Matching supply and demand is tough:
Supply (stocks) needs to be prepared in advance to satisfy the uncertain demand
The actual customer demand can be higher or lower than the prepared stocks
The chance is negligible for realized demand to exactly match the available supply
It happens in both manufacturing and service industries
To managers, excess demand means lost revenue. Excess supply means wasted resource. Mismatched Supply & Demand in manufacturing too many doses of flu produced, had to
be destroyed. In response, next year less produced more necessary than available. Mismatched Supply & Demand in service call-centre. Customers are likely to spend a
significant amount of time waiting before the call is taken by a representative. The same call
centre at another moment in the day, is like to have numerous representatives waiting
unproductively for consumers to call. Airplane boarding strategies for example first classes first and then back to front (or
window to aisle). Why care about boarding strategies?
To cut boarding time can create more flights a day when grounding time gets cut
4 to 5 minutes boarding time savings generate $1 million per year (United Airlines)
In the simplest possible terms, OSM is the study and practice of better matching supply and
demand. make things better, faster and cheaper reduces waste, environmentally-
friendly. OSM is the design, operation and improvement of the system that creates and delivers the
firm’s primary products and services. OSM has clear management responsibilities. Operations and supply strategy is concerned with setting broad policies and plans for using
the resources of a firm to best support its long-term competitive strategy. It is
comprehensive through its integration with corporate strategy. How do I allocate my resource?
Process analysis and project management
How do I process the customer orders?
How do I produce high-quality products? Quality management
How much inventory do I prepare?
How to distribute my products?
Logistics and supply chain management
Process view of organization
Process view of organizations
OSM is the management (design, operation and improvement) of the transformation
processes to create value for society. Examples:
Purchased parts and
Fabrication and assembly
Serve the customers
Elements in OM
Inputs 5 M’s
o Also: Personnel, information & energy
o Cutting, machining, storing, transporting, investing and analysing
Value-added the difference between the cost of inputs and the value or price of outputs. Strategic roles of OSM