Managing operations across the supply chain

657 Pages·2020·61.717 MB·English

by  Morgan Swink, Steven A. Melnyk, Janet L. Hartley

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Managing Operations
Across the Supply Chain
Fourth Edition
Morgan Swink Steven A. Melnyk Janet L. Hartley
Texas Christian Michigan State University Bowling Green State
University University of Newcastle University
(Australia)
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MANAGING OPERATIONS ACROSS THE SUPPLY CHAIN
Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2020 by McGraw-Hill
Education. All rights reserved. Printed in the United States of America. No part of this publication may be
reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the
prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic
storage or transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside the
United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 LWI 21 20 19
ISBN 978-1-260-54763-4
MHID 1-260-54763-9
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All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.
The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does
not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not
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The McGraw-Hill Education Series
Operations and Decision Sciences
Supply Chain Management Business Forecasting Business Math
Benton Keating and Wilson Slater and Wittry
Purchasing and Supply Chain Management Forecasting and Predictive Analytics Practical Business Math Procedures
Third Edition Seventh Edition Thirteenth Edition
Bowersox, Closs, Cooper, and Bowersox Linear Statistics and Regression Slater and Wittry
Supply Chain Logistics Management Math for Business and Finance: An Algebraic
Fifth Edition Kutner, Nachtsheim, and Neter Approach
Applied Linear Regression Models Second Edition
Fourth Edition
Burt, Petcavage, and Pinkerton
Supply Management Business Statistics
Eighth Edition Business Systems Dynamics
Bowerman, et al.
Johnson Sterman Business Statistics and Analytics in Practice
Business Dynamics: Systems Thinking and Ninth Edition
Purchasing and Supply Management
Sixteenth Edition Modeling for a Complex World
Doane and Seward
Simchi-Levi, Kaminsky, and Simchi-Levi Operations Management Applied Statistics in Business and Economics
Sixth Edition
Fundamentals of Supply Chain Management
Cachon and Terwiesch
Third Edition
Operations Management
Doane and Seward
Second Edition
Stock and Manrodt Essential Statistics in Business and Economics
Third Edition
Supply Chain Management
Cachon and Terwiesch
Matching Supply with Demand: An
Jaggia and Kelly
Project Management Introduction to Operations Management
Business Statistics: Communicating with
Fourth Edition
Brown and Hyer Numbers
Managing Projects: A Team-Based Approach Third Edition
Jacobs and Chase
Operations and Supply Chain Management
Larson and Gray Jaggia and Kelly
Fifteenth Edition
Project Management: The Managerial Process Essentials of Business Statistics:
Seventh Edition Communicating with Numbers
Jacobs and Chase Second Edition
Operations and Supply Chain Management:
Service Operations Management
The Core
Lind, Marchal, and Wathen
Fifth Edition
Bordoloi, Fitzsimmons, and Fitzsimmons Basic Statistics for Business and Economics
Service Management Ninth Edition
Ninth Edition Schroeder and Goldstein
Operations Management in the Supply Chain:
Lind, Marchal, and Wathen
Decisions and Cases
Management Science Statistical Techniques in Business and
Seventh Edition
Economics
Hillier and Hillier Seventeenth Edition
Introduction to Management Science: A Stevenson
Modeling and Case Studies Approach with Operations Management
McGuckian
Spreadsheets Thirteenth Edition
Connect Master: Business Statistics
Sixth Edition
Swink, Melnyk, and Hartley
Business Research Methods Managing Operations Across the Supply
Chain
Schindler Fourth Edition
Business Research Methods
Thirteenth Edition
iii
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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 my colleagues in the United States (Dave Frayer, Randall Schaefer, Nick Little)
and in Australia (Jim Jose, Suzanne Ryan, Will Rifkin, Kevin Lyons).
To these people, this book is dedicated.
Steven A. Melnyk
To Glenn and Caleb, for their love and support.
