Managing operations and supply chains L.4

Operations Management (OM)

The development and administration of the activities involved in transforming resources into goods and services.

Manufacturing

Activities and processes used in making tangible products, also called production.

Inbound Logistics

All activities involved in receiving, transporting, and storing raw materials or goods that come into a company.

Operations

Activities used in making both tangible and intangible products.

Transformation Process

The process that converts inputs (resources such as labor, money, materials, and energy) into outputs (goods and services).

Inputs

Resources such as labor, money, materials, and energy.

Economic Order Quantity (EOQ)

A formula that calculates the optimal order size to minimize total inventory costs (ordering costs + holding costs).

Materials Requirements Planning (MRP)

A computer-based system that uses sales forecasts and production schedules to determine what materials are needed and when.

Outsourcing

When a company hires an external organization to perform tasks or services that were previously done in-house (e.g., logistics, customer service, manufacturing).

Outputs

The goods and services that result from the conversion of inputs.

Intangibility

A characteristic of services, meaning they are not physical products (e.g., going to a concert or sports event).

Perishability

A characteristic of services, meaning they cannot be stored for future use (e.g., seats at a speaker's presentation).

Customization

Making products to meet a customer's particular needs or wants (e.g., a haircut; legal services).

Customer Contact

The level of interaction between the service provider and the customer, which is typically high for services (e.g., restaurants; retailing).

Standardization

Making identical, interchangeable components or even complete products.

Modular Design

Building an item in a self-contained unit or module that can be combined or interchanged to create different products.

Capacity

The maximum load an organization unit can carry or operate.

Facility Layout

The physical arrangement of resources and work stations in a facility (e.g., Fixed-position, Process, Product Layout).

Supply Chain Management

Connecting and integrating all parties of the distribution system in order to satisfy customers.

Procurement

The buying of all materials needed by the organization; also called purchasing.

Inventory

All raw materials, components, completed or partially completed products and pieces of equipment a firm uses.

Inventory Control

The process of determining how many supplies and goods are needed and keeping track of quantities on hand, where each item is, and who is responsible for it.

Just-in-Time (JIT) Inventory Management

An inventory system where materials arrive exactly when needed, reducing inventory levels and storage costs.

Outsourcing

The contracting of manufacturing or other tasks to independent companies.

Routing

The sequencing of operations through which the product must pass.

Scheduling

The assignment of required tasks to departments or even specific machines, workers or teams.

Program Evaluation and Review Technique (PERT)

Identifies all the major activities required to complete a project, arranges them in a sequence, and estimates the time required for each event.

Critical Path

The path in a PERT diagram that requires the longest time from start to finish.

Quality

Reflects the degree to which a good or service meets the demands and requirements of customers.

Total Quality Management (TQM)

A philosophy that uniform commitment to quality in all areas of the organization will promote a culture that meets customers' perceptions of quality.

ISO 9000

A series of quality assurance standards designed to ensure the customer's quality standards are met.

Outbound logistics

All activities involved in storing, transporting, and distributing finished products that go out to customers or retailers.

Third-Party Logistics (3PL)

A company outsources its logistics tasks (such as warehousing, transportation, or distribution) to an external logistics provider.

Statistical Process Control

System in which management collects and analyzes information about the production process to pinpoint quality problems within the production system.

ISO 14000

Comprehensive set of environmental standards that encourages

a cleaner and safer world

ISO 19600

A comprehensive set of guidelines for compliance management that addresses risks, legal requirements and stakeholder needs