Managing Operations Across the Supply Chain

579 Pages·2010·19.353 MB·English

by  Morgan Swink, Steven Melnyk, M. Bixby Cooper, Janet L. Hartley

Managing Operations

Across the Supply Chain
Morgan Swink Steven A. Melnyk M. Bixby Cooper
Michigan State University Michigan State University Michigan State University
Janet L. Hartley
Bowling Green State University
MANAGING OPERATIONS ACROSS THE SUPPLY CHAIN
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Library of Congress Cataloging-in-Publication Data
Managing operations across the supply chain / Morgan Swink . . . [et al.].—1st ed.
p. cm.— (The McGraw-Hill/Irwin series operations and decision sciences)
Includes index.
ISBN-13: 978-0-07-340331-1 (alk. paper)
ISBN-10: 0-07-340331-8 (alk. paper)
1. Business logistics. 2. Production management. 3. Industrial management.
I. Swink, Morgan, 1959-
HD38.5.M36175 2011
658.5—dc22
2009054152
www.mhhe.com
The McGraw-Hill/Irwin Series
Operations and Decision Sciences
Operations Management Hill, M anufacturing Strategy: Text & Cases, Simchi-Levi, Kaminsky, and Simchi-Levi,
Third Edition Designing and Managing the Supply Chain:
Beckman and Rosenfield, Operations,
Concepts, Strategies, Case Studies, Third
Strategy: Competing in the 21 st Century, Hopp, S upply Chain Science, First Edition
Edition
First Edition Hopp and Spearman, Factory Physics, Third
Sterman, Business Dynamics: Systems
Benton, Purchasing and Supply Chain Edition
Thinking and Modeling for Complex World,
Management, Second Edition Jacobs, Berry, Whybark, and Vollmann, First Edition
Bowersox, Closs, and Cooper, S upply Chain Manufacturing Planning & Control for
Stevenson, Operations Management, Tenth
Logistics Management, T hird Edition Supply Chain Management, Sixth Edition
Edition
Brown and Hyer, Managing Projects: A Jacobs and Chase, O perations and Supply
Swink, Melnyk, Cooper, and Hartley,
Team-Based Approach, First Edition Management: The Core, S econd Edition
Managing Operations Across the Supply
Burt, Petcavage, and Pinkerton, S upply Jacobs and Chase, O perations and Supply Chain, First Edition
Management, Eighth Edition Management, Thirteenth Edition
Thomke, Managing Product and Service
Cachon and Terwiesch, M atching Sup- J acobs and Whybark, Why ERP? First Edition Development: Text and Cases, First Edition
ply with Demand: An Introduction to Larson and Gray, Project Management: The Ulrich and Eppinger, Product Design and
Operations Management, S econd Edition Managerial Process, Fifth Edition Development, Fourth Edition
Finch, Interactive Models for Operations Leenders, Johnson, Flynn, and Fearon, Zipkin, F oundations of Inventory
and Supply Chain Management, First Purchasing and Supply Management, Management, First Edition
Edition Thirteenth Edition
Fitzsimmons and Fitzsimmons, Service Nahmias, P roduction and Operations Quantitative Methods and
Management: Operations, Strategy, Analysis, Sixth Edition Management Science
Information Technology, Seventh Edition
Olson, I ntroduction to Information Systems
Hillier and Hillier, Introduction to
Gehrlein, Operations Management Cases, Project Management, Second Edition
Management Science: A Modeling and
First Edition
Schroeder, Goldstein, Rungtusanatham, Case Studies Approach with Spreadsheets,
Harrison and Samson, Technology Operations Management: Contemporary Fourth Edition
Management, First Edition Concepts and Cases, F ifth Edition
Stevenson and Ozgur, Introduction to
Hayen, SAP R/3 Enterprise Software: An Seppanen, Kumar, and Chandra, P rocess Management Science with Spreadsheets,
Introduction, First Edition Analysis and Improvement, First Edition First Edition
iii
Dedication
To Jenni, Derek, Rachel, and Sarah, who make my life so full!
Morgan Swink
To my wife and children–Christine, Charles and Beth–for their support and patience.
To four great friends who have been “teachers” to me in my continual quest for more
knowledge–Randall Schaefer, Joe Sandor, Ed Davis (Darden School, University of Virginia)
and Robert Spekman (Darden School, University of Virginia).
To these people, this book is dedicated.
Steven Melnyk
To Ann, Michael, and Carolyn who make my life complete.
Bix Cooper
To Glenn and Caleb, for their love and support.
