Module 1 - Introduction to Operations Management

Overview of Module 1

This module provides a foundational understanding of Operations

Management (OM), its relevance in modern businesses, historical
development, and the critical functions that drive operational success. It sets
the stage for understanding how businesses efficiently transform inputs into
outputs that meet customer demands.

Week 1: Understanding the Foundations of Operations Management

1. Definition of Operations Management (OM)

 What is OM?
Operations Management is the administration of business practices
aimed at achieving the highest level of efficiency possible within an
organization. It focuses on managing processes that convert inputs
(materials, labor, and capital) into outputs (goods and services)
efficiently and effectively.

 Key Objectives of OM:

o Achieve operational efficiency.

o Enhance customer satisfaction.

o Balance cost, quality, and delivery speed.

 Key Question in OM:

o How can we deliver the right product/service to the right

customer at the right time, at the right cost, and with the desired
quality?

2. Importance of OM in Modern Business

Operations Management is the backbone of every organization. Its

significance is underscored by several factors:

2.1. Enhancing Organizational Performance

  OM ensures optimal use of resources (time, money, materials, and
workforce).

 Effective OM minimizes waste and reduces costs, improving

profitability.

2.2. Driving Competitive Advantage

 Companies with superior operations gain a competitive edge through

faster delivery, better quality, and lower costs.

 Examples:

o Toyota: Lean manufacturing for cost reduction.

o Amazon: Unmatched supply chain efficiency for faster delivery.

2.3. Facilitating Innovation and Adaptability

 OM helps companies innovate by designing efficient processes for new

products/services.

 It enables businesses to adapt quickly to market changes (e.g., e-

commerce boom).

2.4. Sustainability in Business

 Operations play a critical role in achieving sustainability goals through

practices like waste minimization and energy conservation.

 Example: Unilever’s commitment to reducing its environmental

footprint.

3. Historical Development of OM

Understanding the evolution of Operations Management provides insights

into modern practices and methodologies:

3.1. Industrial Revolution (18th - 19th centuries):

 Introduction of mechanization in production processes.

 Notable innovation: The assembly line by Henry Ford (1913)

revolutionized manufacturing, enabling mass production at lower costs.

3.2. Scientific Management (Early 20th century):

  Developed by Frederick W. Taylor, focusing on efficiency and
productivity through time and motion studies.

 Key idea: Standardized work methods to optimize labor efficiency.

3.3. Post-WWII Period:

 Emergence of quality-focused techniques such as Total Quality

Management (TQM) and Statistical Process Control (SPC).

 Japan became a leader in quality with approaches like Kaizen

(continuous improvement) and the Toyota Production System.

3.4. Modern Era (Late 20th century - Present):

 Rise of automation, robotics, and digital transformation in operations.

 Adoption of methodologies such as Six Sigma, Lean, and Agile.

 Integration of AI, machine learning, and IoT for predictive analytics and
real-time decision-making.

4. Key Functions of Operations Management

Operations Management encompasses several key functions critical to a

company’s success.

4.1. Product/Service Design

 Purpose: Create offerings that satisfy customer needs while aligning

with the company's strategic goals.

 Factors Considered:

o Functionality

o Cost-effectiveness

o Aesthetics and usability

4.2. Process Design

 Purpose: Develop efficient workflows for producing goods or

delivering services.

 Types of Processes:
 o Job Shop: Custom, small-scale production (e.g., handmade
furniture).

o Batch Production: Producing in groups (e.g., bakery items).

o Continuous Flow: High-volume, standardized production (e.g., oil

refining).

 Example: Toyota’s Just-in-Time (JIT) system to reduce waste and

inventory costs.

4.3. Quality Management

 Purpose: Ensure outputs meet customer expectations and industry

standards.

 Tools and Techniques:

o Total Quality Management (TQM).

o Six Sigma: A data-driven approach to reducing defects.

o ISO Certifications for global quality standards.

4.4. Supply Chain Management

 Purpose: Oversee the movement of goods, information, and finances

from suppliers to customers.

 Key Elements:

o Procurement, production, inventory management, logistics, and

distribution.

 Focus on building resilient and efficient supply chains.

4.5. Forecasting

 Purpose: Predict demand to ensure adequate resource allocation.

 Techniques:

o Time series analysis.

o Causal models.

