Operations and

Supply Chain Management

Unit 1
Prof. Sujeet Subhash Tambe
B.E(Chemical), M.M.S(Operations), UGC-NET(Management), SET(Management), Ph.D (Pursuing)

Prof. Sujeet Tambe

Navsahyadri Group of Institutes,

Faculty of Management – MBA
Savitribai Phule Pune University
 Unit I
Introduction to Operations and
Supply Chain Management

Prof. Sujeet Tambe 2

 Introduction to Operations and
Supply Chain Management
• Definition, Concept, Significance and Functions of
Operations and SCM. Evolution from manufacturing
to operations management, Physical distribution to
Logistics to SCM, Physical Goods and Services
Perspectives. Quality: Definitions from various
Perspectives, Customers view and Manufacturer's
view, Concept of Internal Customer, Overview of TQM
and LEAN Management, Impact of Global
Competition, Technological Change, Ethical and
Environmental Issues on Operations and Supply Chain
functions. (7+2)
Prof. Sujeet Tambe
Operations and Supply Chain Management
Meaning of Operations Management:
• It is an area of business concerned with the production of
products and services.
• It involves the responsibility of ensuring that execution is
effective (Customer satisfaction) as well as efficient (Cost
effective)
• It is execution of process that converts input resources into
final output.
• Initially it was production process only later on services
processes evolved rapidly.
Input(Resources) Process Output(Goods and
Services)
Operations System
Prof. Sujeet Tambe
Operations Management: Systems Perspective

Forecasting

Processing Output
Input (Labor, - Process and Product Design (Goods
Material, Capital) - Purchasing and Inventory Control and
-Operations Planning and Control Services)

Feedback
Quality Management Maintenance Management Process Improvement
Prof. Sujeet Tambe
Definition of Operations Management
• The American Association for Operations Management:
“The field of study that focuses on the effectively
planning, scheduling, use and control of manufacturing
or service organization through the study of concepts
from design engineering, industrial engineering, MIS,
QM, production management, inventory management,
accounting and other functions as they affect the
organization.”
• Production and Operations Management(POM) is
defined as the design, operations and improvement of
the transformation process, which converts the various
inputs into the desired outputs of products and
services.
Prof. Sujeet Tambe
 E-Commerce
SCM and TQM
Deming and
Juran
MRP
OB
Computation
D
igital
Computer
OR in WW II
I
nspection
Sampling
Qualit
y
contro
l charts
Scheduling
Scientific
Management,
1900Motion 1950
1737/031/2016 Prof. Sujeet Tambe
2000
Scope of Operations Management
In earlier days of manufacturing, production
activity was handled by person alone hence
doing repetitive work the operators
mastering some of the skills also rate werof
production was less. To counter the quantum
e of
reduced production the division of labor came
into existence.

Prof. Sujeet Tambe 8

Scope of Operations Management

Activities Relating to Production System Design

• Production Engineering
• Tools, Jigs and Fixtures
• Design, Development and Installation of equipments.

Activities Relating to Analysis and Control of Activities

• Production Planning
• Production Control
• Quality Control

Prof. Sujeet Tambe 9

Objectives of Operations Management

• Right Quality
Ultimate • Right Quantity
Objectives • Right Time
• Pre-Established Cost

• Machinery and Equipment

Intermediat • Materials
• Manpower
e Objectives • Manufacturing Services

Prof. Sujeet Tambe 1

0
Significance of Operations
Management
Organization

Nation Consumer

Community Investors

Suppliers Employee

Prof. Sujeet Tambe 1

1
 Meaning and Definition of
SCM
 Supply Chain Management is management of a
network of interconnected businesses involved in the
ultimate provision of product and services packages
required by end customers. SCM deals with planning,
execution, control and monitoring of supply chain
activities with the objective of creating the value.

 According to Christopher “ SCM is the management of

upstream and downstream relationship with suppliers
and customers to deliver superior customer value at
less cost to the supply chain as a whole.

