Reducing Variability, and Improving Throughput.
Module B
Linear Programming
Many operations management decisions involve trying to make the most effective use of available resources. To help solve this problem, optimization models seek to maximize or minimize some objective function while satisfying a set of constraints. An important category of optimization models is linear programming. Linear Programming (LP) is a mathematical technique designed to help operations managers plan and make decisions necessary to allocate resources problems seek to maximize or minimize some quantity. In this chapter we will formulate linear programming models, including an objective function and constraints by recognizing decision variables, the objective function and constraints. We will use Excel Solver to solve linear optimization models on spreadsheets and then perform sensitivity analysis on the solution of a linear programming problem.