 Example: Retailers forecasting demand during holiday seasons to stock

appropriately.

4.6. Inventory Management

  Purpose: Maintain optimal inventory levels to avoid overstocking or
stockouts.

 Approaches:

o Economic Order Quantity (EOQ).

o ABC Analysis for prioritizing inventory items.

Interactive Components for In-depth Learning

Activity 1: Case Study Discussion

 Case: Analyze Amazon’s supply chain strategies.

 Objective: Identify how Amazon uses OM principles to achieve

efficiency, cost savings, and customer satisfaction.

Activity 2: Group Exercise – Process Design

 Task: Design a process flow for making a simple product (e.g., a

sandwich).

 Objective: Understand the steps and decisions involved in creating

efficient workflows.

Activity 3: Class Discussion

 Question: "How do you think modern technologies like AI and robotics

are reshaping Operations Management?"

Key Takeaways

1. Operations Management ensures the effective transformation of inputs

into outputs, meeting customer expectations while optimizing
resources.

2. The historical evolution of OM reflects continuous advancements aimed

at improving productivity and quality.

3. Core OM functions like product design, quality management, and

supply chain management are fundamental to business success.
 4. Modern challenges in OM include sustainability, digital transformation,
and adapting to global competition.

Assignment:

 Research one company of your choice and analyze how it applies

Operations Management principles to achieve its goals.

Module 2 – Operations Strategy and Competitive Advantage

Module Overview

In this module, we explore how operations strategies are formulated and

aligned with business strategies to gain a competitive edge. We also
examine key competitive priorities in operations management and their role
in driving organizational success. This discussion will culminate in a case
study on operations management strategy within the Philippine
manufacturing sector.

Week 2: Operations Strategy and Competitive Advantage

1. Operations Strategy and Its Alignment with Business Strategy

1.1. What is Operations Strategy?

Operations strategy refers to the long-term plan that defines how an

organization will allocate resources and configure its processes to meet its
business objectives effectively. It serves as a bridge between high-level
corporate strategy and day-to-day operations.

 Key Purpose:

o To ensure operational capabilities align with the company’s

strategic goals.

o To create a sustainable advantage by leveraging resources,

technology, and innovation.
1.2. Why Alignment is Critical

 Business Strategy: Defines the overarching goals of the

organization, such as market leadership, customer focus, or cost
leadership.

 Operations Strategy: Provides the roadmap to achieve these goals

through decisions on processes, technology, quality, and supply chain.

 Examples of Alignment:

o Cost Leadership Strategy: Focuses on producing

goods/services at the lowest possible cost (e.g., Walmart).
Operations must prioritize efficiency and economies of scale.

o Differentiation Strategy: Offers unique products or services

(e.g., Apple). Operations must emphasize innovation and quality.

o Focus/Niche Strategy: Targets a specific market segment (e.g.,

Tesla in electric vehicles). Operations focus on customization and
specialized processes.

1.3. Components of an Operations Strategy

1. Structural Decisions:

o Capacity (e.g., how much to produce).

o Facilities (e.g., location, layout).

o Technology (e.g., automation, ERP systems).

2. Infrastructural Decisions:

o Workforce policies (e.g., training and hiring).

o Quality management practices.

o Inventory and supply chain policies.

2. Competitive Priorities: Cost, Quality, Flexibility, and Delivery

2.1. Competitive Priorities Defined

Competitive priorities are the dimensions that a company chooses to

compete on in its target market. They guide the development of operations
strategies.
2.2. Key Competitive Priorities

1. Cost:

o Focus: Minimizing production and operational costs.

o Examples:

 Low-cost airlines (e.g., Cebu Pacific).

 Fast fashion brands (e.g., Uniqlo).

o OM Implications:

 High efficiency, process automation, and lean

manufacturing.

2. Quality:

o Focus: Offering products/services that meet or exceed customer

expectations.

o Examples:

 Luxury brands like Louis Vuitton focus on superior

craftsmanship.

 Japanese car manufacturers like Toyota emphasize

reliability.

o OM Implications:

 Implementation of Total Quality Management (TQM), Six

Sigma, and ISO certifications.

