Managing Operations: Across the Supply Chain, Fourth Edition
By Morgan Swink, Steven A. Melnyk and Janet L. Hartley
Contents:
Part 1 SUPPLY CHAIN: A PERSPECTIVE FOR OPERATIONS MANAGEMENT 1
CHAPTER 1 Introduction to Managing Operations Across the Supply Chain 2
A Broad Definition of Supply Chain Operations Management 4
Get Real: Why You Need to Study Operations Management 5
Important Decisions in Supply Chain Operations Management 6
Differences in Goods and Services Operations 6
Processes and Process Thinking 8
Operations Management Yesterday and Today:
Growth of the Supply Chain Management Perspective 9
Advances in Technology and Infrastructure 11
Reduction in Governmental Barriers to Trade 11
Focus on Core Capabilities 11
Viewing Operations Management from a Supply Chain Management Perspective 12
Operations Management Partners Across the Supply Chain 12
Cross-Functional Relationships in Operations Management 14
Get Real: Jobs in Operations Management 16
The Changing Nature of Supply Chains 18
Levels of Operational Planning Across the Supply Chain 18
How This Book Is Structured 19
Chapter Summary 20
Key Terms 21
Discussion Questions 21
Case: Business Textbook Supply Chain 22
Case: Cemex’s Digital Transformation 23
Selected Readings & Internet Sites 25
CHAPTER 2 Operations and Supply Chain Strategy 26
Levels of Strategic Planning 28
Corporate Strategic Planning 28
Business Unit Strategic Planning 29
Functional Strategic Planning 30
Developing Operations Strategy: Creating Value Through Strategic Choices 31
Key Customers 31
Get Real: Huffy Bikes Targets Its Key Customers 32
Assessing Customer Wants and Needs 32
Value Propositions and Competitive Priorities 33
Get Real: Bosch CS20: Finding a New Order Winner
by Changing the Way Customers Cut Straight Lines 33
Product-Related Competitive Priorities 34
Process-Related Competitive Priorities 35
Get Real: IKEA: Growth through Supply Chain Innovation 36
Capabilities: Strengths and Limitations of Supply Chain Operations 38
Get Real: Seven Cycles: Building a Bicycle Your Way 39
Get Real: Don’t Expect a Salad at Five Guys Burgers and Fries 40
Maintaining the Fit between Customer Outcomes, Value Propositions, and Capabilities 40
Deploying Operations Strategy: Creating Value Through Execution 40
Feedback/Measurement: Communicating and Assessing Operations Strategy 42
The Strategic Profit Model 42
Chapter Summary 46
Key Terms 46
Discussion Questions 47
Solved Problem 48
Problems 49
Case: Otis Toy Trains Explores the Supply Chain 51
Case: Steinway & Sons Piano 52
Case: Trail Frames Chassis 53
Case: Lil’ Me Dolls Deals with the Millions of Toys (MOT) Proposal 54
Selected Readings & Internet Sites 56
Additional Photo Credits 56
Part 2 FOUNDATIONS OF OPERATIONS MANAGEMENT 57
CHAPTER 3 Managing Processes and Capacity 58
Cleaning Up Dry Cleaners 59
Processes and Process Thinking 61
Anatomy of a Process 62
Activities of a Process 62
Inputs, Outputs, and Flows 62
Get Real: States Reduce Waiting Times for Car
License Renewals and Registrations 63
Structure 63
Management Policies 64
Capacity Planning 64
Get Real: Capacity Planning Contributes to iPad’s® Success 64
Economies and Diseconomies of Scale 65
Process Capacity and Utilization 66
Principles of Process Performance: The Theory of Constraints 69
Principle 1: Every Process Has a Constraint 69
Estimating Capacity Requirements 72
Principle 2: Every Process Contains Variance That Consumes Capacity 73
Get Real: Storyboarding: The Key to Success at Pixar 75
Principle 3: Every Process Must Be Managed as a System 76
Principle 4: Performance Measures Are Crucial to the Process’s Success 76
Principle 5: Every Process Must Continuously Improve 77
Chapter Summary 78
Key Terms 78
Discussion Questions 79
Solved Problems 79
Problems 84
Case: Evergreen Products 88
Case: Midas Gold Juice Company 89
Case: American Vinyl Products 90
Selected Readings 91
CHAPTER 3 Chapter Supplement: Process Mapping and Analysis 92
The “Process” of Process Mapping and Analysis 93
American Health and Medical Products (AHMP) 93
Step 1: Identify the Desired Outcomes in Advance 94
Step 2: Identify and Bound the Critical Process 95
Step 3: Document the Existing Process (the “Current State” Map) 96