Janet Hartley
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About the Authors
Courtesy of Morgan Swink Courtesy of Steven A. Melnyk Courtesy of Janet L. Hartley
Morgan Swink Steven A. Melnyk Janet L. Hartley
is Professor, Eunice and James L. West is Professor of Operations Management is Professor at the Department of Manage-
Chair of Supply Chain Management, at Michigan State University. Dr. Melnyk ment at Bowling Green State University.
and Executive Director of the Center obtained his undergraduate degree from She received her BS in Chemical Engi-
for Supply Chain Innovation at the Nee- the University of Windsor and his doctor- neering from the University of Missouri-
ley School of Business, Texas C hristian ate from the Ivey School of Business, the Rolla, and the MBA and PhD degrees in
University. He holds a BS in Mechanical University of Western Ontario. He has co- Business Administration from the Uni-
Engineering from Southern Methodist authored 21 books focusing on operations versity of Cincinnati. Prior to graduate
University, an MBA from the University and the supply chain and has published school, she developed new products and
of Dallas, and a PhD in Operations Man- over 90  refereed articles in numerous designed new manufacturing processes
agement from Indiana University. Before international and national journals. He is for the Clorox Company. She has pub-
becoming a professor, Dr. Swink worked Associate Editor for the Journal of Busi- lished over 30 articles on s upply man-
for 10 years in a variety of manufactur- ness Logistics. He also is a member of sev- agement and supply chain management.
ing and product development positions at eral editorial advisory boards, including She serves as an Associate Editor for
Texas Instruments Incorporated. He has the International Journal of Production the Journal of Operations Management,
co-authored three books and published Research and the International Journal Journal of Business Logistics, Journal of
over 75 articles in a variety of academic of Operations and Production Manage- Supply Chain Management, International
and managerial journals. Dr.  Swink is ment. Dr. Melnyk has consulted with over Journal of Operations and Production
formerly the C o-Editor in Chief for the 60 companies. He has also served as a Management, and Journal of Purchas-
Journal of Operations M anagement and member of the APICS Board of Direc- ing and Supply Management. Dr. Hartley
past president of the Decision Sciences tors (2014–2016) and the APICS leader- is president-elect of the Decision Science
Institute. ship team (2015). In 2017, Dr. Melnyk Institute.
accepted a joint appointment as the Global
Innovation Chair in Supply Chain Man-
agement at the University of Newcastle,
New South Wales, Australia.
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Preface
We continue to live in dynamic and exciting times. Recent consumers and the rapid developments taking place
years have seen many changes that have affected nearly in digital technologies. Consequently, in this edition,
every aspect of business, including operations management. we introduce a new theme: digital. While the basics
In this fourth edition of our book, we continue to reflect remain the same, the context in which operations are
key shifts in operations management, including transitions: managed continues to change rapidly.
• From a focus on the internal system to a focus on Managing Operations Across the Supply Chain pro-
the supply chain. In today’s highly competitive busi- vides a global, supply chain perspective of operations man-
ness environment, organizations must leverage the agement for students in introductory courses in operations
capabilities of their suppliers and customers. Opera- management and in supply chain management courses that
tions managers must look beyond the “four walls” of do not require an operations management prerequisite.
the firm and take an integrated supply chain perspec- While the book is primarily written for undergraduates,
tive of operations. it also can be used effectively in MBA courses. There are
• From a local focus to a global focus. As Thomas several features that help to differentiate this book in its
L. Friedman pointed out,1 the world is indeed flat. view of operations management:
Business solutions generated in Argentina are used
• Broader Vision of Operations Management While
to meet needs in the United States, and parts built by
many operations management textbooks have revised
suppliers located in China are used to assemble cars
or added a chapter to address supply chain issues, we
in Canada. Commercial needs have overcome, to a
developed our book from the ground up to effectively
large part, national borders, presenting new opportu-
integrate operations management and the supply
nities and challenges for operations managers.
chain. The primary focus of the book is operations
• From an emphasis on tools and techniques to management, but we provide a “supply chain” per-
an emphasis on systems, people, and processes. spective. Operations management cuts across a firm’s
To be successful, operations managers must think boundaries, bringing together its internal activities
more broadly than just the application of analyti- with the operations of customers, suppliers, and other
cal tools and techniques. They must take a systems partners around the world. We clarify the functional
view to address important managerial issues such as roles of operations, supply management, and logistics
designing processes, working with people, managing while examining the integrative processes that make
information flows, and building interorganizational up the supply chain. One unique aspect of the book
relationships. is that we examine both the upstream (supply-side)
• From myopic pursuit of profit to a holistic pursuit and downstream (demand-side) aspects of the supply
of sustainability. Pressures on businesses have risen chain, including a discussion of marketing and cus-
to the point that they can no longer ignore or give tomer relationships.
only lipservice to social and environmental issues. • Balanced Treatment The book balances the quanti-
Operations managers have to balance the profit tative and qualitative coverage needed to equip opera-
motive with the need to protect and even strengthen tions and supply chain managers for the challenges
both people and the planet. and opportunities they face. It describes and applies
• From a static to a dynamic treatment of oper- analytical tools that operations managers use to
ations and supply chain management. We have support decision making. However, we also address
revised each new edition to keep pace with changes the important managerial issues such as systems,
taking place in the field. In recent years, very evident people, and processes that are critical in a supply
changes include the emergence of millennials as key chain context.