3. Flexibility:

o Focus: Ability to respond to changes in customer demand or

market conditions.

o Examples:

 Companies offering customizable products (e.g., Dell's

build-your-own-PC model).

o OM Implications:

 Modular processes, flexible workforce, and adaptive supply

chains.
 4. Delivery:

o Focus: Providing products/services faster or more reliably than

competitors.

o Examples:

 FedEx’s focus on timely delivery.

 Amazon’s promise of same-day or next-day delivery.

o OM Implications:

 Efficient logistics, real-time tracking, and optimized

distribution networks.

3. The Role of OM in Gaining Competitive Advantage

3.1. Leveraging Operational Efficiency

 Streamlining processes to reduce costs and improve productivity.

 Example: Toyota’s lean manufacturing system eliminates waste while

maintaining quality.

3.2. Innovating Processes and Technology

 Using advanced technology like AI, IoT, and robotics to gain an edge.

 Example: Nike uses 3D printing to rapidly prototype and manufacture

custom footwear.

3.3. Enhancing Customer Experience

 Delivering consistent quality, faster service, and greater customization.

 Example: Starbucks creates a personalized experience through its

mobile app ordering system.

3.4. Building Resilient Supply Chains

 Developing agile supply chains that can quickly adapt to disruptions.

 Example: Procter & Gamble maintains close relationships with

suppliers to ensure consistent material flow.
4. Case Study: Operations Management Strategy in Philippine
Manufacturing

4.1. Overview of Philippine Manufacturing Sector

 Manufacturing contributes significantly to the Philippine economy,

accounting for about 20% of GDP.

 Key industries: Food and beverage, electronics, textiles, and

automotive parts.

4.2. Challenges in the Philippine Manufacturing Sector

 High logistics costs due to inadequate infrastructure.

 Dependence on imported raw materials.

 Global competition from countries like China and Vietnam.

4.3. Successful OM Strategies in the Philippines

1. Adoption of Lean Practices:

o Example: San Miguel Corporation (SMC) focuses on operational

efficiency to remain competitive in food and beverage
manufacturing.

2. Focus on Quality:

o Example: The Philippine semiconductor industry (e.g., Texas

Instruments in Baguio City) emphasizes quality control to meet
international standards.

3. Flexibility in Production:

o Example: Local garment manufacturers adapt quickly to

changing global fashion trends by maintaining flexible production
systems.

4. Sustainability Initiatives:

o Example: Companies like URC (Universal Robina Corporation) are

implementing sustainable operations to reduce their carbon
footprint.

5. Reading: Chapter 2 (Heizer & Render, Operations Management)

Key Takeaways from Chapter 2:

 The importance of aligning operations strategy with the business

mission.

 Frameworks for identifying competitive priorities.

 Case studies on how global companies like Toyota and Zara leverage
OM for success.

Guided Reading Questions:

1. How do competitive priorities differ across industries?

2. What are the risks of misalignment between business strategy and

operations strategy?

3. How do global companies address challenges in cost, quality, and

delivery?

Interactive Components

Activity 1: Group Discussion

 Question: "Which competitive priority do you think is most critical for

startups? Why?"

 Objective: Analyze the importance of prioritizing certain aspects of

OM based on business type.

Activity 2: Case Study Analysis

 Task: Students analyze how San Miguel Corporation aligns its

operations strategy with its business goals.

 Objective: Understand the role of OM strategies in overcoming

industry-specific challenges.

Activity 3: Class Poll

 Question: "Which competitive priority would you choose if you were

starting your own business: cost, quality, flexibility, or delivery?"

 Objective: Highlight the trade-offs between competitive priorities.

Conclusion and Takeaways

 1. Operations strategy is essential for aligning organizational goals with
operational processes to achieve a competitive advantage.

2. Companies must prioritize cost, quality, flexibility, or delivery based on

their market position and customer demands.

3. The Philippine manufacturing sector demonstrates the importance of

tailoring OM strategies to local challenges and opportunities.

Assignment:

 Research and write a report on a company in your local area that

demonstrates effective operations strategy. Include their key
competitive priorities and how these contribute to their success.

Module 3 – Product and Service Design

Module Overview

This module provides a deep dive into the principles and processes behind
product and service design. Students will learn about the characteristics that
differentiate products and services, how they are designed and developed,
the significance of service blueprinting and the product life cycle, and the
importance of manufacturability and sustainability in design.