Step 4: Analyze the Process and Identify Opportunities for Improvement 99
Step 5: Recommend Appropriate Changes to the Process (the “Future State” Map) 103
Step 6: Implement the Changes and Monitor Improvements 104
Other Process Mapping Tools 105
Supplement Summary 108
Key Terms 109
Problems 109
Case: Midwestern Lighting 111
Selected Readings 113
CHAPTER 4 Product/Process Innovation 114
The Role of Product/Process Innovation in Supply Chain Operations Management 116
The Product Life Cycle 117
How Product/Process Innovation Affects Firm Performance 118
Innovation Competencies 119
Idea and Opportunity Development 120
Get Real: LEGO: Crowdsourcing for Product Ideas and Customer Engagement 120
Innovation Portfolio Planning 121
Innovation Project Management 122
New Product/Process Launch and Learning 122
Codevelopment 122
Get Real: Codeveloping with a Competitor: Clorox
Aligns Its Business Model with P&G 123
Product/Process Design and Development 124
The Stage-Gate Process 124
Integrated Product/Process Design and Development: Concurrent Engineering 125
Design for the Customer 128
Design for Supply Chain Operations 132
Enabling Technologies for Product/Process Innovation 134
Get Real: Lockheed Martin Makes the Most of VR in
Product Development 135
Chapter Summary 136
Key Terms 136
Discussion Questions 137
Problems 137
Case: The ALPHA Timer Development Project (A) 139
Case: The ALPHA Timer Development Project (B) 140
Case: The ALPHA Timer Development Project (C) 140
Selected Readings & Internet Sites 141
CHAPTER 5 Manufacturing and Service Process Structures 142
Process Structures 144
Product-Process Matrix 144
Processes within a Supply Chain 147
Get Real: Adidas Reinvents Athletic Shoe Manufacturing 148
Aligning Process Structure and Market Orientation 148
Unique Aspects of Service Processes 149
Service Process Matrix 149
Managing Front-Office and Back-Office Processes 150
Operations Layout 151
Fixed-Position Layout 151
Functional Layout 152
Product Layout 153
Line Balancing in Product Layouts 153
Cellular Layout 156
Capability Enabling Technologies 157
Get Real: Shopping Goes Hi-Tech 158
Information Processing and Sharing 158
Process Automation 159
Challenges to Digital Transformation 160
Chapter Summary 160
Key Terms 161
Discussion Questions 161
Solved Problems 162
Problems 163
Case: Coffee Roasters 167
Case: Sonnie’s Gourmet Sandwich Café 168
Selected Readings & Internet Sites 168
CHAPTER 6 Managing Quality 170
Defining the Dimensions of Quality 172
Get Real: Ritz-Carlton: Where Quality Is First and Foremost 173
Functional Roles in Quality Management 174
Core Values and Concepts of Quality Management 174
Get Real: Food Safety in Global Supply Chains—A Real Challenge 177
TQM: A “Total” View of Quality 177
Recognizing the Total Impacts of Quality Performance 178
Get Real: Cost of Quality Analysis Applies to Both Services and Manufacturing 179
An Inverted View of Management 180
Process-Oriented Focus on Prevention and Problem Solving 181
Viewing Quality Management as a Never-Ending Quest 182
Building an Organizational Culture around Quality 182
Quality Goes Digital 182
Get Real: Social Media Are Making Big Impacts on Quality 183
Guiding Methodologies for Quality Management 184
Plan-Do-Check-Act Cycles (Deming Wheel) 184
Six Sigma: A Systematic Approach to Quality Management 184
DMAIC: The Six Sigma Process 186
Design for Six Sigma 187
Get Real: Applying DMAIC to Cough Drops 188
Implementing Six Sigma 188
Certifying Progress in Quality Management 189
ISO 9000: An International Quality Standard 189
Attaining ISO 9000 Certification 189
Industry Interpretations of ISO 9000 191
Chapter Summary 191
Key Terms 192
Discussion Questions 192
Problems 193
Case: Aqua-Fun 194
Case: A Comment on Management Attitude 197
Selected Readings & Internet Sites 199
CHAPTER 6 Chapter Supplement: Quality Improvement Tools 200
Overview 201
Standard Problem Solving Approach 201
Quality Improvement Tools 201
Pear Computers: Using Quality Tools to Improve Performance 201
Histograms 202
Cause-and-Effect Diagrams 204
Check Sheets 205
Pareto Analysis 206
Scatter Diagram 207
Process Flow Diagram 208
