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MANAGING PROJECTS

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Projects represent nonroutine business activities that often have long-term strategic ramifications for a firm. In this chapter, we examined how projects differ from routine business activities and discussed the major phases of projects. We noted how environmental changes have resulted in increased attention being paid to projects and project management over the past decade. In the second half of the chapter, we introduced some basic tools that businesses can use when planning for and controlling projects. Both Gantt charts and network diagrams give managers a visual picture of how a project is going. Network diagrams have the added advantage of showing the precedence between activities, as well as the critical path(s). We wrapped up the chapter by showing how these concepts are embedded in inexpensive yet powerful software packages such as Microsoft Project. If you want to learn more about project management, we encourage you to take a look at the Web site for the Proj...
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MANAGING PROJECTS

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Projects represent nonroutine business activities that often have long-term strategic ramifications for a firm. In this chapter, we examined how projects differ from routine business activities and discussed the major phases of projects. We noted how environmental changes have resulted in increased attention being paid to projects and project management over the past decade. In the second half of the chapter, we introduced some basic tools that businesses can use when planning for and controlling projects. Both Gantt charts and network diagrams give managers a visual picture of how a project is going. Network diagrams have the added advantage of showing the precedence between activities, as well as the critical path(s). We wrapped up the chapter by showing how these concepts are embedded in inexpensive yet powerful software packages such as Microsoft Project. If you want to learn more about project management, we encourage you to take a look at the Web site for the Proj...
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MANAGING PRODUCTION ACROSS THE SUPPLY CHAIN

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This chapter has provided a comprehensive overview of the various tools companies use to manage production, starting with master scheduling, then MRP and job sequencing, and ending with DRP. Planning and control systems aid manufacturers and service firms alike by helping them to determine the quantities and timing of their activities. Put another way, production management should be of interest not only to manufacturing firms but to virtually all firms involved in the flow of physical products. Today, advances in information technology are radically changing planning and control systems in two fundamental ways. First, faster computers and extensive communications networks are expanding the depth and breadth of planning and control activities. Firms can replan and share new information with their supply chain partners almost instantaneously. Second, planning and control software tools are becoming more sophisticated. Some firms even have advanced decision support tools th...
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FORECASTING

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Forecasting is a critical business process for nearly every organization. Whether the organization is forecasting demand, supply, prices, or some other variable, forecasting is often the first step an organization must take in planning future business activities. In this chapter, we described the different types of forecasts companies use and the four laws of forecasting. We also talked about when to use qualitative and quantitative forecasting techniques and explained several approaches to developing time series and causal forecasting models. Of course, forecasting is not just about the “numbers.” As the discussion and CPFR examples illustrate, organizations can collaborate with one another to improve the accuracy of their forecasting efforts or even reduce the need for forecasts.
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Sales and operations Planning (Aggregate Planning)

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S&OP fills the gap between long-term strategic planning and shortterm planning and control. Through S&OP, firms can not only plan and coordinate efforts in their own functional areas—operations, marketing, finance, human resources, and so on—but also effectively communicate to other members of the supply chain what they expect to accomplish over the intermediate time horizon. In this chapter, we described several approaches to S&OP and demonstrated the power of thetechnique. We discussed when and where top-down versus bottom-up planning can be used and showed three basic approaches to S&OP: level, chase, and mixed production. We also touched on some of the qualitative issues surrounding S&OP: How do we select a plan? How can we use S&OP to foster agreement and cooperation among the various parties? How can we organize for S&OP? We also argued for increased sharing of S&OP information across the supply chain. As information technologies be...
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LOGISTICS