Week 3: Product and Service Design

1. Characteristics of Products and Services

1.1. Defining Products and Services

 Product: A tangible item created to meet customer needs (e.g.,

smartphones, cars).
  Service: An intangible activity or benefit provided to customers (e.g.,
consulting, healthcare).

1.2. Key Characteristics

Aspect Products Services

Tangible; can be seen, Intangible; cannot be seen or

Tangibility
touched, and stored. stored.

Non-perishable; can be Perishable; consumed as they

Perishability
inventoried. are produced.

Customer Low to moderate High interaction during

Interaction interaction. delivery.

Standardizatio Can be standardized for Often customized to meet

n mass production. individual needs.

Ownership Ownership of the product is No ownership transfer; the

Transfer transferred. service is experienced.

1.3. Implications for Design

 Products require focus on material selection, durability, and usability.

 Services require emphasis on customer experience, service delivery,

and relationship management.

2. Design and Development Processes

2.1. The Design Process

The process of creating products or services involves several stages:

1. Idea Generation:

o Sources: Market research, customer feedback, competitors, and

internal brainstorming.

o Tools: Design Thinking, SWOT analysis.

2. Feasibility Analysis:

o Assess technical, financial, and market feasibility.

 o Example: Can a new smartphone design incorporate advanced
features without exceeding costs?

3. Concept Development:

o Develop prototypes or service models.

o Example: Creating a beta version of a software application for

testing.

4. Design Testing and Refinement:

o Evaluate functionality, usability, and quality.

o Example: Automobile crash tests to ensure safety compliance.

5. Launch and Commercialization:

o Finalize the product/service and launch it in the market.

2.2. Tools for Design and Development

 CAD (Computer-Aided Design): Software to create precise product

designs.

 Rapid Prototyping: Techniques like 3D printing for quick prototype

development.

 Concurrent Engineering: A collaborative approach where design and

manufacturing teams work simultaneously to reduce time-to-market.

3. Service Blueprinting and Product Life Cycle

3.1. Service Blueprinting

A visual representation of the service process that identifies key elements in

service delivery, focusing on customer interaction.

 Key Components of a Service Blueprint:

o Customer Actions: Steps the customer takes in the service

process.

o Frontstage Actions: Visible actions by employees (e.g., a

waiter taking an order).

o Backstage Actions: Behind-the-scenes processes (e.g., food

preparation).
 o Support Processes: External or internal systems supporting
service delivery (e.g., IT systems).

 Benefits:

o Enhances customer experience.

o Identifies bottlenecks and inefficiencies in service delivery.

3.2. Product Life Cycle (PLC)

The Product Life Cycle refers to the stages a product goes through from
inception to decline.

 Stages of the PLC:

Stage Characteristics OM Implications

High costs, low sales, heavy

Introducti Focus on quality, capacity
promotion, and focus on
on planning, and distribution.
development.

Increasing sales and profitability, Scale operations, focus on

Growth
market expansion. process efficiency.

Peak sales, market saturation, and Optimize costs, diversify

Maturity
high competition. product features.

Decide whether to innovate,

Decline Decreasing sales and profits.
rebrand, or discontinue.

 Example: The life cycle of smartphones, where new models emerge

frequently, and older models decline in sales.

4. Design for Manufacturability and Sustainability

4.1. Design for Manufacturability (DFM)

 Definition: Designing products that are easy and cost-effective to

manufacture.

 Principles:

o Simplify product design to minimize parts.

o Use standard components whenever possible.

 o Optimize assembly processes.

 Benefits:

o Reduces production costs.

o Improves product quality and reliability.

 Example: IKEA designs furniture with flat-pack delivery in mind,

simplifying manufacturing and logistics.

4.2. Design for Sustainability

 Definition: Designing products/services that minimize environmental

impact throughout their lifecycle.

 Key Aspects:

o Material Selection: Use renewable, recyclable, or

biodegradable materials.

o Energy Efficiency: Minimize energy consumption in production

and usage.

o End-of-Life Disposal: Design products that can be easily

recycled or safely disposed of.

 Benefits:

o Reduces environmental footprint.

o Enhances brand reputation among eco-conscious consumers.

 Example: Tesla’s electric vehicles reduce reliance on fossil fuels and

prioritize sustainability.