Process Capability Analysis: Cp and Cpk 208
Process Control Charts 212
Taguchi Methods/Design of Experiments 219
Moments of Truth Analysis 220
Other Quality Control Tools 220
Supplement Summary 221
Key Terms 221
Solved Problems 221
Problems 226
Case: The Tragedy of RMS Titanic 236
Case: The Bully Boy Bagging Line 238
Selected Readings & Internet Sites 239
CHAPTER 7 Managing Inventories 240
Types and Roles of Inventory 242
Types of Inventory 242
The Roles of Inventory 242
The Financial Impact of Inventory 243
Balance Sheet Considerations 243
Costs Related to Inventory 243
Measures of Inventory Performance 245
Asset Productivity: Inventory Turnover and Days of Supply 246
Service Level 248
Inventory Management Systems 248
The Continuous Review Model 249
The Case of No Variability 249
How Much to Order: Economic Order Quantity 250
When to Order: The Reorder Point 252
EOQ Extensions 253
Enter Variability and Uncertainty 256
Determining the Standard Deviation of Demand During Lead Time 256
Determining a Service Level Policy 257
Revisiting ROP and Average Inventory 259
The Periodic Review Model 260
Single Period Inventory Model 261
Impact of Location on Inventory Requirements 262
Location and Inventory/Service Trade-offs 264
Managing Inventory 264
Managing Cycle Stocks 264
Managing Safety Stocks 265
Managing Locations 267
Inventory Information Systems and Accuracy 268
Get Real: Robots and Drones: Automating Inventory Control 268
Implementing Inventory Models 269
Managing Inventory Across the Supply Chain 269
Inventory Value in the Supply Chain 269
The Bullwhip Effect 269
Integrated Supply Chain Inventory Management 270
Get Real: Supplier-Managed Inventory at Stryker Instruments 271
Chapter Summary 272
Key Terms 273
Discussion Questions 274
Solved Problems 274
Problems 278
Case: Inventory at Champion Electric 284
Case: Tasty Treats 285
Case: Dexter’s Chicken 286
Selected Readings & Internet Sites 287
CHAPTER 8 Lean Systems 288
Lean Systems Defined 290
Origins of Lean Systems and Just-in-Time Production 291
Strategic Benefit of Lean Systems 292
Lean Systems Objectives, Culture, and Guiding Principles 293
Get Real: “Picturing” Waste and Value: A Process Mapping Story 296
Implementing Lean Systems: Tools and Techniques 297
Total Productive Maintenance (TPM) 298
Group Technology—Cellular Manufacturing 298
Focused Factories 298
TAKT Time Flow Balancing 298
Get Real: Applying the Focused Factory Idea to an Insurance Firm 298
Kanban (Pull) Scheduling 299
Get Real: Using Kanbans to Schedule a Steel Mill 299
Level, Mixed-Model Scheduling 300
Setup Reduction 300
Statistical Process Control 301
Visual Control 301
Quality at the Source 301
Get Real: Visual Control in Action: An Andon Board 302
Kaizen Events 302
Get Real: Delta Faucet Uses a Kaizen Event to Improve Quality and Reduce Scrap 303
Process Analysis/Value Stream Mapping 304
Poka-Yoke 304
Get Real: Eliminating Forgetting Cards at ATMs 305
5-S Program 305
Simplification/Standardization 306
Lean Systems: Range of Application 306
Applying Lean Systems within the Firm 306
Applying Lean Systems to Services 307
Applying Lean Systems Across the Supply Chain 307
Applying Lean Systems to Product Innovation 309
Chapter Summary 310
Key Terms 310
Discussion Questions 311
Case: Good Guy Hospital Supply 312
Case: Purchasing at Midwestern State University 312
Case: Western Telephone Manufacturing 313
Selected Readings 315
Part 3 INTEGRATING RELATIONSHIPS ACROSS THE SUPPLY CHAIN 317
CHAPTER 9 Customer Service Management 318
Basic Service 321
Product Availability 321
Order-to-Delivery Lead Time 322
Service Reliability 323
Service Information 323
Get Real: JJ’s Dishwasher Delivery Travails 323
The Perfect Order 324
Technology Enablement of Basic Service 325
Limitations of Basic Service 326
Customer Satisfaction 326
Customer Expectations 327
Customer Satisfaction Model 327
Limitations of Customer Satisfaction 329
Get Real: Overpromising Leads to Dissatisfied Customers 329
Customer Success 330
Achieving Customer Success 330
Get Real: Procter & Gamble’s Service Program 330
Customer Relationship Management 331
Get Real: Tesco’s Virtual Store 331
Get Real: Amazon’s Automated CRM Technology 332