1Thomas L. Friedman, The World Is Flat: A Brief History of the Twenty-First Century (New York: Farrar, Straus, and Giroux, 2006).
vi
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Preface vii
• Integrative Frameworks The book introduces and entire chapter to sustainability, while also incor-
develops various topics in supply chain operations porating it throughout the book.
management using five integrative frameworks:
• Real, Integrated Examples The book brings opera-
1. An operations strategy framework that brings tions and supply chain management to life through
together three critical elements: (1) the key cus- opening vignettes, Get Real highlights, and rich
tomer, (2) the value proposition, and (3) capabili- examples throughout the book.
ties, introducing students to a broad supply chain Managing Operations Across the Supply Chain, fourth
perspective of operations management.
edition, offers a new, global, supply chain perspective of
2. A foundations framework that covers process operations management, a treatment that embraces the
fundamentals, innovation, quality, inventory, and foundations of operations management but includes new
lean thinking. frameworks, concepts, and tools to address the demands of
3. A relational framework that highlights func- today and changing needs of the future. The book is orga-
tional, supplier, and customer management nized into five major sections:
aspects of operations management.
• Part 1 Supply Chain: A Perspective for Operations
4. A planning framework that covers demand and
Management provides an overview of operations
supply planning at multiple levels.
management as a field, and describes the strategic
5. A change management framework that illustrates role operations has in business from the perspective
how projects and future developments can be used of supply chain management.
to drive innovation in operations management.
• Part 2 Foundations of Operations Management
• Use of Integrating Themes Four key themes are discusses foundational process concepts and princi-
highlighted throughout the book: digital transforma- ples that govern all operational activities. This section
tion, global issues, relationships, and sustainability. examines concepts such as product/process innova-
tion, quality, lean, and inventory fundamentals.
• Digital technologies such as the Internet
• Part 3 Integrating Relationships Across the Supply
and other communication networks,
Chain deals with the primary functional relationships
automation, and artificial intelligence are
between internal operations management activities,
rapidly and radically changing supply
and other operational functions both inside and outside
chain operations management. The book
the firm. This section describes customer relation-
highlights numerous examples of these changes,
ship management, supply management, and logistics
explaining how technologies are enabling faster,
management.
better, cheaper, and richer customer experiences.
• Part 4 Planning for Integrated Operations Across
• Because most organizations have
the Supply Chain discusses planning approaches
supply chains that reach beyond a
and technologies used at different levels of opera-
home country, we examine the
tions decision making. Key topics such as demand
dynamic global environment influ-
planning, forecasting, sales and operations planning,
encing supply chain operations man-
inventory management, and materials requirements
agement, taking care to represent business norms
planning are examined.
and cultures in many different parts of the world.
• Part 5 Managing Change in Supply Chain
• Operations managers must collabo-
Operations discusses how operations managers
rate with other functional person-
use projects, change programs, and technologies to
nel, with suppliers, and with
shape a sustainable future for operations and supply
customers to accomplish most
chain management.
operations activities. The book showcases how to
build, maintain, and benefit from cross- functional
and interorganizational relationships.
CHAPTER-BY-CHAPTER
• To reduce costs and be competi-
REVISIONS FOR THE
tive, organizations today must
adopt sustainable business prac- FOURTH EDITION
tices. Sustainability is increasingly
becoming a key metric for opera- In this major revision of Managing Operations Across
tions managers, and an important expectation of the Supply Chain, our key objective has been to integrate
customers. Accordingly, we have dedicated an and highlight the role of digital technologies throughout
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viii Preface
all aspects of supply chain operations management. We Chapter 6 Supplement: Quality Improvement Tools
also strove to make all of the content more concise and • Additional discussion questions and problems.
crisp. We have updated or replaced many of the opening
Chapter 7: Managing Inventories
vignettes and Get Real stories throughout the book, along
• Added discussion of customization and customer
with other changes, which are summarized below.
service aspects of inventory location decisions.
Chapter 1: Introduction to Managing Operations Across
• Additional problems applying square root law.
the Supply Chain
• Added discussion of Internet of Things (IoT) and
• Introduced digital theme with examples illustrating
inventory visibility in the supply chain.
how technologies are changing operational processes.
• Added fuller discussion of choice between using
• Replaced example (now a restaurant supply chain) of
P and Q inventory models.
functional relationships across the supply chain.
