Introduction to Operations and Supply Chain Management

Chapter 1, Slide 2 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Introduction Why study Operations and Supply Chain Management? Operations Management Supply Chain Management Important trends LeapFrog case study

Chapter 1, Slide 3 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Focus Key issues surrounding the design and ongoing management of these areas Common tools and techniques Analytical skills (both qualitative and quantitative)

Chapter 1, Slide 4 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Why Study Operations and Supply Chain Management?

Chapter 1, Slide 5 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Three Basic Truths I.Pervasiveness II.Interdependence III.Profitability and Survival

Chapter 1, Slide 6 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Pervasiveness Every organization must make a product or provide a service that someone values…………. Manufacturer. Retailer. Design firm. University. Health services.

Chapter 1, Slide 7 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Interdependence Most organizations function as part of a larger supply chain

Chapter 1, Slide 8 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Supply Chains Networks of manufacturers and service providers that work together to move goods from the raw material stage through to the end user Linked through physical, information, and monetary flows

Chapter 1, Slide 9 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Profitability and Survival Organizations must carefully manage their operations and supply chains to prosper, and indeed, survive! Shoe manufacturer: How many shoes should we make? What mix? What resources do we need? What will we outsource? Location? Key performance criteria -- Cost? Quality? Speed?

Chapter 1, Slide 10 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Operations Management The planning, scheduling, and control of the activities that transform inputs into finished goods and services

Chapter 1, Slide 11 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Operations Function The collection of people, technology, and systems within a company... … that has primary responsibility... … for providing the organization’s products or services.

Chapter 1, Slide 12 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Viewing Operations as a Transformation Process Transformation Process Manufacturing operations Service operations Inputs Outputs Materials People Equipment Intangible needs Information Tangible goods Fulfilled requests Information Satisfied Customers

Chapter 1, Slide 13 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Manufacturing Tangible product Key decisions driven by physical characteristics of the product: – How is the product made? – How do we store it? – How do we move it? – Etc.

Chapter 1, Slide 14 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Services Intangible “Product” or Service –Location, Exchange, Storage, Physiological, Information Key decisions: –How much customer involvement? –How much customization?

Chapter 1, Slide 15 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Cross-Functional Linkages Operations Finance Budgeting. Analysis. Funds. Marketing What products? What volumes? Costs? Quality? Delivery? Human Resources Skills? Training? # of Employees? Accounting Performance measurement systems. Planning and control. MIS What IT solutions to make it all work together? Design Sustainability. Quality. Manufacturability.

Chapter 1, Slide 16 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Supply Chain Management Active management of supply chain activities and relationships to maximize customer value and achieve a sustainable competitive advantage

Chapter 1, Slide 17 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Alcoa Ball CorpAnheuser-BuschM&M Meijer First Tier Supplier DistributorRetailer Transportation companies Final customers UpstreamDownstream Alcoa Second Tier Supplier Material Flows

Chapter 1, Slide 18 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Supply Chain Issues Length of the chain Complexity Stability Physical, informational, and monetary flows

Chapter 1, Slide 19 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Wal-Mart — Early 1990s Individual stores sent sales data daily to Wal-Mart’s suppliers via satellite Suppliers plan production and ship based on this sales data Wal-Mart used its own dedicated fleet to ship from its warehouses to stores

Chapter 1, Slide 20 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Krispy-Kreme — 2004 Stores order supplies electronically from K-K’s warehouses At the warehouse –Radio-frequency tag (RFID) technology to track the location of inventory Results: Fast and error-free ordering

Chapter 1, Slide 21 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Important Trends Electronic commerce –Reduce the costs and time associated with supply chain relationships Increasing competition and globalization –Fewer industries protected by geography Relationship management –Competition between chains, not individual firms –Trust and coordination

Chapter 1, Slide 22 ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield LeapFrog Chapter 1 Case Study