Customer Service Strategy 332
Chapter Summary 334
Key Terms 334
Discussion Questions 335
Solved Problem 335
Problems 336
Case: Tiler Industries 337
Case: Johnson Snacks 338
Selected Readings & Internet Sites 339
CHAPTER 10 Sourcing and Supply Management 340
Supply Management’s Impact on Firm and Supply Chain Performance 342
Supply Management Goals 342
Get Real: Resilinc Uses Machine Learning to Increase Supply Chain Resilience 344
Get Real: Airbag Supplier Responsible for Largest Recall in U.S. History 345
Get Real: Sourcing Increases Sustainability for Caribou Coffee 347
Making an Insourcing/Outsourcing Decision 347
Get Real: Boeing Reverses Course on Outsourcing 348
Supply Category Management 350
Identify Purchase Categories 350
Develop Strategies Using Portfolio Analysis 350
Get Real: K’Nex® Reshoring Toy Production 352
Get Real: Self-Driving Cars Are Reshaping Buyer-Supplier Relationships 354
Examining the Sourcing Process 354
Identify Need and Develop Specifications 354
Identify Potential Suppliers 355
Assess and Select Suppliers 355
Manage Ongoing Supplier Relationships 357
Chapter Summary 359
Key Terms 360
Discussion Questions 360
Solved Problems 361
Problems 362
Case: Category Management at Best Banks 365
Case: Trail Frames Chassis: Insourcing/Outsourcing Decision 366
Case: Dining Services Sourcing at Midwest University 367
Selected Readings & Internet Sites 368
CHAPTER 11 Logistics Management 370
The Role of Logistics in Supply Chain Management 372
Order Processing 372
Inventory Management 373
Get Real: Walmart Turns to Suppliers to Reduce Inventory 374
Transportation Management 374
Government’s Role in Transportation 374
Transportation Economics 375
Consolidation 375
Transportation Modes 376
Get Real: Mobile Apps Are Transforming the Trucking Industry 378
Last Mile Delivery 380
Get Real: Tuesday Morning Shifts Modes 380
Transportation Service Selection 381
Distribution/Fulfillment Management 382
Primary Functions of Distribution Centers (DCs) 382
DC/FC Operations 384
Get Real: GameStop Depends upon Reverse Logistics 385
Materials Handling and Packaging 385
Logistics Network Design 386
Number of Facilities 387
Facility Location 388
Get Real: Logistics Change Leaves KFC without Chicken 389
Center-of-Gravity Method 390
Third-Party Logistics Service Providers 391
Chapter Summary 392
Key Terms 392
Discussion Questions 393
Solved Problems 394
Problems 395
Case: Spartan Plastics 398
Case: Lear Corporation 400
Selected Readings & Internet Sites 400
Part 4 PLANNING FOR INTEGRATED OPERATIONS ACROSS THE SUPPLY CHAIN 403
CHAPTER 12 Demand Planning: Forecasting and Demand Management 404
Demand Planning: An Overview 406
The Role That Demand Planning Plays in Operations Management 406
Planning Activities 406
Demand Forecasting 407
Components of Demand 407
Designing a Forecasting Process 409
Judgment-Based Forecasting 410
Get Real: Two Examples of Grassroots Forecasting 411
Statistical Model–Based Forecasting 412
Estimating Trends 417
Adjusting Forecasts for Seasonality 420
Causal Models 423
Simulation Models 425
Artificial Intelligence 425
Get Real: Lennox Uses Artificial Intelligence to Improve Demand Planning 426
Assessing the Performance of the Forecasting Process 426
Tracking Forecast Error Acceptability 429
Situational Drivers of Forecast Accuracy 430
Demand Management 431
Improving the Constraints on Demand Planning 433
Improving Information Breadth, Accuracy, and Timeliness 433
Get Real: Destination Maternity Corporation 434
Reducing Lead Time 435
Redesigning the Product 435
Get Real: Calyx and Corolla Delivers Freshness by Redesigning the Supply Chain 435
Get Real: HP Improves the Constraints on Forecasting through Postponement 436
Collaborating and Sharing Information 436
Chapter Summary 438
Key Terms 438
Discussion Questions 439
Solved Problems 440
Problems 444
Case: Rachel’s Breakfast Café 449
Case: C&F Apparel, Inc. 450
Selected Readings & Internet Sites 451
CHAPTER 13 Sales and Operations Planning 452
Sales and Operations Planning 454
S&OP Benefits 456
Get Real: One-Number Forecasting at Heinz 456
The S&OP Process 457
Get Real: Whirlpool and Lowe’s Integrate Their Planning 458
S&OP: Recent Trends and Developments 458
