1. The Internet International computer network
Connects companies and people around the world
Enables the integration of internal information systems and enhanced communications between organizations
Ties together global design, manufacturing, delivery, sales, and after-service
Points which might be emphasized include:
- Statistical process control measures the performance of a process, it does not help to identify a particular specimen produced as being “good” or “bad,” in or out of tolerance.
- Statistical process control requires the collection and analysis of data - therefore it is not helpful when total production consists of a small number of units
- While statistical process control can not help identify a “good” or “bad” unit, it can enable one to decide whether or not to accept an entire production lot. If a sample of a production lot contains more than a specified number of defective items, statistical process control can give us a basis for rejecting the entire lot. The issue of rejecting a lot which was actually good can be raised here, but is probably better left to later.

2. The Internet
Reshaping how businesses think about delivering value to customers
Prime benefits are speed and access
Important vehicle for change in Operations Management
Intranets are internal networks not available to external users
Growing daily with over 300 million domains registered worldwide
Points which might be emphasized include:
- Statistical process control measures the performance of a process, it does not help to identify a particular specimen produced as being “good” or “bad,” in or out of tolerance.
- Statistical process control requires the collection and analysis of data - therefore it is not helpful when total production consists of a small number of units
- While statistical process control can not help identify a “good” or “bad” unit, it can enable one to decide whether or not to accept an entire production lot. If a sample of a production lot contains more than a specified number of defective items, statistical process control can give us a basis for rejecting the entire lot. The issue of rejecting a lot which was actually good can be raised here, but is probably better left to later.

3. Electronic Commerce
E-commerce (or e-business) – the use of the internet to buy and sell products and services and exchange information
Low cost rapid exchanges
A whole new way of doing business
“… all about cycle time, speed, globalization, enhanced productivity, reaching new customers and sharing knowledge across institutions for competitive advantage.”
Louis Gerstner
Former Chairman, IBM

4. E-Commerce Definitions
Business-to-business (B2B) – Both sides of the transaction are businesses, non-profit organizations, or governments
Business-to-consumer (B2C) – Transactions in which buyers are individual consumers
Consumer-to-consumer (C2C) – Consumers sell directly to each other
Consumer-to-business (C2B) – Individuals sell services or goods to businesses

5. E-Commerce Transactions
Business
Consumer
B2B
Global Health Care Exchange,
Global Net Xchange
B2C
Amazon, Dell, Netgrocer.com
C2B
Priceline, Travelocity
C2C
eBay
Figure S11.1

6. Economics of E-Commerce
Costs of information exchange are dramatically reduced
Barriers to entry are lower
Time constraints almost disappear
Information and communication is cheap and easy

7. Types of Information
Product — drawings, specifications, video, or simulation demonstrations, prices
Production Processes — capacities, commitments, product plans
Transportation — carrier availability, lead times, costs
Inventory — inventory tracking, levels, costs, and location
Table S11.1

8. Types of Information
Suppliers — product catalog, quality history, lead times, terms, and conditions
Supply Chain Alliances — key contact, partners’ roles and responsibilities, schedules
Supply Chain Process and Performance — process descriptions, performance measures such as quality and delivery
Table S11.1

9. Types of Information
Competitor — benchmarking, product offerings, market share
Sales and Marketing — point of sale (POS) data entry, promotions, pricing, discounts
Customer — sales history and forecasts
Costs — market indexes, auction results
Table S11.1

10. Benefits and Limitations
Benefits of E-Commerce
Improved, lower-cost information that makes buyers and sellers more knowledgeable has an inherent power to drive down costs
Lower entry costs increase information sharing
Available 24 hours a day, virtually any place in the world, enabling convenient transactions for those concerned
Table S11.2

11. Benefits and Limitations
Availability expands the market for both buyer and seller
Decreases the cost of creating, processing, distributing, storing, and retrieving paper-based information
Reduces the cost of communication
Richer communication than traditional paper and telephone communication because of video clips, voice, and demonstrations
Table S11.2

12. Benefits and Limitations
Fast delivery of digitized products such as drawings, documents, and software
Increased flexibility of location. (That is, it allows some processes to be located anywhere electronic communications can be established, and allows people to shop and work from home.)
Table S11.2

13. Benefits and Limitations
Limitations of E-Commerce
Lack of system security, reliability, and standards
Lack of privacy
Some transactions are still rather slow
Integrating e-commerce software with existing software and databases is still a challenge
Table S11.2

14. Benefits and Limitations
Lack of trust in (1) unknowns about the integrity of those on the other end of a transaction, (2) integrity of the transaction itself, and (3) electronic money that is only bits and bytes
Security and risk are major factors in E-commerce
Table S11.2

15. Product Design
Easily shared knowledge and information allows quicker and lower cost design cycles that can involve participants in diverse locations
Product data can be managed over the Internet
Engineering changes and configuration management can be extended along the supply chain

16. Collaborative Project Management
Project management software allows for establishing intranet sites for sharing documents and maintaining status reports
Intranets can also be used for document libraries
Students should understand both the concepts of natural and assignable variation, and the nature of the efforts required to deal with them.

17. E-Procurement
Purchasing or order release communicated over the Internet
Online catalogs allow quicker cost comparisons and bidding processes
Catalogs can be provided by
Vendors
Intermediaries
Buyers
Once the categories are outlined, students may be asked to provide examples of items for which variable or attribute inspection might be appropriate. They might also be asked to provide examples of products for which both characteristics might be important at different stages of the production process.

18. Online Catalogs
Vendor catalogs provide quick and easy access to the entire product line
Available to anyone with Internet access
Quick and easy to customize and adjust
Reduced paper trails reduce purchasing costs
This slide introduces the difference between “natural” and “assignable” causes.
The next several slides expand the discussion and introduce some of the statistical issues.

19. Online Catalogs
Intermediary catalogs facilitate buyers and sellers meeting
Buyers can find multiple sellers on one site
Buyer-focused exchanges allow groups of generally similar firms to join together to buy in larger quantities and more efficiently than if they worked independently
This slide introduces the difference between “natural” and “assignable” causes.
The next several slides expand the discussion and introduce some of the statistical issues.

20. Manual processes, including paper, phone, and fax
Medical Supply Chain
Current Supply Chain
Suppliers
Customers H
H H
Manual processes, including paper, phone, and fax
Figure S11.2 H
– Manufacturer
– Distributor
– Hospital
H H
Group Purchasing Organizations –

21. Automated Web-based processes
Medical Supply Chain
New Supply Chain
Suppliers
Customers H
H H
Online
Global Health
Care
Exchange
Automated Web-based processes
Figure S11.2 H
– Manufacturer
– Distributor
– Hospital
H H
Group Purchasing Organizations –

22. E-Procurement Online Auctions
Maintained by buyers, sellers, or intermediaries
May be used to sell excess raw material or discontinued or excess inventory
Low cost and increased access to buyers

23. Inventory Tracking
Technologies like bar code scanners, radio frequency, electronic communications can be used by almost any firm to track inventory in transit, on the shop floor, or in a warehouse

24. Inventory Reduction Warehousing for E-Commerce
Managed by a logistics vendor
Pass-through facility rather than storage
Just-in-Time Delivery for E-Commerce
E-commerce can improve communication and coordination
E-commerce service companies manage complex transactions

25. Scheduling and Logistics Improvements
Coordinated Pickup and Delivery
Unified view of data
Shipments can be merged in transit
Reduced inventory and delays mean lower costs

26. Scheduling and Logistics Improvements
Logistics Cost Reduction
Carriers with unused capacity can find loads through Internet sites
Logistics efficiency improves and costs are reduced