Prof. Sujeet Tambe

 Features of
SCM
• Mutually sharing information: Making suppliers as a
partners by sharing non-core information. E.g. Sharing
of production plans, design of components.
• Focus on serving customers: Synergy and goal
congruence of supply chain members. E.g. Domino’s
Pizza.
• Integration: From Supplier’s suppliers to ultimate
customers. Integration can be accomplished through
CFT, in plant supplier personnel, third party services
provider. E.g. Courier tracking services.
• Mutually sharing channel risks and rewards: Sharing
of profit margins also sharing risk E.g. Obsolescence.

Prof. Sujeet Tambe

 Scope of Supply Chain
All traditional Inter firm
Functional Scope

Organizational Scope
Business relationships are
Functions included relevant to the
in the process of participating firms
SCM to get a in the
specific output. implementation
Finance and the process of
+Marketing+ SCM
Operations+
Support Functions
Prof. Sujeet Tambe
 Objectives of
SCM
 Systems orientation: synergy due to
cooperation and coordination.
 Minimizing the time: Reduces the time required
to convert orders into cash.
 Service to the customer: Delivering Values.
 Minimizing WIP: Reduces total WIP.
 Improving Quality: Improving operations
 Reducing logistics cost: Efficient supply chain
reduces overall logistics cost and improving value.

Prof. Sujeet Tambe

 Supply Chain
Participants
 Raw Materials Suppliers
 Manufacturers
 Distributers
 Resellers
 Franchisers
 Sales Representative
 Logistics Providers
 Financiers
 Credit Support Providers
 End Users: Consumers
 Lessors: Leasing

Prof. Sujeet Tambe

 Development of SCM: Physical Distribution
to Logistics to SCM
Earlier
Logistics
Secondary
During 1970’s Function: - SCM Phase:
- operational Ranked After Global
and cost Marketing, competition,
Operational activities inefficiencies Sales, Emergence
split among Marketing, Uncoordinate Production of ICT,
Manufacturing, d functions now logistics Internal as
Finance. into a single Management well as
Physical Distribution: cost focused conceived as external
Warehousing+ MH+ integrated internal competitive
Freight transportation department strategic advantage
advantage

1900 1960Prof. Sujeet Tambe 1980 1990

 Significance of Supply
Chain
• Collaboration
• Lowered Costs
• Precise Purchasing
• Cycle Time
• Improved Alliances
• Increased Profits
• Increased Efficiency
• Minimum Delay
• Increased productivity

Prof. Sujeet Tambe

 Functions of Supply Chain Management
• Supply chain Network Design
• Strategic partnerships
• IT Infrastructure
Strategic • Make or Buy decisions

• Purchasing Decisions
• Inventory Decisions
• Transportation Strategy
Tactical • Production related decisions

• Daily Production and distribution planning

• Production scheduling
• Inbound and Outbound Operations
Operational • Constraints Management

Prof. Sujeet Tambe

Issues on Operations and Supply Chain Functions
1. Impact of Global Competition: Global view to gain
competitive advantage. How companies gone global:
Transportation & Communication (Internet), Reduced
Financial Regulations(FDI),Increased demand for
imported goods and services (Thyrocare labs)
2. Technological Change: Disruptive changes ( Mobile
phones in 2000 and 2014)
3. Ethical and Environmental: Some countries are more
concerned about these issues. Ethical treatment
includes bribery, conflicts of interests, discrimination
against minorities and women etc. E.g. Reliance Vs.
Tata Environmental issues includes quality of natural
resources, quality of life etc. E.g. Areva in Jaitapur,
Hybrid cars.
Prof. Sujeet Tambe
Challenges in Operations Management

Competitive Pressure due to economic Reforms

Falling Prices

Shrinking Delivery Quote

Build to Order Requirements

Growing Customer Expectation

Prof. Sujeet Tambe

 Quality
Revolution
• Fitness for use or purpose is a definition of quality that
evaluates how well product perform for its intended use.-
Joseph Juran (24 Dec. 1904-2008)
• Quality should be aimed at the needs of the customers
present and future.- Dr. Edwards Deming (1900-1993)
• Quality as an umbrella concept which integrates whole
spectrum of all improvement initiatives such as service
enhancement(Same day delivery), cost reduction (Tata
Nano), value analysis(Value stream mapping, E.g.
Smartphone applications)
• Quality is positioned as an input which accelerates
business improvements by shifting focus from Inspection
to quality control.