Aggregate Production Planning 458
Relevant Aggregate Planning Costs 459
Aggregate Production Strategies 460
Get Real: Nintendo Ramps Up Production of the Switch 462
Creating an Aggregate Production Plan 462
Level Production Plan 463
Chase Plan 464
Hybrid Plan 466
Comparing Aggregate Production Plans 467
Aggregate Planning for Service Industries 468
Yield Management 468
Get Real: Yield Management in the Hotel Industry 469
An Example of a Service Aggregate Plan 469
Chapter Summary 471
Key Terms 472
Discussion Questions 472
Solved Problem 473
Problems 474
Case: Med-Chem Products: Hospital Division 479
Case: Fitch and Hughes, P.C. 480
Selected Readings & Internet Sites 481
CHAPTER 14 Materials and Resource Requirements Planning 482
Materials Requirements Planning (MRP) 484
Get Real: MRP in Services: Using MRP for Surgical Kits 485
MRP Inputs 486
Master Production Schedule (MPS) 486
Bill of Materials (BOM) 488
Inventory Records 489
MRP Process 490
MRP Outputs and Use 496
Distribution Requirements Planning (DRP) 496
DRP Planning Process 497
Capacity Requirements Planning (CRP) 497
Advances in Planning Systems 498
Enterprise Resource Planning (ERP) 499
Get Real: ERP Supports Growth at MOD Pizza 499
Advanced Planning and Scheduling (APS) 500
Extending Planning across the Supply Chain 500
Chapter Summary 500
Key Terms 501
Discussion Questions 501
Solved Problems 502
Problems 506
Case: QP Industries—The Challenges of Integration 513
Case: The Casual Furniture Company 514
Selected Readings & Internet Sites 515
Part 5 MANAGING CHANGE IN SUPPLY CHAIN OPERATIONS 517
CHAPTER 15 Project Management 518
Projects and Project Management 520
How Projects Succeed 521
Stages in the Life of a Project 522
Project Definition 523
Organizing the Project: Pure, Functional, and Matrix Projects 523
Selecting a Project Manager 524
Organizing Project Teams 526
Get Real: The Case of Mistaken Spray-N-Wash 527
Establishing a Project Charter 528
Project Planning 528
Budgeting for Time and Cost 529
Detailed Scheduling Using the Critical Path Method 530
Get Real: Project Management Software Helps Get the Job Done 534
Analyzing Resources and Trade-Offs 534
Making Time-Cost-Scope Trade-Offs 535
Planning for Uncertainty 535
Project Execution 538
When to Kill a Project 539
Project Completion 540
Managing a Portfolio of Projects 540
Chapter Summary 542
Key Terms 543
Discussion Questions 543
Solved Problem 544
Problems 546
Case: Derek’s European Tour 551
Case: Monolith Productions 552
Selected Readings & Internet Sites 553
CHAPTER 15 Chapter Supplement: Advanced Methods for Project Scheduling 554
Project Crashing: Making Time-Cost Trade-Offs 555
Scheduling a Project with Probabilistic Task Duration Estimates 558
Supplement Summary 562
Key Terms 562
Discussion Questions 562
Solved Problem 562
Problems 565
Selected Readings & Internet Sites 567
CHAPTER 16 Sustainable Operations Management—Preparing for the Future 568
The Triple Bottom Line 570
The First P—Planet 571
Get Real: Disney Sustainability 572
Implications for Operations Management: A Broader View of Waste 573
Get Real: Tesco Drops Its Carbon Label Pledge 575
Get Real: Paper or Plastic? 576
ISO 14000—The Standard for Environmental Management Systems 577
Challenges of Being Environmentally Sustainable 577
The Second P—People 578
Get Real: Starbucks and “Fair Trade” 579
Organizational Culture 580
Get Real: Zappos Culture Sows Spirit 580
National Culture 581
Get Real: Dabbawallahs—Managing the Lunchtime Food Supply Chain in Bombay, India 582
The Third P—Profit and Long-Term Competitive Advantage 582
Changes in Key Customers 583
Changes in Value Propositions 584
Changes in Operational Capabilities 584
Get Real: Starbucks Reserve 584
Balancing the 3 Ps 585
Get Real: Patagonia Outdoor Sportswear 586
Measuring and Reporting Sustainability through the Triple Bottom Line 586
Chapter Summary 589
Key Terms 589
Discussion Questions 590
Case: EuroConstellation Electronics 591
Case: The Problem with Plastics 592
Case: The Hypercar 593
Case: Sourcing Outside the Cage 594
Selected Readings & Internet Sites 597
Appendix A 598
Appendix B 599
Key Themes 612
Indexes
Name Index 618
Subject Index 620