management

Managing the Value Chain, Information Technology,

and E-Business

CHAPTER 14

chapter19

Copyright ©2010 by South-Western, a division of Cengage Learning. All rights reserved.

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Learning Outcomes

• Define operations management and describe its application within manufacturing and service organizations.

• Explain today’s partnership approach to supply chain management.

• Summarize considerations in designing facilities layout.

• Discuss new technologies used for manufacturing and service operations, and explain what is meant by lean manufacturing.

• Explain why small inventories are preferred by most organizations and describe just-in-time inventory management.

• Identify ways in which information technology has transformed the manager’s job.

• Describe different types of IT systems used in today’s organizations and how they support daily operations and decision making.

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Which Side of Your Brain Do You Use?

• Managers are inundated with data and information

• Computers and the Internet have expanded the options of information

• Managers choose from written reports, explicit data or visuals

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The Organization As a Value Chain

• At the center of the transformation process is the technical core

– The management of inputs to produce products and services (output)

– Drive value to customers

• Operations Management pertains to the day-to-day management of the technical core

– Managing the physical production of goods or services

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The Value Chain

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Manufacturing vs. Service Organizations

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Supply Chain Management

• Efficient and reliable system for distributing finished products

• Managing the sequence of suppliers and purchasers

• From obtaining raw materials to distributing finished goods

• Use of Internet technologies

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Integrated Supply Chain

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Facilities Layout

• Process Layout – similar functions are grouped together

• Product Layout – assembly line, tasks are arranged according to progress

• Cellular Layout – sequenced tasks are grouped into cells

• Fixed-Position Layout – product remains at one location and resources are brought to it

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Basic Production Layouts

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Technology Automation

• Radio-Frequency Identification (RFID) – electronic tagging to track items

• Flexible Manufacturing Systems – production lines that can be adapted to produce different products

• Lean Manufacturing – using highly trained employees, technology and innovative methods to cut waste and improve quality

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Inventory Management

• Inventory is expensive to carry

• Unproductive asset

• Dollars not tied up in inventory can be used in other areas

• High levels of inventory hide business problems

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Just-in-Time Inventory

• Designed to reduce the level of inventory and associated costs– Stockless systems, zero inventory systems, kanban

systems

• Suppliers deliver inventory at the exact moment needed

• Reduces raw materials inventory to zero• Matching finished-goods inventory to sales

demand• Reduced inventory frees capital for other uses

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Information Technology Has Transformed

Management• Collaboration

– Information technology connects people around the world

– Sharing and exchanging information and ideas

• Knowledge Management

– Systematically gathering and organizing knowledge

– Foster a culture of continuous learning and knowledge sharing

– Knowledge is different than data and information, knowledge has a human factor; drawn conclusions

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Management Information Systems

(MIS)• Computer-based system

• Provides information and support for effective decision making

– Decision Support Systems

– Executive Information Systems

– Groupware/Collaborative Work Systems

• Enterprise Resource Planning (ERP) integrates business processes across the firm

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Basic Elements of MIS

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Enterprise Resource Planning Systems

• Backbone of an organization’s operation

• Optimizes business processes

• Collects, processes, and provides information about the entire firm

• Managers can analyze decisions across the organization

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Example of ERP Applications

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New Generation of Information Technology

• Innovative technology on the Internet is being fueled by individuals– Blogs– Wikis– Social Networking– Peer-to-Peer File Sharing

• Companies are using these tools and starting their own

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The Internet and E-Business

• Organizations have been incorporating the Internet to expand their operations

– Improve business processes

– Reaching new customers

– Leveraging resources

• Managers must align e-Business strategies with corporate strategy

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