Introduction to Operations and Supply Chain Management 2008

Introduction to Operations and Supply Chain Management © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 1

Chapter Objectives Be able to: q Describe what the operations function is and why it is critical to an organization’s survival. q Describe what a supply chain is and how it relates to a particular organization’s operations function. q Discuss what is meant by operations management and supply chain management. q Identify some of the major operations and supply chain activities, as well as career opportunities in these areas. q Make a case for studying both operations management and supply chain management. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 2

Introduction • Why study Operations and Supply Chain Management? • Operations Management • Supply Chain Management • Important trends • Leap. Frog case study © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 3

Focus • Key issues surrounding the design and ongoing management of these areas • Common tools and techniques – Introduction to the SCOR model • Analytical skills (both qualitative and quantitative) © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 4

Why Study Operations and Supply Chain Management? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 1, Slide

Three Basic Truths I. Pervasiveness II. Interdependence III. Profitability and Survival © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 6

Pervasiveness Every organization must make a product or provide a service that someone values…………. Manufacturer. Retailer. Design firm. University. Health services. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 7

Interdependence Most organizations function as part of a larger supply chain © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 8

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 © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 9

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? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 10

Operations Management The planning, scheduling, and control of the activities that transform inputs into finished goods and services © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 1, Slide

Operations Function The collection of people, technology, and systems within a company. . . … that has primary responsibility. . . … for providing the organization’s products and/or services. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 12

Viewing Operations as a Transformation Process Manufacturing operations Inputs üMaterials üPeople üEquipment üIntangible needs üInformation Outputs Service operations © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 üTangible goods üFulfilled requests üInformation üSatisfied Customers 13

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. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 14

Services • Intangible “Product” or Service – Location, Exchange, Storage, Physiological, Information • Key decisions: – How much customer involvement? – How much customization? © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 15

Cross-Functional Linkages MIS Finance What IT solutions to make it all work together? Budgeting. Analysis. Funds. Design Sustainability. Quality. Manufacturability. Operations and Supply Chain Accounting Performance measurement systems. Planning and control. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Human Resources Skills? Training? # of Employees? Marketing What products? What volumes? Costs? Quality? Delivery? 16

Supply Chain Management Active management of supply chain activities and relationships to maximize customer value and achieve a sustainable competitive advantage © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 1, Slide

Material Flows Upstream Downstream Second Tier First Tier Supplier Alcoa Ball Corp Distribut or Anheuser-Busch M&M Retailer Meijer Final customers Transportation companies © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 18

Supply Chain Issues • • Length of the chain Complexity Stability Physical, informational, and monetary flows © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 19

Supply-Chain Operations Reference (SCOR)* Model Consists of: • Planning activities • Sourcing activities • “Make” or production activities • Delivery activities • Return activities * Supply-Chain Council, 2007. www. supply-chain. org © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 20

SCOR Model © Supply-Chain Council, 2007 © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 21

Wal-Mart — Early 1990 s • 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 © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 22

Panera Bread — 2006 • 4 th quarter revenues and profits up 25% and 8%, respectively, over 2005 4 th quarter* • >200 million pounds of dough delivered by 110 trucks traveling 9. 7 million miles annually *Panera Bread, 4 th Quarter 2006 Earnings Report, www. panera. com/about/investor/reports. php. © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 23

Important Trends • Electronic commerce – Reduces 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 © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 24

Operations and Supply Chain Management and You Some of the many career positions • Analyst • Commodity Manager • Customer Service Manager • International Logistics Manager • Logistics Services Salesperson • Production Manager • Sourcing Analyst • Logistics and Material Planner • Systems Support Manager (MIS) • Transportation Manager • Process Analyst • Scheduler • Purchasing Agent © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 25

Operations and Supply Chain Activities • Process selection, design, and improvement • Forecasting for decision making • Capacity planning for capital investment and resource levels • Inventory management for amount and location • Planning and control for work scheduling and meeting demand • Purchasing, managing supplier relationships • Logistics or acquisition and distribution © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 26

Case Study Introducing Operations and Supply Chain Management Leap. Frog © 2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 1, Slide