5. Reading: Chapter 3 (Heizer & Render, Operations Management)

Key Topics Covered in Chapter 3:

 Importance of product and service design in achieving organizational

goals.

 Tools and techniques for effective design and development.

  Case studies highlighting real-world applications of service blueprinting
and DFM principles.

Guided Reading Questions:

1. How do companies balance innovation and manufacturability during

product design?

2. What role does sustainability play in the long-term success of a

business?

3. How can service blueprinting improve customer satisfaction?

Interactive Components

Activity 1: Design Analysis

 Task: Select a product or service and evaluate its design based on the
principles of manufacturability and sustainability.

 Objective: Understand the trade-offs and considerations in design

processes.

Activity 2: Service Blueprinting Exercise

 Task: Create a service blueprint for a restaurant or retail store.

 Objective: Visualize and identify potential service bottlenecks and

improvement areas.

Activity 3: PLC Group Discussion

 Question: “How can companies extend the maturity stage of their

products in a highly competitive market?”

 Objective: Analyze strategies for prolonging product relevance.

Conclusion and Takeaways

1. Product and service design plays a pivotal role in meeting customer

needs and achieving business goals.

2. Understanding the unique characteristics of products and services is

essential for effective design.
 3. Tools like service blueprinting and frameworks like the product life
cycle help businesses plan and optimize operations.

4. Prioritizing manufacturability and sustainability in design ensures long-

term success and environmental responsibility.

Assignment:

 Research and report on a company that successfully integrates

sustainability into its product design. Provide specific examples and
discuss their competitive

Module 4 – Process Design and Improvement

Module Overview

This module introduces the different types of processes, tools for process
analysis, and techniques to improve processes effectively. We’ll cover job
shop, batch, assembly line, and continuous flow processes, explore tools like
process mapping, and discuss frameworks like Lean and Six Sigma for
continuous improvement.

Week 4: Process Design and Improvement

1. Process Types

Processes are the foundation of operations management, as they define how

work is structured and executed. Each process type has unique
characteristics, applications, and implications for operational efficiency.

1.1. Job Shop

 Definition:

o A flexible process used to produce small batches of highly

customized products.

o Example: Custom furniture, specialized machine parts.

 Characteristics:

o High variety, low volume.

o Equipment and workers are arranged by function (e.g., cutting,

welding).

o Requires skilled labor for customization.

 Advantages:

o High flexibility for customization.

o Ability to meet specific customer needs.

 Disadvantages:

o High unit costs.

o Longer lead times due to low efficiency.

1.2. Batch Process

 Definition:

o Produces moderate volumes of products in batches, where each

batch follows the same production steps.
 o Example: Bakeries, clothing manufacturers.

 Characteristics:

o Moderate variety and volume.

o Equipment is used for a range of similar products.

 Advantages:

o Greater efficiency than job shops.

o Economies of scale for mid-sized production.

 Disadvantages:

o Changeover times between batches can be time-consuming.

o Inventory holding costs for batches.

1.3. Assembly Line

 Definition:

o A standardized production process where products move

sequentially through a series of steps.

o Example: Automobile manufacturing.

 Characteristics:

o High volume, low variety.

o Highly automated or specialized equipment.

 Advantages:

o High efficiency and productivity.

o Lower unit costs due to economies of scale.

 Disadvantages:

o Inflexibility; difficult to adapt to changes.

o High initial investment in equipment.

1.4. Continuous Flow

  Definition:

o A process designed for the uninterrupted production of

standardized products.

o Example: Oil refining, electricity generation.

 Characteristics:

o Extremely high volume, no variety.

o Operates 24/7 with minimal interruptions.

 Advantages:

o Lowest unit cost for standardized products.

o Consistent quality.

 Disadvantages:

o Inflexible and expensive to modify.

o Significant downtime if equipment fails.

2. Process Analysis Tools and Techniques

2.1. Process Flowcharting

 Definition: A visual representation of a process that maps each step

in sequential order.

 Purpose:

o Identify inefficiencies and bottlenecks.

o Understand how work flows through the system.

 Example: Mapping out the steps involved in fulfilling an e-commerce

order, from order placement to delivery.

2.2. Cause-and-Effect Diagrams (Fishbone Diagram)

 Definition: A tool to identify root causes of process issues.

 Categories to Analyze:

o Materials, Methods, Machines, Manpower, Measurement, and

Environment.
2.3. Pareto Analysis (80/20 Rule)

 Definition: A technique to prioritize issues based on their frequency or

impact.

 Example: Identifying that 80% of delays in manufacturing come from

20% of production errors.

2.4. Value Stream Mapping (VSM)

 Definition: A lean tool that maps the flow of materials and information
through a process.

 Objective:

o Identify value-added and non-value-added activities.

o Reduce waste.

3. Process Mapping and Improvement: Lean and Six Sigma

3.1. Process Mapping

 Definition: A visual representation of workflows to identify

inefficiencies and improvement areas.

 Key Types of Process Maps:

o Flowcharts.

o Swimlane diagrams (show roles or departments).

o Value Stream Maps.

3.2. Lean Management

 Definition: A methodology focused on eliminating waste and

optimizing processes.

 Seven Wastes (TIMWOOD):

o T: Transportation.

o I: Inventory.

o M: Motion.
 o W: Waiting.

o O: Overproduction.

o O: Overprocessing.

o D: Defects.

 Tools in Lean:

o Kanban (visual task boards for workflow management).

o 5S (Sort, Set in order, Shine, Standardize, Sustain).

3.3. Six Sigma

 Definition: A data-driven approach to reducing variation and

improving quality.

 DMAIC Framework:

o D: Define the problem.

o M: Measure current performance.

o A: Analyze root causes.

o I: Improve processes.

o C: Control to sustain improvements.

 Example: Reducing defects in manufacturing electronic components

to improve reliability.

3.4. Combining Lean and Six Sigma

 Lean Six Sigma integrates waste reduction (Lean) and quality

improvement (Six Sigma) for maximum efficiency.

 Example: Toyota uses Lean Six Sigma to streamline production while

maintaining high quality.

4. Reading: Chapter 4 (Heizer & Render, Operations Management)

Key Topics in Chapter 4:

 Characteristics and applications of process types.

 Practical tools for analyzing and mapping processes.

  Case studies showcasing Lean and Six Sigma implementation.

Guided Reading Questions:

1. How does a company determine the most suitable process type for its
operations?

2. What are the advantages of using process mapping tools like value
stream maps?

3. How do Lean and Six Sigma complement each other in process

improvement?

Interactive Components

Activity 1: Process Type Identification

 Task: Analyze a given business scenario and identify the most

appropriate process type (job shop, batch, assembly line, or continuous
flow).

 Objective: Develop the ability to match processes to business needs.

Activity 2: Process Mapping Exercise

 Task: Create a process flowchart for a common activity, such as

booking a flight online or ordering food delivery.

 Objective: Practice identifying inefficiencies and potential

improvements.

Activity 3: Lean and Six Sigma Role Play

 Task: In groups, simulate a business process (e.g., assembling a

simple product) and apply Lean and Six Sigma principles to improve it.

 Objective: Gain hands-on experience with process improvement

techniques.

Conclusion and Takeaways

1. Process design determines the efficiency and effectiveness of

operations.
 2. Different process types suit different production environments based
on volume, variety, and customization needs.

3. Tools like flowcharts, value stream mapping, and Six Sigma frameworks
help identify and solve process inefficiencies.

4. Lean and Six Sigma are powerful methodologies for improving quality,
reducing waste, and driving continuous improvement.

Assignment:

1. Research a company that has successfully implemented Lean or Six

Sigma. Write a report on their challenges, implementation strategies,
and outcomes.

2. Create a process map for a real-world activity and identify one

inefficiency you would address.

Module 5: Supply Chain Management

Week 5 Topics:

1. Definition and Importance of Supply Chains

2. Key Elements of Supply Chain Management (SCM)

3. SCM Challenges in the Philippine Context

 4. Reading Assignment: Chapter 6 (Heizer & Render, Operations
Management)

I. Introduction to Supply Chain Management (SCM)

A. Definition of Supply Chain

 A supply chain consists of all the activities, resources, and entities

involved in producing and delivering a product or service, from raw
materials to final consumption.

 A supply chain is a network of suppliers, manufacturers, warehouses,

distribution centers, and retailers working together to produce and
deliver a product or service to customers.

 Example: The journey of a smartphone—from raw material extraction

(metals, glass) to manufacturing, distribution, and retailing.