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As critical as logistics is today it will continue to grow in importance. In fact, several trends will keep logistics at the forefront of many firms’ strategic efforts: ·          Growth in the level of both domestic and international logistics; ·          Outsourcing opportunities; and ·          Increased emphasis on sustainability at the company level. The last two points deserve special mention. As logistics becomes more globalized and information intensive, more firms are outsourcing the logistics function to specialists, most notably third-party logistics providers (3PLs). This trend is expected to continue. However, firms must carefully analyze the strategic benefits and risks of outsourcing. Firms must remember that outsourcing is part of a logistics strategy, not a substitute for one. Second, logistics covers a wide range of business activiti...
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SUPPLY MANAGEMENT

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In this chapter, we introduced you to some of the specific activities and challenges associated with supply management. We began by highlighting the importance of supply management, most notably the profit leverage effect. We then described in detail the strategic sourcing process (Figure 7.1) and demonstrated how spend analysis, total cost analysis, portfolio analysis, and weighted-point evaluation models can be used to support strategic sourcing efforts. We followed with a discussion of the procure-to-pay cycle, as well as some of the major challenges affecting supply management today. We end this chapter with a brief discussion on the future of the purchasing profession. Every year, purchasing professionals perform fewer procure-to-pay activities and spend more time on strategic sourcing activities such as spend analysis, supplier evaluation and selection, and make-or-buy decisions. These activities require individuals with a solid mix of quantitative and interpersonal ...
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MANAGING CAPACITY

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Capacity decisions are among the most important strategic decisions operations and supply chain managers make. As the opening case study on manufacturing flu vaccines suggests, such decisions can have far-reaching effects for a business, its customers, and even society. Even though capacity decisions are inherently risky, this chapter showed how managers can think about and analyze these decisions in a logical manner. Specifically, we talked about three common capacity strategies and also demonstrated various methods for evaluating the financial pros and cons of capacity alternatives. We devoted the last section of the chapter to analyzing process  capacity using the Theory of Constraints (TOC), waiting line theory, and Little’s Law. These advanced perspectives help us understand how capacity behaves across a supply chain, how higher resource levels drive down waiting times, and the relationship between inventory, throughput times, and throughput rates.
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MANAGING QUALITY

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As an area of intense business interest, quality is here to stay. Operations and supply chain personnel in particular need to be familiar with the major quality topic areas, including the different philosophical perspectives on quality and the tools used to manage quality levels on a day-to-day basis. In this chapter, we gave you a solid introduction to quality topics, ranging from high-level discussions of quality issues to detailed descriptions of tools and techniques. We started by defining quality and describing a total cost of quality model. We then presented an overview of total quality management (TQM), as well as a section on statistical quality control (SQC). We ended the chapter with a discussion of how organizations manage quality across the supply chain and some of the issues they face. We encourage you not to let your quality education end here. The American Society for Quality ( www.asq.org ), the Juran Institute ( www.juran.com ), the W. Edwards Deming Institute ( www....
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BUSINESS PROCESS

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Although the term business processes has been in the management lexicon for years, not all organizations clearly understand the importance of business processes and their effects on operations and supply chain performance. In this chapter, we defined the concept of business processes and showed how the business process perspective is different from the traditional, functionally oriented view of business. Business processes change the focus from “How is the business organized?” to “What does the business do?” Fortunately, practitioners and theorists continue to develop various tools and approaches for managing business processes. In this chapter, we described two process mapping approaches and demonstrated how they can be used. We also spent considerable time talking about various approaches to managing and improving business processes, including performance measurement and benchmarking, the Six Sigma methodology, and continuous improvement tools. We concluded the chapter with a discu...
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OPERATIONS AND SUPPLY CHAIN STRATEGIES

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The operations and supply chain areas are important providers of value in any organization. To ensure that managers make sound operations and supply chain decisions, firms must develop strategies for these functions that are tied to the overall business strategy. This chapter has presented a top-down model of the strategic planning process, with particular attention to the concepts of value, competitive advantage, and core competency. In the second half of the chapter, we defined the major operations and supply chain decision variables, outlined the four generic performance dimensions (quality, time, flexibility, and cost), and discussed the need to make trade-offs between these key dimensions. We showed how order winner and order qualifier information can help managers understand exactly what their customers demand, so they can make trade-offs in a logical fashion. We ended the chapter with a discussion of the four stages of alignment in operations and supply chain strategy, sho...
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INTRODUCTION to OPERATIONS and SUPPLY CHAIN MANAGEMENT

