Operations and Supply Chain Management PDF

Operations and supply chain management **Summary: Prêt a Manger and Operations Management** **About Prêt a Manger** - A high-end sandwich and snack retailer emphasizing **wholesome ingredients**. - **Daily fresh preparation:** Each shop has its own kitchen, and staff prepare fresh sa...

Operations and supply chain management **Summary: Prêt a Manger and Operations Management** **About Prêt a Manger** - A high-end sandwich and snack retailer emphasizing **wholesome ingredients**. - **Daily fresh preparation:** Each shop has its own kitchen, and staff prepare fresh sandwiches every morning with ingredients delivered early each day. - Staff culture includes a focus on work-life balance and a casual, approachable atmosphere (\"We don't work nights, we wear jeans, we party...\"). **Core Functions at Prêt a Manger:** 1. **Product/Service Development**: - Design and development of nutritional, mechanical, and aesthetic aspects of food and snacks. 2. **Marketing**: - Promotional activities, market research, and customer engagement strategies. 3. **Operations**: - Store design, process management, and logistics to maintain fresh and high-quality service. **Operations Management** - Defined as the management of resources to produce and deliver products or services efficiently. - Inputs, processes, and outputs form the core structure: - **Inputs:** Ingredients, packaging, equipment, staff. - **Processes:** Transformation into fresh products, maintaining quality and speed. - **Outputs:** Satisfied and served customers. **Performance Objectives of Operations:** 1. **Quality**: Consistency in product excellence. 2. **Speed**: Fast service for customer satisfaction. 3. **Dependability**: Timely delivery of promises. 4. **Flexibility**: Adaptation to changes in demand or product variety. 5. **Cost**: Efficient use of resources to remain competitive. **Impact on Triple Bottom Line (TBL):** 1. **Planet:** Minimizing waste and energy consumption. 2. **People:** Positive social impact through safe practices and non-exploitative operations. 3. **Profit:** Enhancing revenue, lowering costs, and fostering future innovation. **Key Traits of Great Operations Managers:** - Focused on action and results. - Strong customer understanding. - Effective communication and motivation skills. - Lifelong learning and innovation-driven. - Analytical, resilient, and capable under pressure. By focusing on these principles, Prêt a Manger exemplifies excellent operations management, integrating efficiency, sustainability, and customer satisfaction into its business model. **Summary: What is Strategy?** **Key Aspects of Strategy:** - **Broad Objectives:** Guides the enterprise toward overall goals. - **General Path Planning:** Focuses on overarching paths to achieve objectives. - **Long-Term Focus:** Emphasizes enduring goals over short-term gains. - **Holistic Perspective:** Addresses the organization as a whole rather than individual activities. - **Detached Approach:** Remains above daily operational distractions. **Strategic Decisions:** - Impact the organization broadly. - Define the organization's position relative to its environment. - Aim to achieve long-term organizational goals. **Operations vs. Operational:** - **Operations:** Resources that create products/services. - **Operational:** Detailed, short-term, and day-to-day aspects, opposite of strategic considerations. **Operations Strategy vs. Operations Management:** - **Timeframe:** Management is short-term (1-12 months); Strategy is long-term (1-10 years). - **Scope:** Management focuses on micro-processes; Strategy focuses on the macro view of total operations. **Four-Stage Model of Operations Contribution:** 1. **Internally Neutral:** Corrects worst problems. 2. **Externally Neutral:** Adopts best practices. 3. **Internally Supportive:** Links strategy to operations. 4. **Externally Supportive:** Redefines industry expectations. **Four Perspectives on Operations Strategy:** 1. **Top-Down:** Driven by business goals. 2. **Bottom-Up:** Emerges from operational experience. 3. **Market Requirements:** Based on competitive needs. 4. **Operations Resources:** Leveraging internal capabilities. **Strategy Hierarchy:** 1. **Corporate Strategy:** Determines overall business scope and resource allocation. 