B. Importance of SCM

 Cost Reduction – Efficient supply chains lower production and

distribution costs.
 Customer Satisfaction – Ensures timely delivery of products and
services.
 Competitive Advantage – Well-managed supply chains help
businesses outperform competitors.
 Risk Management – Identifies and mitigates potential supply chain
disruptions.
 Sustainability – Reducing waste, carbon footprint, and ethical
sourcing.

🟢 Activity 1: Think-Pair-Share

 Ask students: "Think of a product you recently purchased. Can you

identify at least three steps in its supply chain?"

 Pair up and discuss how SCM might impact cost and quality.

II. Key Elements of Supply Chain Management

A. The Five Major Components of SCM

1. Planning: Forecasting demand, production scheduling, and inventory

management.
 2. Sourcing: Selecting suppliers and managing supplier relationships.

3. Manufacturing: Converting raw materials into finished products.

4. Distribution & Logistics: Warehousing, transportation, and delivery.

5. Return & Reverse Logistics: Handling returns, repairs, and

recycling.

B. Role of Technology in SCM

 Enterprise Resource Planning (ERP) for integrating supply chain

functions.
 Radio Frequency Identification (RFID) for real-time inventory
tracking.
 Artificial Intelligence (AI) & Big Data for demand forecasting.
 Blockchain Technology for supply chain transparency and security.

🟢 Activity 2: Mini Case Analysis

 Present a real-world case on SCM (e.g., how fast fashion brands

manage supply chains).

 Ask students to analyze how each SCM component is managed in the

case study.

III. Strategies for an Efficient Supply Chain

1. Just-In-Time (JIT) System – Reducing inventory costs by ordering

supplies only when needed.

2. Outsourcing & Offshoring – Partnering with third parties for

production or logistics.

3. Vertical Integration – Controlling multiple stages of the supply chain

for efficiency.

4. Supplier Relationship Management – Ensuring strong partnerships

with suppliers.

5. Agile & Resilient SCM – Quickly adapting to disruptions and

unexpected market changes.

🟢 Activity 3: Case Study Analysis

  Students will analyze a case of a successful company’s supply chain
(e.g., Amazon, Toyota, Uniqlo).

 Identify best practices and key strategies used.

IV. SCM Challenges in the Philippine Context

A. Logistics and Infrastructure Problems

 Poor road networks, inefficient ports, and high transportation costs.

B. High Supply Chain Costs

 Expensive raw materials, taxes, and unpredictable fuel prices.

C. Supply Chain Disruptions

 Natural disasters (typhoons, earthquakes), COVID-19 pandemic, and

political issues.

D. Government Regulations and Bureaucracy

 Customs delays, import/export restrictions, and legal compliance

issues.

🟢 Activity 4: Problem-Solving Discussion

 Assign groups a specific SCM challenge in the Philippines.

 Each group will propose solutions and present their ideas.

V. Emerging Trends in Supply Chain Management

1. Sustainable Supply Chains – Eco-friendly packaging, ethical

sourcing, and reducing carbon footprint.

2. E-commerce & Omnichannel Supply Chains – Meeting customer

demands in digital marketplaces.

3. Automation & Robotics – Using AI and robots in warehouses and

deliveries.

4. Circular Economy – Reusing and recycling materials to reduce waste.

5. Resilient Supply Chains – Preparing for future disruptions through

diversification and risk management.
🟢 Activity 5: Debate

 Topic: "Is automation in supply chains a threat to human jobs?"

 Students will be divided into pro and con sides for a structured debate.

VI. Reading Assignment

📖 Chapter 6 – Supply Chain Management (Heizer & Render, Operations

Management)

 Focus on key concepts, case studies, and practical applications.

🟢 Activity 6: Reading Reflection

 Students will summarize key takeaways from the reading.

 Write a 1-page reflection on an SCM strategy that can be applied in the

Philippines.
Module 6: Inventory Management and Control

Week 6 Topics:

1. Understanding Inventory & Its Types

o Raw Materials, Work-in-Progress (WIP), and Finished Goods

2. Inventory Control Systems

o Economic Order Quantity (EOQ)

o Just-In-Time (JIT)

o ABC Analysis

3. Inventory Management Challenges in the Philippine Context

4. Emerging Trends in Inventory Management

5. Reading Assignment: Chapter 9 (Heizer & Render, Operations

Management)

Lecture Content

I. Introduction to Inventory Management

A. What is Inventory?

Inventory refers to the stock of goods or materials that a company holds to

meet customer demand and ensure smooth operations. Managing inventory
effectively ensures that a business has the right products at the right time
without overstocking or understocking.