Janet Hartley
About the Authors
Morgan Swink Steven A. Melnyk M. Bixby Cooper Janet L. Hartley
is Professor and Eli Broad is Professor of Operations is Associate Professor in the is Owens-Illinois Professor
Legacy Fellow of Operations Management at Michigan Department of Supply Chain and Chair of the Department of
and Supply Chain Management State University. Dr. Melnyk Management at Michigan State Management at Bowling Green
at the Broad Graduate School of obtained his undergraduate University. He received his BS State University. She received
Management, Michigan State degree from the University in Business Administration a BS in Chemical Engineering
University. He holds a BS in of Windsor and his doctorate from the University of North from University of Missouri-
Mechanical Engineering from from the Ivey School of Busi- Carolina, MBA from the Uni- Rolla, and the MBA and PhD
Southern Methodist U niversity, ness, the University of West- versity of Virginia and PhD degrees in Business Admin-
an MBA from the University ern Ontario. He is the lead from the University of Ala- istration from University of
of Dallas, and a PhD in Opera- author of 13 books focusing bama. Prior to joining Michi- Cincinnati. Prior to graduate
tions Management from Indiana on operations and the supply gan State, he served on the school, she developed new
University. Before becoming chain. Dr. Melnyk has pub- faculty of Winthrop University products and designed new
a professor, Dr. Swink worked lished 65 refereed articles in and Louisiana State Univer- manufacturing processes for
for 10 years in a variety of numerous international and sity. He is an active researcher the Clorox Company. She has
manufacturing and product de- national journals. He also is a and co-author of several books published over 25 articles on
velopment positions at Texas member of the editorial advi- on distribution and logistics. supply management and sup-
Instruments Incorporated. He sory board for the P roduction Dr. Cooper has consulted ply chain management. She
has co-authored three books and Inventory Management with numerous organizations serves as an associate edi-
and published over 50 articles Journal, the Journal of Supply including Kellogg, Johnson tor for Journal of Operations
in a variety of academic and Chain Management, and the and Johnson, Mead Johnson, Management and J ournal of
managerial journals. Dr. Swink International Journal of Pro- Westinghouse, Novartis, Day- Supply Chain Management.
is currently the Co-Editor in duction Research. Dr. Melynk ton Hudson (Target), Kerr-
Chief for the Journal of Opera- has consulted with over 60 McGee, VF Industries, and
tions Management. companies. Siemens.
v
Preface
The last 20 years have seen many changes that have affected have revised or added a chapter to address supply
nearly every aspect of business—including operations man- chain issues, we developed our book from the ground
agement. As a result, operations management is a field in up to effectively integrate operations management
transition that demands new tools, concepts, and approaches and the supply chain. The primary focus of the book
to meet new challenges. Three key shifts in operations man- is operations management but we provide a “supply
agement that are reflected in this book include: chain” perspective. Operations management cuts
across a firm’s boundaries bringing together its
• From a focus on the internal system to a focus
internal activities with the operations of customers,
on the supply chain In today’s highly competitive
suppliers, and other partners around the world. We
business environment, organizations must leverage
clarify the functional roles of operations, supply
the capabilities of their suppliers and customers.
management, and logistics while examining the
Operations managers must look beyond the “four
integrative processes that make up the supply chain.
walls” of the firm and take an integrated supply chain
One unique aspect of the book is that we examine
perspective of operations.
both the upstream (supply-side) and downstream
• From a local focus to a global focus As Thomas
(demand-side) aspects of the supply chain, including
L. Friedman pointed out,1 the world is indeed flat.
a discussion of marketing and customer relationships.
Business solutions generated in Argentina are used
• Balanced Treatment The book balances the quanti-
to meet needs in the United States and parts built by
tative and qualitative coverage needed to equip oper-
suppliers located in China are used to assemble cars
ations and supply chain managers for the challenges
in Canada. Commercial needs have overcome, to a
and opportunities they face. It describes and applies
large part, national borders, presenting new opportu-
analytical tools that operations managers use to sup-
nities and challenges for operations managers.
port decision making. However, we also address the
• From an emphasis on tools and techniques to an
important managerial issues such as systems, people,
emphasis on systems, people, and processes To be
and processes that are critical in a supply chain
successful, operations managers must think more
context.
broadly than just the application of analytical tools
• Use of Integrative Frameworks The various
and techniques. They must take a systems view
elements of operations management are introduced
to address important managerial issues such as
and developed using an operations strategy
designing processes, working with people, managing
framework that brings together three critical
information flows, and building interorganizational
elements: (1) the critical customer, (2) the value
relationships.