2. **Business Strategy:** Defines mission, strategic objectives, and competitive approach. 3. **Functional Strategy:** Aligns resources and skills to contribute to strategic objectives. **Competitive Factors and Performance Objectives:** - **Key Competitive Factors:** Low price, high quality, fast delivery, innovation, flexibility. - **Matching Performance Objectives:** Cost, quality, speed, dependability, flexibility. **Order-Winning, Qualifying, and Less Important Factors:** - **Order-Winning:** Differentiators that win customers. - **Qualifying:** Must-have factors to compete. - **Less Important:** Minimal impact on customer choice. **Strategic Reconciliation:** - Align **operations capabilities (what you have)** with **market requirements (what you want)** to achieve **strategic needs (what you need to compete).** **Effective Operations Strategy:** - Must be appropriate, comprehensive, coherent, and consistent over time. **Key Questions Addressed** - What is product and service design/innovation? - Why is it important? - What are its stages? - How do product/service and process design interact? 1. **Concept Generation**: - Sources: Customers, competitors, staff, R&D. 2. **Concept Screening**: - Evaluated for feasibility, acceptability, and vulnerability. 3. **Preliminary Design**: - Initial structure and functionality defined. 4. **Evaluation and Improvement**: - Tools: Quality Function Deployment (QFD), value engineering. 5. **Prototyping and Final Design**: - Final adjustments and specifications. - **Interrelationship**: Product/service design and process design are interconnected and should evolve together. - **Importance of Early Design**: Early resolution of design issues prevents costly disruptions later. - **Sequential vs. Simultaneous Processes**: Simultaneous stages facilitate faster time-to-market and greater innovation. - Dyson vacuum cleaners show how innovative design overcame initial rejections. - Square watermelons highlight market, finance, and operational considerations in concept evaluation. - **Structures**: Innovation processes can follow sequential or simultaneous arrangements. - **Efficiency**: Sorting issues early ensures smoother progression toward the final design. - **Definition**: The activity of transforming ideas into tangible systems that deliver services or products. - **Purpose**: To meet customer requirements while considering available resources and environmental factors. - **Figure 4.1**: This diagram illustrates the scope of process design. It places process design as a critical interface between product/service design and operational resources, emphasizing the importance of aligning process design with customer requirements. - The process must optimize performance in five key areas: 1. **Quality**: Delivering products/services to meet customer expectations. 2. **Speed**: Ensuring rapid delivery and reduced lead times. 3. **Dependability**: Providing consistent outcomes. 4. **Flexibility**: Adapting to changes in customer needs or operational conditions. 5. **Cost**: Maintaining efficiency to reduce expenses. - **Project Processes**: Handle one-off, complex, large-scale products (e.g., bridge construction). Tasks are diverse and involve high work content. - **Jobbing Processes**: Produce small quantities of custom products with high variety and low repetition. Broad skills are required (e.g., bespoke furniture making). - **Batch Processes**: Focus on standard products with moderate variety and volume. Tasks involve setups at different stages of production (e.g., bakery production). - **Mass Processes**: Produce high volumes of standardized items with minimal variation (e.g., automobile manufacturing). - **Continuous Processes**: Extremely high volumes of uniform products, often with automated systems (e.g., oil refining). - **Professional Services**: Involve high customer interaction, high customization, and skilled personnel (e.g., legal consulting). - **Service Shops**: Mix of standardization and customization with medium customer interaction (e.g., car repair shops). - **Mass Services**: High volume, low customization processes (e.g., retail banking). - **Figure 4.3**: A graph plotting manufacturing process types along two axes: **volume** (low to high) and **variety** (high to low). It shows: - **Project Processes** in the high variety, low