• New Case: Dexter’s Chicken.
• Added new Cemex Digital Transformation case.
Chapter 8: Lean Systems
Chapter 2: Operations and Supply Chain Strategy
• Additional discussion questions and problems.
• New opening vignette on Redbubble.
• Added a case on Lil’ Me, a manufacturer of custom- Chapter 9: Customer Service Management
ized dolls that look like their owner. • New opening vignette on the “Amazon Effect.”
• Additional discussion questions and problems.  • New discussion of digital enhancement of customer
service including omnichannel service, product
Chapter 3 and 3S: Managing Processes and Capacity platforms, and crowdsourcing service.
• Included a better focus on the notion of process
• New discussion of social (millennials) and global
thinking.
impacts on customers’ service expectations.
• Additional discussion questions and problems.
• New Get Real on service delivery failures.
• Expanded alternative process mapping approaches
• New section on service information.
with the expanded coverage of techniques such as
service blueprinting. Chapter 10: Sourcing and Supply Management
• Updated the opening vignette on sourcing and supply
Chapter 4: Product/Process Innovation
management at Chipotle to reflect challenges with
• Introduced new concepts including product service
food safety.
platforms, servitization, and augmented/virtual
• New Get Real on Resilinc and supply chain risk
reality (VR).
management.
• Added new example for modular design.
• Updated the Get Real box on Takata airbags.
• New Get Real describing Lockheed’s application of VR.
• New Get Real showing how Boeing is doing more
Chapter 5: Manufacturing and Service Process Structures insourcing.
• Revised Table 5-1 to show inputs, transformation, • Added a section on Supply Category Management.
outputs, and examples. • Revised the Examining the Sourcing Process.
• New Get Real explaining how Adidas uses digital • New Get Real showing the importance of supplier
technologies to customize shoes. innovation in self-driving vehicles.
• Moved service blueprinting to Chapter 3S. • Updated the discussion of information shar-
• Added figure to illustrate market orientation. ing to reflect new digital technologies such as
• Updated the section Capability Enabling Technolo- blockchain.
gies to reflect advances in digital technologies. • Additional discussion questions.
• New Get Real on Amazon Go explaining how digital • Added new sourcing case.
technologies are changing retailing.
Chapter 11: Logistics Management
• Updated and added a discussion question.
• Updated opening vignette about Amazon’s innova-
Chapter 6: Managing Quality tions in delivery.
• Updated the Hyundai story to include awards and • Moved cost management discussion to Logistics
changes within the last 3 years. Network Design.
• Updated Get Real on food safety. • Changed Warehouse Management to Distribution and
• Dropped discussion of Malcolm Baldrige award. Fulfillment Management.
• Additional problems. • New Get Real on Walmart’s delivery policy.
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Preface ix
• Added discussion of electronic logging devices Chapter 15 and 15S: Project Management
(ELDS). • Updated opening Pixar vignette.
• Added discussion of last mile delivery. • More in-depth discussion of stages in project
• New Get Real explaininghow logistics network life cycle.
design caused a chicken shortage for KFC. • New discussion of agile project management. 
• Updated and added discussion questions. • New Get Real on Spray-N-Wash project.
• Deeper discussion of project management software.
Chapter 12: Demand Planning: Forecasting and Demand
• New example of a business case for a proposed
Management
project.
• New opening vignette on how Walmart uses weather,
social media, and other data to forecast sales.
Chapter 16: Sustainable Operations Management—
• Get Real on how Lennox uses artificial intelligence
Preparing for the Future
to improve demand planning.
• Updated Unilever vignette with achievements of zero
• Enhanced discussion of artificial intelligence. landfill waste.
• New discussions of social media and dynamic pricing • New Get Real on Patagonia’s sustainability efforts.
in demand management.
• Discussion of Starbucks Reserve, a new experiential
coffee store in Seattle aimed at making the experi-
Chapter 13: Sales and Operations Planning
ence of brewing and enjoying a unique cup of coffee
• Additional discussion questions and problems.
critical and attractive.
Chapter 14: Materials and Resource Requirements • Discussion of how the Internet of Things (IoT) is
Planning affecting not only the supply chain but also the busi-
• Updated opening vignette on Blue Apron, a home ness model.
meal delivery service.  • New case: “Sourcing Outside the Cage.”
• Updated the Advances in Planning Systems to reflect • Expanded discussion of the changes in customer
digital technologies. (specifically the advent of millennials) is changing
• New Get Real showing how MOD Pizza is using a how firms compete and how operations and supply
cloud-based ERP system for planning.  chain management is carried out.
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