Introduction to Operations Management: Supply Chain Essentials
Supply Chain Awareness
- Awareness of the supply chain provides a key competitive advantage: quicker recognition and reaction to issues.
- Goods and services are connected: not a strict divide but a continuum; both require operations and supply chain management.
Goods vs. Services on a Continuum
- Services examples: restaurant meal, computer help desk, teaching (mostly service-oriented but not exclusively).
- Goods examples: tangible products like cars, computers, etc.; however, services accompany goods (marketing and sales include service elements).
- There is no clear boundary between goods and services; the continuum matters for operations planning.
Characteristics: Goods vs. Services
- Goods (e.g., canned Del Monte vegetables)
- Output is tangible
- Low customer contact
- Low labor content (high automation, uniform inputs)
- Easy to measure productivity
- High pre- and post-production inventory
- Wages tend to be uniform
- Process can be patentable
- Services (e.g., hospital)
- Output is intangible
- High customer contact and labor content
- Inputs are not uniform (variable patient needs)
- Productivity harder to measure
- Quality control is more challenging; issues harder to fix in real time
- Inventory is low
- Wages vary widely; patents exist but are not the norm
- Bread at Outback Steakhouse as a value-adding chain:
- Field wheat is harvested; value per pound is about 0.10
- Mill processes wheat; 1 ext{ lb wheat}
ightarrow 0.75 ext{ lb flour} valued at about 0.50 per lb flour - Wheat is stored as inventory awaiting production
- Manufacturer mixes flour into bread dough using whole wheat, flour, honey, molasses, sugar, yeast, and possibly instant coffee
- Bread is parbaked (likely not fully baked) and inventoried until ordered by Outback
- Final baking and service at table deliver the product
- At each stage, a transformational process adds value; a feedback loop assesses quality and informs prior stages (e.g., if flour is faulty, the mill is alerted and may be refunded)
Value Addition and Feedback
- After each stage, output is assessed for quality
- Feedback loop drives process improvement and quality control
Why Study Operations Management
- All aspects of business are affected by operations management
- Provides understanding of the world and global dependencies in supply chains
- Helps explain why companies succeed or fail and highlights the importance of cross-functional collaboration
- Communication is key across Finance, Marketing, Operations, and other functions
Careers and Learning Opportunities
- Various jobs in the field; more functions discussed throughout the course
- Educational paths: Muma College of Business offers undergraduate and graduate supply chain degrees
- Networking and professional organizations: e.g., company and student chapters in supply chain management
- Many CEOs start as COOs and understand the whole business
Course Structure and Next Steps
- Modules contain several short lectures for flexible listening
- Next lectures continue the introduction
- If interested, reach out for more information and opportunities
Closing Thought
- Everything you study in operations management ties back to how value is created, measured, and improved across both goods and services