B. Importance of Inventory Management

1. Reduces holding costs (warehousing, insurance, depreciation).

2. Prevents stockouts and delays that can harm customer

satisfaction.
 3. Optimizes cash flow by balancing supply and demand.

4. Enhances operational efficiency through proper planning.

🟢 Activity 1: Inventory Walkthrough

 Students will visit a local store (or analyze an online retailer) and
identify different types of inventory they manage.

 Write a short reflection on how inventory affects business operations.

II. Types of Inventory

A. Raw Materials

 Basic materials used to produce goods.

 Example: Fabric for clothing companies, steel for car manufacturers.

B. Work-in-Progress (WIP)

 Partially completed products in the production process.

 Example: A cake being decorated in a bakery, unfinished furniture in a

workshop.

C. Finished Goods

 Completed products ready for sale.

 Example: Smartphones in a retail store, packaged food in a

supermarket.

🟢 Activity 2: Inventory Classification Exercise

 Students will categorize different products in a business (e.g., a car

manufacturer or bakery) into raw materials, WIP, or finished goods.

III. Inventory Control Systems

Inventory control systems help businesses determine how much stock to

order and when to order it.

A. Economic Order Quantity (EOQ)

 A mathematical model used to determine the optimal order quantity

that minimizes total inventory costs (ordering costs + holding costs).
  Formula: EOQ=2DSHEOQ = \sqrt{\frac{2DS}{H}}EOQ=H2DS Where:

o DDD = Demand (units per year)

o SSS = Ordering cost per order

o HHH = Holding cost per unit per year

✅ Best for: Businesses with predictable demand and stable supply chains.

B. Just-In-Time (JIT) Inventory System

 A strategy where inventory is ordered and received only when

needed, reducing storage costs.

 Companies like Toyota use JIT to minimize waste and improve

efficiency.

✅ Best for: Businesses that want to reduce excess inventory and improve
efficiency but require reliable suppliers.

C. ABC Analysis

 A method of categorizing inventory based on its importance and

value.

o A-items: High-value, low-quantity items (need tight control).

o B-items: Moderate-value, moderate-quantity items.

o C-items: Low-value, high-quantity items (require minimal

control).

✅ Best for: Businesses with diverse inventory that need to prioritize stock
control efforts.

🟢 Activity 3: Inventory Optimization Case Study

 Students will analyze a case study of a business struggling with

inventory issues.

 Groups will propose solutions using EOQ, JIT, or ABC Analysis.

IV. Inventory Management Challenges in the Philippine Context

1. High Inventory Costs – Warehousing and logistics costs are

expensive.
 2. Unreliable Supply Chains – Import and customs delays affect stock
levels.

3. Demand Uncertainty – Seasonal fluctuations make inventory

forecasting difficult.

4. Lack of Technology Adoption – Many businesses still use manual

tracking methods.

5. Limited Storage Space – High real estate costs restrict warehousing

capacity.

🟢 Activity 4: Problem-Solving Discussion

 Each group will identify one key inventory challenge faced by

businesses in the Philippines and propose a realistic solution.

V. Emerging Trends in Inventory Management

1. AI & Machine Learning for Demand Forecasting – Helps

businesses predict stock needs more accurately.

2. RFID & Barcode Technology – Enhances real-time inventory

tracking.

3. Automation & Robotics – Reduces human errors and speeds up

warehouse operations.

4. Sustainable Inventory Practices – Reducing waste through

recycling and eco-friendly packaging.

5. Omnichannel Inventory Management – Integrating online and

offline inventory for seamless sales.

🟢 Activity 5: Debate – Manual vs. Automated Inventory Management

 One team will argue that manual inventory management is still

effective, while the other will argue that automation is the future.

VI. Reading Assignment

📖 Chapter 9 – Inventory Management (Heizer & Render, Operations

Management)

 Focus on key inventory control techniques and case studies.

🟢 Activity 6: Reading Reflection

 Students will write a one-page analysis of how a business they

know can improve its inventory system.