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

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 1, Slide 2

Why Study Operations andSupply Chain Management?

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 1, Slide 3

Three Basic Truths

I. Pervasiveness

II. Interdependence

III. Profitability and Survival

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

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 Chapter 1, Slide 5

Interdependence

Most organizations function as part of a larger supply chain

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 1, Slide 6

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 Chapter 1, Slide 7

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 Chapter 1, Slide 8

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 Chapter 1, Slide 9

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 Chapter 1, Slide 10

Viewing Operations as a Transformation Process

TransformationProcess

Manufacturing operations

Service operations

Inputs Outputs

MaterialsPeopleEquipmentIntangible needsInformation

Tangible goodsFulfilled requestsInformationSatisfied Customers

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 1, Slide 11

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 Chapter 1, Slide 12

Services• Intangible “Product” or Service

– 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 Chapter 1, Slide 13

Cross-Functional Linkages

Operations

FinanceBudgeting.Analysis.Funds.

MarketingWhat products?What volumes?Costs? Quality?Delivery?

HumanResourcesSkills? Training?# of Employees?

AccountingPerformance measurement systems.Planning and control.

MISWhat IT solutionsto make it all worktogether?

DesignSustainability.Quality.Manufacturability.

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 1, Slide 14

Supply Chain Management

Active management of supply chain activities and relationships to maximize

customer value and achieve a sustainable competitive advantage

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 1, Slide 15

Alcoa Ball Corp Anheuser-Busch M&M Meijer

First TierSupplier Distributo

rRetailer

Transportation companies

Finalcustomers

Upstream Downstream

Alcoa

Second TierSupplier

Material Flows

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 1, Slide 16

Ball Corporation

Metal Beverage Product Catalog (Ball Corporation)

The right size for any occasion

Building on our position as the market leader in 12-ounce (355ml) cans, we offer the largest variety of sizes of aluminum beverage cans in North America.

Our comprehensive range of products provides customers key opportunities to drive growth for their brands through a variety of multi-pack types for the take-home market and immediate consumption. Custom shapes and sizes including our Sleek Cans™ and Squat Cans offer fresh approaches to brand differentiation and serving-size optimization.

Use the links on the left to review product sizes, ends, and tabs or to learn more about custom graphic capabilities and innovative new packaging developed by Ball.

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 1, Slide 17

Supply Chain Issues

• Length of the chain

• Complexity

• Stability

• Physical, informational, and monetary flows

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 1, Slide 18

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

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 1, Slide 19

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

©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield Chapter 1, Slide 20

Important Trends

• Electronic commerce– Reduce the costs and time associated with

supply chain relationships

• Increasing competition & globalization– Fewer industries protected by geography

• Relationship management– Competition between chains, not individual

firms– Trust and coordination