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Operations and supply chains are pervasive in business. Every organization must provide a product or service that someone values. This is the primary responsibility of the operations function. Furthermore, most organizations do not function independently but find that their activities are linked with those of other organizations through supply chains. Careful management of operations and supply chains is, therefore, vital to the long-term health of nearly every organization. Because operations and supply chain activities cover everything from planning and control activities to sourcing and logistics, there are numerous career opportunities for students interested in the area. Trends in e-commerce and global competition, as well as the growing importance of maintaining good relationships with other supply chain partners, will only increase these opportunities. Fortunately, there are many professional organizations, including APICS, CSCMP, and ISM, that cater to the career development ...
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The Global Economy

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Emerging markets refer to countries which are between developed and developing status and have low to medium GDP per capita. Limited growth opportunities in developed countries mean that more businesses are turning to investing in emerging economies as the source of future growth. Existing business models often cannot be replicated in emerging markets and as a result more creative and innovative ways of doing business may have to be thought of which meet the needs of populations which have very limited incomes. A common currency area (currency union or monetary union) is a geographical area through which one currency circulates and is accepted as the medium of exchange. The formation of a common currency area can bring significant benefits to the members of the currency union, particularly if there is already a high degree of international trade among them (i.e. a high level of trade integration). This is primarily because of the reductions in transaction costs ...
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Macroeconomics – Fiscal, Monetary and Supply-Side Policy

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The three main policies used to affect economic activity are monetary policy, fiscal policy and supply-side policy. Keynes developed The General Theory as a response to the mass unemployment which existed in the 1930s. He advocated governments intervene to boost demand through influencing aggregate demand. The Keynesian cross diagram shows how the economy can be in equilibrium when E = Y. This equilibrium may not be sufficient to deliver full employment output and so the government can attempt to boost demand to help achieve full employment. Supply-side policies aim to improve the efficiency of the economy and increase the capacity of the economy by shifting the aggregate supply curve to the right. Key elements of a supply-side policy include tax and welfare reforms, improving the flexibility of labour markets including trade union reform, education and training, and investing in improved infrastructure. In developing a theory of short-run economic fluctua...
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Macroeconomics – Inflation and Price Stability

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The overall level of prices in an economy adjusts to bring money supply and money demand into balance. When the central bank increases the supply of money, it causes the price level to rise. Persistent growth in the quantity of money supplied leads to continuing inflation. A government can pay for some of its spending simply by printing money. When countries rely heavily on this ‘inflation tax’, the result is hyperinflation. Many people think that inflation makes them poorer because it raises the cost of what they buy. This view is a fallacy, however, because inflation also raises nominal incomes. Economists have identified six costs of inflation: shoe leather costs associated with reduced money holdings; menu costs associated with more frequent adjustment of prices; increased variability of relative prices; unintended changes in tax liabilities due to non-indexation of the tax system; confusion and inconvenience resulting from a changing unit of account; and ar...
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Macroeconomics – Employment and Unemployment

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The unemployment rate is an imperfect measure of joblessness. Some people who call themselves unemployed may actually not want to work, and some people who would like to work have left the labour force after an unsuccessful search. In many advanced economies, most people who become unemployed find work within a short period of time. Nevertheless, most unemployment observed at any given time is attributable to the few people who are unemployed for long periods of time. One reason for unemployment is the time it takes for workers to search for jobs that best suit their tastes and skills. Unemployment insurance is a government policy that, while protecting workers’ incomes, increases the amount of frictional unemployment. A second reason why an economy may always have some unemployment is if there is a minimum wage that exceeds the wage that would balance supply and demand for the workers who are eligible for the minimum wage. By raising the wage of unskilled and ...
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