Introduction to Operations and Supply Chain Management

Text: Introduction to Operations and Supply Chain Management Custom edition for Farmingdale State College Authors: Cecil Bozarth & Robert Handfield Where appropriate reference text page numbers will be on bottom of slides OSC may be used as an abbreviation of Operations and Supply Chain

Chapter Objectives Be able to: Describe what the operations function is and why it is critical to an organization’s survival. Describe what a supply chain is and how it relates to a particular organization’s operations function. Discuss what is meant by operations management and supply chain management. Identify some of the major operations and supply chain activities, as well as career opportunities in these areas. Make a case for studying both operations management and supply chain management.

Introduction Why study Operations and Supply Chain Management? Operations Management Supply Chain Management Important trends LeapFrog case study

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)

Why Study Operations and Supply Chain Management?

Three Basic Truths Pervasiveness Interdependence Profitability and Survival

Pervasiveness Every organization must make a product or provide a service that someone values…………. Manufacturer. Retailer. Design firm. University. Health services.

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.

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

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?

Operations Management The planning, scheduling, and control of the activities that transform inputs into finished goods and services

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.

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

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.

Services Intangible “Product” or Service Key decisions: Location, Exchange, Storage, Physiological, Information Key decisions: How much customer involvement? How much customization?

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 and Supply Chain Marketing What products? What volumes? Costs? Quality? Delivery? Accounting Performance measurement systems. Planning and control.

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

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

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.

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 Discussed in more detail in Chapter 3

SCOR Model © Supply-Chain Council, 2007

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/

Panera Bread — 2006 4th quarter revenues and profits up 25% and 8%, respectively, over 2005 4th quarter* >200 million pounds of dough delivered by 110 trucks traveling 9.7 million miles annually *Panera Bread, 4th Quarter 2006 Earnings Report, www.panera.com/about/investor/reports.php.

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 Use Boeing, http://www.boeing.com, as an example for reducing supply chain costs and time.

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

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

Case Study Introducing Operations and Supply Chain Management LeapFrog