proposition, and (3) capabilities. Furthermore, the
Managing Operations Across the Supply Chain incor- students are introduced to operations management in
porates these key shifts in operations management. The a structured way that begins with the “big” picture
book provides a global, supply chain perspective of opera- of operations strategy, proceeds to the foundations
tions management for students in introductory courses in of operations management, integrating relationships,
operations management and supply chain management planning for integrated supply chain operations, and
courses that do not require an operations management pre- then ending with a discussion of how to manage the
requisite. While the book is primarily written for under- system looking to the future.
graduates, we believe that it also can be used effectively in
• Use of Three Integrating Themes Three key themes
MBA courses. There are several features that help to dif-
are highlighted throughout the book: global issues,
ferentiate this book in its view of operations management:
relationships, and sustainability. Because most orga-
• Broader Treatment of Operations Management nizations have supply chains that reach beyond a
Although many operations management textbooks single country, we examine global issues associated
1 Thomas L. Friedman, The World is Flat: A Brief History of the Twenty-First Century (New York: Farrar, Straus, and Giroux, 2006).
vi
Preface vii
with operations and supply chain management. Orga- operations management as a field, and describes the
nizations must collaborate with customers and suppli- strategic role operations has in business from the
ers to accomplish many operations activities. Thus, perspective of supply chain management.
the book showcases how to build, maintain, and • Part 2 Foundations of Operations Management
benefit from cross-functional and interorganizational discusses foundational process concepts and princi-
relationships. To reduce costs and be competitive ples that govern all operational activities. This section
organizations today must adapt sustainable business examines concepts such as product/process innova-
practices. In fact, we expect sustainability to increas- tion, quality, lean, and inventory fundamentals.
ingly become a key metric for operations and supply
• Part 3 Integrating Relationships Across the Sup-
chain management performance.
ply Chain deals with the primary functional rela-
• Real, Integrated Examples The book brings
tionships between internal operations management
operations and supply chain management to life
activities and other operational functions both inside
through opening vignettes, Get Real highlights, and
and outside the firm. This section describes customer
rich examples throughout the book. Companies such
relationship management, supply management, and
as Disney/Pixar®, HP, Boeing, IKEA, American
logistics management.
Apparel, Starbucks, and Procter & Gamble, to name
• Part 4 Planning for Integrated Operations Across
a few, are used to illustrate how to address real
the Supply Chain discusses planning approaches
operations and supply chain challenges.
and technologies used at different levels of opera-
Managing Operations Across the Supply Chain offers tions decision making. Key topics such as demand
a new, global, supply chain perspective of operations planning, forecasting, sales and operations planning,
management—a treatment that embraces the foundations inventory management, and materials requirements
of operations management but includes new frameworks, planning are examined.
concepts, and tools to address the demands of today and
• Part 5 Managing Change in Supply Chain
changing needs of the future. The book is organized into
Operations discusses how operations managers
five major sections:
use projects, change programs, and technologies
• Part 1 Supply Chain: A Perspective for Opera- to shape the future of operations and supply chain
tions Management provides an overview of management.
Acknowledgments
W e would like to express our appreciation to the people Rahul Kale, University of North Florida
who have provided assistance in the development of this Vijay Kannan, Utah State University
textbook. We express our sincere thanks to the following
Matthew Keblis, U niversity of Wyoming
individuals for their thoughtful reviews and suggestions:
Jim Keyes, University of Wisconsin, Stout
Rasoul Afifi, Northeastern Illinois University Michelle Lane, B owling Green State University
Nazim Ahmed, Ball State University Anita Lee-Post, University of Kentucky, Lexington
John Aloysius, University of Arkansas Dennis McCahon, Northeastern University
Gopesh Anand, University of Illinois Laura M Meade, T exas Christian University
Ravi Behara, F lorida Atlantic University Gisele Olney, University of Nebraska, Omaha
Michael Bendixen, N ova Southeastern Joseph Ormsby, Stephen F. Austin State University
Ednilson Bernardes, G eorgia Southern Ron Parker, Metropolitan State University
Greg Bier, University of Missouri, Columbia Fariborz Y. Partovi, Drexel University
William Borders, Troy University, Ecampus Pat Penfield, Syracuse University
Sanjeev Bordoloi, University of Saint Thomas K. V. Ramaswamy, Texas Southern University
Kimball Bullington, Middle Tennessee State University Cesar Rego, University of Mississippi