volume quadrant. - **Mass and Continuous Processes** in the low variety, high volume quadrant. - **Figure 4.4**: Similar to Figure 4.3 but focused on service processes, comparing Professional Services, Service Shops, and Mass Services using volume-variety characteristics. - **Fixed-Position Layout**: The product remains stationary, and resources move to it (e.g., aircraft assembly). - **Functional Layout**: Resources performing similar tasks are grouped together (e.g., libraries organized by subject areas). - **Cell Layout**: Resources are grouped to serve specific product families or customer needs (e.g., departmental sections in a retail store). - **Product Layout**: Resources are organized sequentially along a line for high-volume production (e.g., car assembly lines). - **Figure 4.6**: A depiction of \"assembly line\" surgery, where a product layout optimizes flow efficiency by trading off space utilization. The figure illustrates a high-efficiency setup. - **Library Layout Example**: A detailed diagram mapping the flow of customers in a functional library layout. It shows sections such as study desks, copying areas, reference books, and journal stacks, highlighting the complexities of navigating the space. - **Department Store Layout**: Demonstrates a cell layout within a larger functional layout, showing how a \"sports goods shop\" operates as a cell within the overall store. - **Fixed-Position Layout**: - **Advantages**: High flexibility; avoids moving the product. - **Disadvantages**: Expensive; challenging scheduling. - **Functional Layout**: - **Advantages**: Flexible and robust to disruptions. - **Disadvantages**: High work-in-progress; complex flow control. - **Cell Layout**: - **Advantages**: Balances cost and flexibility; motivates staff. - **Disadvantages**: Costly to rearrange; lower equipment utilization. - **Product Layout**: - **Advantages**: Low unit costs; efficient flow. - **Disadvantages**: Low flexibility; repetitive work. - **Figures on Layout Types**: - Examples include diagrams of factory setups and customer flows, highlighting differences in efficiency and complexity for each layout. - Processes and layouts are chosen based on specific volume and variety requirements. - **Figure 4.7**: A graph mapping process technologies to volume-variety combinations. It demonstrates the alignment between specific process types (e.g., batch or continuous) and their respective volume-variety characteristics. Here's a detailed and structured summary of the provided notes: **Objectives of Process Design** Process design ensures performance aligns with the organization's goals through the following key objectives: 1. **Quality**: Error-free processing and meeting product/service specifications. 2. **Speed**: Minimizing throughput time to align output rates with demand. 3. **Dependability**: Reliable and consistent output timing and volume. 4. **Flexibility**: Adapting processes to changing product, service, or volume needs. 5. **Cost**: Eliminating process waste (e.g., excess capacity, delays, and errors). **Impact of Performance Objectives on Design** - **Quality**: Ensures error-free processes, reducing rework and waste. - **Speed**: Provides faster throughput, reducing in-process inventory. - **Dependability**: Results in on-time deliveries and minimizes disruptions. - **Flexibility**: Allows rapid adaptation to changes in product range, volume, and unforeseen events. - **Cost**: Focuses on reducing processing, resource, delay, and inventory costs. **Process Flow Performance Metrics** 1. **Throughput Rate**: The number of units passing through the process per time unit. 2. **Cycle Time**: The time between consecutive items emerging from the process. 3. **Throughput Time**: The total time taken for inputs to move through the process and become outputs. 4. **Work-In-Progress (WIP)**: The average number of items within the process. 