Introduction to Operations and Supply Chain Management ©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 ©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) ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

Why Study Operations and Supply Chain Management? ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

Three Basic Truths Pervasiveness Interdependence Profitability and Survival ©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. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

Interdependence Most organizations function as part of a larger supply chain Discussion with class about what kinds of operations and suppliers are required to realize a basic product idea like a running shoe, beginning with the initial design concept. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield ©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 ©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? ©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 ©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. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

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

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

Cross-Functional Linkages MIS What IT solutions to make it all work together? Finance Budgeting. Analysis. Funds. Human Resources Skills? Training? # of Employees? Design Sustainability. Quality. Manufacturability. Operations Table 1.2 on page 13 in the text for more details to support this discussion Marketing What products? What volumes? Costs? Quality? Delivery? Accounting Performance measurement systems. Planning and control. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield ©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 Example: Buying co-ops for independent hardware dealers ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

Material Flows First Tier Supplier Distributor Retailer Alcoa Ball Corp Anheuser-Busch M&M Meijer First Tier Supplier Distributor Retailer Transportation companies Final customers Upstream Downstream Second Tier Supplier Page 8 in the text. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield ©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 Use Dell Computer as an example for a class discussion of the possible issues. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield ©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 http://www.walmartfacts.com/ ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield ©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 http://www.krispykreme.com/ ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield ©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 Use Boeing, http://www.boeing.com, as an example for reducing supply chain costs and time. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

LeapFrog Chapter 1 Case Study Page 17 in the text. ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield ©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield