Lecture Principle of inventory and material management - Lecture 1: Course Introduction

Lecture 1 Course Introduction. In this chapter, the learning objectives are: How is this course organized? what is inventory and material management management? A historical perspective.

Material Management

LSM736

Course Introduction

• How is this course organized?

• What is Inventory and Material Management Management?

• A Historical Perspective

OM = Designing, operating, and improving 

the systems that deliver the firm’s primary products and services

Operations Management = Strategy 

Execution

Time

Flexibility Quality

Cost

1. What is our strategy?

2. How do we design our operations to support it?

Product / Service  Development

Supply Chain  Management Process Design and 

Management

C C

R

R W

.com

Phase 2

Phase 3

Phase 4

Phase 5

Planning Concept Development System-level Design Detail Design Testing and Refinement Production Ramp-Up

Adapted from U&E

2002

• Strategic decisions (long­term impact)

• Tactical decisions (mid­term impact)

• Operational decisions (short­term impact)

Strategic questions that operations managers ask and respond to …

Manufacturing Services

Prod. Development

Tactical questions that operations managers ask and respond to …

Manufacturing Services

Prod. Development

Operational questions that operations managers ask and respond to …

What is the goal of OM with respect to production/service systems?

Effectiveness is doing appropriate  things to create value for the 

organization

Usually, these things require a tradeoff

– 31% internal (equipment breakdown, manufacturing problems,  quality problems, inaccurate inventory records, poor 

You can get an interesting job!!

Supply Chain ManagerQuality Manager

Project ManagerOperations Consultant Plant Manager

Procurement ManagerThe OM Area at Tech is ranked in the top 10 in the US and employers take it seriously!

A Historical Perspective

• Application of Taylor’s methods

The DuPont Powder company

• More importance to the human element

Studies at the Western Electric Hawthorne plant to  understand ergonomics: the human element in 

manufacturing

• Investment in management education

Between 1914 and 1940 B­schools grew a lot

1920’s ­ 1930’s: Taylorism Spreads

Production Schedule

Forecasted Demand

MRP automated production…

But, someone has to tell the computers what to analyze!

American manufacturing led until the late 70’s, but then…

The methods introduced by Japanese manufacturing firms

outperformed the US …

TQC: Total Quality Control 

JIT: Just­In­Time 

Higher quality Less cost

Aggregate planning

Forecasting

& inventory management

Material requirements planning

Supply chain management

Effectiveness (meeting the demand)

Quality management &

Statistical process control

Efficiency (managing internal processes well)

Process management

• process analysis (no variability)

• waiting line mgt (variability)

Lean operations Product design

End of Lecture 1