5. **Utilization**: The percentage of available time resources are actively performing useful work. **Process Mapping** - **Definition**: Visual representation of process flows using standardized symbols to illustrate activity sequences and interrelationships. - **Key Applications**: Identifies bottlenecks, inefficiencies, and opportunities for process improvement. **Figures:** - **Figure 5.2**: Symbols used in process mapping, such as activities, decisions, and delays. - **Figure 5.3**: \"Enquire-to-delivery\" process map highlighting different stages in a stage lighting operation. - **Figure 5.4**: Supply-and-install operations mapped at multiple detail levels. - **Figure 5.5**: \"Collect-and-check\" process map showing varying levels of process visibility. **Little's Law** - **Formula**: Throughput Time (TH)=Work-In-Progress (WIP)×Cycle Time (CT)\\text{Throughput Time (TH)} = \\text{Work-In-Progress (WIP)} \\times \\text{Cycle Time (CT)} - **Example**: For 10 items in process with a cycle time of 2 minutes, the throughput time = 10×2=20 minutes10 \\times 2 = 20 \\, \\text{minutes}. - **Applications**: Helps calculate efficiency, assess resource needs, and optimize throughput. **Formula for Throughput Efficiency**: Throughput Efficiency=Work ContentThroughput Time×100\\text{Throughput Efficiency} = \\frac{\\text{Work Content}}{\\text{Throughput Time}} \\times 100 **Long-Thin vs. Short-Fat Processes** - **Long-Thin Processes**: - Greater control over flow. - Simplified materials handling. - Lower capital requirements (no duplication). - **Short-Fat Processes**: - Greater flexibility in volume and mix. - Higher efficiency and space utilization. - More robust and engaging for workers. **Figure 5.8**: Illustrates the spectrum between \"long-thin\" and \"short-fat\" processes, showing trade-offs in efficiency, flexibility, and resource requirements. **Bottlenecks and Precedence** - **Bottleneck**: The most overloaded stage in a process, limiting overall capacity. - **Precedence Diagram (Figure 5.7)**: Tasks arranged to optimize flow and allocate workloads efficiently. This summary captures the core content, incorporating the details and visual elements mentioned in the notes. Let me know if you need further elaboration on any specific section or figure! **Summary of Notes** **Chapters Covered:** 1. **Direct Operations:** - *Operations Strategy:* Focuses on aligning operational activities with the business strategy. - *Operations Performance:* Measuring the effectiveness of operations through key metrics like cost, quality, speed, and flexibility. 2. **Design:** - *P&S Innovation:* Discusses product and service innovations and how they are integrated into the design process. - *Process Design:* Covers the planning of production and service processes, focusing on efficiency and effectiveness. 3. **Develop:** - *Quality Management:* Focuses on quality control and improvement practices within operations. **Course Information (Assessments):** - **CA1 (10%):** Case Study - **CA2 (30%):** Simulation - *Submission \#1:* Nov 29 - *Submission \#2:* Dec 6 - **Examination (60%):** January 2025 - **Section A & B:** Answer one of two questions (35 marks each) - **Section C:** 30 multiple choice questions (30 marks) **Erasmus+ Blended Intensive Program:** - Partners: Université Lumière Lyon 2 (France), Tecnocampus Mataró-Maresme (Spain), University of Piraeus (Greece), University of Salento (Italy). - Delivery: In Lyon, Feb 10--14, 2025, with case study work and cultural/site visits. - Online: December--February. **Chapter 7 -- Capacity Management:** - Capacity management involves ensuring that the right amount of resources is available to meet demand effectively. - Key questions from the chapter include: - What is capacity management? - How are demand and capacity measured? - How can demand fluctuations be managed? - How can queuing theory be applied in planning capacity? **Case Study:** - **SUBWAY Supply Chain Issues:** Focus on a capacity problem triggered by the demand increase from a national promotion. Long-term solutions involved vertical integration, while short-term solutions focused on inventory management. - **Challenges:** Increased demand for products like chicken, turkey, and pepperoni, with growing store numbers. - **Solutions:** Long-term: Vertical integration, buildings, and equipment; Short-term: Improved inventory management. **Key Concepts in Capacity Management:** - **Capacity Definition:** Physical scale and time-sensitive capabilities (e.g., 24,000 liters/day, 10,000 calls/day). - **Objectives of Capacity Planning:** - Provide appropriate capacity to meet demand. - Balance costs, revenue, working capital, and service levels. - Forecast demand and identify the right capacity plan. **Demand Fluctuation Management:** - **Causes of Seasonality:** Include climatic, behavioral, political, and social factors. - Effective capacity planning requires understanding demand uncertainty and the risks involved in meeting service levels. **Ways to Reconcile Capacity and Demand:** 1. **Level Capacity:** Maintain constant capacity. 