Cenk Caliskan, Utah Valley University, Orem DeMatta Renato, U niversity of Iowa, Iowa City
Cem Canel, University of North Carolina, Wilmington Pedro Reyes, Baylor University
Thomas Choi, Arizona State University Germaine Saad, G eorgia Southern University
Petros Christofi, Duquesne University Shane Schvaneveldt, Weber State University
Chen-Hua Chung, University of Kentucky Ruth Seiple, University of Cincinnati
Lori Cook, DePaul University Sridhar Seshadri, University of Texas, Austin
Dinesh Dave , A ppalachian State University Avanti Sethi, University of Texas, Dallas
Eddie Davila, Arizona State University Lori Seward, University of Colorado
Scott Dellana, East Carolina University Kenneth A. Shaw, O regon State University
Barbara Downey, U niversity of Missouri John Sloan, Oregon State University
Kamvar Farahbod, C alifornia State University, Jeremy Stafford, University of Northern Alabama
Santa Barbara Drew Stapleton, University of Wisconsin, La Crosse
Richard Franza, K ennesaw State University Larry Taub, University of North Carolina, Greensboro
Thomas Gattiker, B oise State University Oya Turkel, Cleveland State University
David Gilliss, San Jose State University Gustavo Vulcano, New York University
Mike Godfrey, University of Wisconsin, Oshkosh James Walters, Ball State University
Mark Hanna, Loyola College (Maryland) Kevin Watson, Iowa State University
Vishwanath Hegde, C alifornia State University, East Bay Elliott Weiss, University of Virginia
Craig Hill, Georgia State University Theresa Wells, U niversity of Wisconsin, Eau Claire
Ziaul Huq, University of Nebraska, Omaha Larry White, Eastern Illinois University
Tony Inman, Louisiana Tech University Susan Williams, Northern Arizona University
Mark Ippolito, Indiana University Martha Wilson, California State University, Sacramento
Doug Isanhart, University of Central Arkansas Mustafa Yilmaz, N ortheastern University
Raj Jagannathan, U niversity of Iowa George Yorke, T exas Southern University
Vaidy Jayaraman, U niversity of Miami
viii
Acknowledgments ix
O ther contributors included accuracy checker Laura A special thanks to our outstanding editorial team.
M. Meade, Texas Christian University. We greatly appreciate the support, encouragement, and
W e want to thank the outstanding McGraw-Hill/ patience shown by Gail Korosa, our wonderful develop-
Irwin production and marketing team who made this book ment editor. Thanks for keeping us on track! Our execu-
p ossible—including Melissa Caughlin, marketing man- tive editor, Dick Hercher, provided excellent guidance and
ager; Steward Mattson, editorial director; Tim Vertovec, leadership throughout the process. We truly appreciate it!
publisher; Harvey Yep, project manager; Michael McCor-
Morgan Swink
mick, production supervisor; Gregory Bates, senior media
Steven A. Melynk
project manager; Matthew Baldwin, designer; and Jeremy
M. Bixby Cooper
Cheshareck, photo research coordinator.
Janet L. Hartley
Walkthrough
T he following section highlights the key features of the book developed to provide you
with the help you need to learn, understand, and apply operations concepts.
CHAPTER ELEMENTS
W ithin each chapter, you will find the following elements that are designed to facilitate
study and learning. All of these have been carefully developed.
Chapter Opener
E ach chapter begins with an outline of the chapter and a chapter vignette to help set the
tone for the material that follows. Learning objectives also provide a quick introduction to
the material students will learn and should understand before moving to the next chapter.
1
Introduction to Managing
Operations Across the Supply Chain
LEARNING
OBJECTIVES CHAPTER OUTLINE
After studying this chapter, A Broad Definition of Supply Chain Operations Management 4
you should be able to: Get Real: Why You Need to Study Operations Management 5
1 Explain what operations Important Decisions in Supply Chain Operations Management 6
management is and Differences in Goods and Services Operations 6
describe the role that
it plays in business and Processes and Process Thinking 7
society. Operations Management Yesterday and Today: Growth of the Supply
2 Describe the major Chain Management Perspective 9
decisions that operations Advances in Technology and Infrastructure 10
managers typically make. Reduction in Governmental Barriers to Trade 10
3 Epxropclaeisns tehse a rnodle “ opfr ocess Focus on Core Capabilities 11
thinking” in operations Collaborative Networks 11
management. Viewing Operations Management from a Supply Chain Management
4 Explain what the supply Perspective 11
chain is and what it Operations Management Partners Across the Supply Chain 12
means to view operations
management using Cross-Functional Relationships in Operations Management 13
a “supply chain The Changing Nature of Supply Chains 16
perspective.” Levels of Operational Planning Across the Supply Chain 16
5 Identify the partners Get Real: Jobs in Operations Management 17
and functional groups
that work together in How this Book Is Structured 18
operations management. Chapter Summary 20
6 Define the primary Key Terms 21
activities associated with Discussion Questions 21
managing operations
across the supply chain. Case: Business Textbook Supply Chain 22
Selected Readings and Internet Sites 23
2
x