Prof. Sujeet Tambe

 Definition of Quality from various
perspectives
Customers View: Meeting the requirements of
the customers ultimate goal of any business.
 Quality =Maximum Satisfaction (Wants and Needs)
 External customers and Internal customers
concept (Traditional business functions)
 Customers are ultimate judge of quality.
Manufactures View: Supply based and concerned
with engineering and manufacturing practices.
• Weight of Sugar specification could be 500 grams with
tolerance of 10 gram (Applicable to Gold/Silver?)

Prof. Sujeet Tambe

Definition of Quality from various perspectives
Transcendent View: People learn to recognize
quality through the experience gained from
repeated exposure. Decision about the quality of
goods and services after used/consumed. E.g.
using transportation medium Volvo/MSRTC
Product View: Attributes of the product must have
something in terms of attributes that other
similar and competing products do not have. E.g.
RAM of the Computer
• A Quality product must be a market differentiator
and customers take pride in owning it.

Prof. Sujeet Tambe

 Total Quality Management
• Total (Everyone) + Quality (Requirements Fulfilled)+
Management (Commitment) Customer driven QM.
• Fosters continuous improvement in an organization.
• TQM philosophy stresses a systematic integrated,
consistent, organization wide perspective involving
everyone & everything.
• TQM is totally integrated efforts for gaining
competitive advantage by continuously improving
every facet of an organization.
• Total quality can be viewed as a strategy itself as it
focuses on cost as well as differentiation.
Prof. Sujeet Tambe
 Quality
Revolution
QA,
1950 TQM
Japan- TQC, SQ
Quality
movement

1970 Developed

q TQ

1980 Europe

1990: Developing countries.

Prof. Sujeet Tambe

 Quality
Costs
Conformance Non-Conformance

Prevention Internal Failure

Appraisal External Failure

3.5
14.1

6.9
Basic Work
7.8
Prevention
67.7
Appraisal

Internal Failure

External Failure

Total cost of production

Prof. Sujeet Tambe
 Features of
Satisfying TQM
Customers
People
Commitment

Systems/ Improvement
Processes Tools
Continuous 4C’s of
Competence
Improvement TQM

Communica
tion
Innovation

Prof. Sujeet Tambe 29

 Principles of Total
Quality
• Customer Focus
• Leadership
• Employee Involvement
• Process Approach
• Systems Approach
• Continual Improvement
• Fact based decision making
• Mutually beneficial supplier relationships

Prof. Sujeet Tambe

 Benefits of
TQM
• Creates good corporate culture: TQM philosophy focus on
developing a culture that advocates total commitment to
customer satisfaction through continuous improvement.
• Better Employee Relations: Highly involved and motivated
workforce. How to Measure it? (Employee satisfaction,
attendance, retention rate, OHSAS, No. of suggestions
made {Japanese- Transparency: suggestion box})
• Increased Profitability: Market share can be increased
through improved quality/ value which in turn increases
Profitability. Also measured by sales per sales person, sales
made by each shop, return on assets etc.
• Improves operational performance: Quality and the costs
by mapping reliability, quality costs, adherence to delivery
schedules, defects and defectives, Inventory turnover etc.
Prof. Sujeet Tambe
 Obstacles to
TQM
1
• Lack of Top Management Commitment

2
• Should be Taken seriously by everyone.

3
• Removal of functional silos

4
• Lack of structure for TQM activities.

5
• Difficulty in implementation (Clear Understanding)

6
• Awards E.g. ISO 9000 should be a start point for quality

Prof. Sujeet Tambe

Quality Tools

5S KANBAN

KAIZEN LEAN

FISHBONE QUALITY
DIAGRAM CIRCLE

Prof. Sujeet Tambe

 Lean
Philosophy
Value=Utility/Cost
Eg. Smart phone for youth
and basic phone for
adults.
Lean Management=
Identify the wastes
(Muda) and eliminate in
order to map value
added activities
involved in the process.
Prof. Sujeet Tambe
Efficiency Vs.
Effectiveness

Prof. Sujeet Tambe

THANK YOU

Prof. Sujeet Tambe