2. **Chase Demand:** Adjust capacity based on fluctuating demand. 3. **Demand Management:** Change the nature or timing of demand. 4. **Absorb Demand:** Build excess capacity to handle fluctuations. 5. **Adjust Output:** Use overtime, temporary labor, or subcontracting to match demand. **Queuing Theory:** Can help plan for capacity by modeling arrival and processing times, considering factors like rejection and reneging by customers. **OEE (Operating Equipment Effectiveness):** - A measure of how effectively a machine or system is operating. - Formula: OEE = Availability × Performance × Quality. **Cumulative Planning:** - Consider demand on a cumulative basis to assess feasibility and build stock. **Summary of Key Points on Inventory Management:** 1. **Definition of Inventory:**\ Inventory is stock maintained to bridge the gap between supply and demand. 2. **Reasons for Holding Inventory and Disadvantages:** - **Reasons**: Buffer against erratic demand, allow bulk purchasing, secure production, and meet unexpected fluctuations. - **Disadvantages**: Storage costs, potential obsolescence, risk of overstocking. 3. **Inventory Management and Control:** - Strategies include replenishment policies, managing stock levels, and ensuring timely order fulfillment. - Inventory can be managed through **single-stage, two-stage**, or **multi-stage inventory systems** (e.g., retail, distribution, or manufacturing). 4. **Determining How Much Inventory to Hold:** - Classified as **Class A (high-value), Class B (medium-value),** and **Class C (low-value)**. - The amount of inventory depends on demand, cost considerations, and the type of items. 5. **Replenishment Timing:** - **Continuous Review**: Replenish when stock reaches the reorder level (ROL). - **Periodic Review**: Replenish at set intervals, e.g., weekly or monthly. - **Safety stock** can be added to account for uncertainties in lead time or demand. 6. **Inventory Functions:** - **Buffer Inventory**: Compensates for fluctuations in supply and demand. - **Cycle Inventory**: Based on production or procurement cycles. - **Decoupling Inventory**: Maintains flow between departments. - **Anticipation Inventory**: Accounts for predictable demand spikes. - **Pipeline Inventory**: Materials in transit between supply and demand points. 7. **Key Inventory Metrics:** - **Stock Cover**: The number of days of inventory available. - **Stock Turns**: How often inventory is replenished. - **Order Fulfillment Rate**: The percentage of orders fulfilled on time and in full. 8. **Inventory Management Costs:** - **Ordering Cost (Co)**: Includes ordering, invoicing, and administrative costs. - **Holding Cost (Ch)**: Includes storage, handling, obsolescence, and financial costs. 9. **Economic Order Quantity (EOQ):**\ The optimal order quantity that minimizes total inventory costs, balancing ordering and holding costs.\ Formula: EOQ=2DCoChEOQ = \\sqrt{\\frac{2DCo}{Ch}} where: - DD = Demand (units/year) - CoCo = Ordering cost per order - ChCh = Holding cost per unit/year 10. **Replenishment Policy:** - Defining replenishment involves answering: - **What**: Which products to replenish. - **When**: The time to reorder. - **How much**: The quantity to order. 11. **Two-bin and Three-bin Systems:** - **Two-bin system**: Two containers are used, one for active inventory and one for reorder. - **Three-bin system**: An additional bin acts as safety stock. 12. **Replenishment Approaches:** - **Continuous Review**: Monitor stock levels continuously and order when reaching reorder level. - **Periodic Review**: Review at fixed intervals and adjust order quantity to a desired maximum. **Example Problem:**\ Given average monthly demand (1000 units), supplier lead time (3 months), order quantity (5000 units), and safety stock (1000 units), determine: - Order quantity (Q) - Reorder level (ROL) using continuous review. - Maximum inventory quantity using periodic review. These are key operations questions in inventory management addressed in Chapter 8 by Slack et al.