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

• Why study Operations and Supply Chain
Management?
• Operations Management
• Supply Chain Management
• Important trends
• LeapFrog case study
©2008 Pearson Prentice Hall --- Introduction to Operations and Supply
Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 1, Slide 3

• 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
Chapter 1, Slide 4

Why Study Operations and
Supply Chain Management?

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
Chapter 1, Slide 6

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
Chapter 1, Slide 7

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
Chapter 1, Slide 8

• 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
Chapter 1, Slide 9

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
Chapter 1, Slide 10

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

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
Chapter 1, Slide 12

Inputs
 Materials
 People
 Equipment
 Intangible needs
 Information
Viewing Operations as a
Transformation Process
Transformation
Process
Manufacturing operations
Service operations
Outputs
 Tangible goods
 Fulfilled requests
 Information
 Satisfied Customers
©2008 Pearson Prentice Hall --- Introduction to Operations and Supply
Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 1, Slide 13

• 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
Chapter 1, Slide 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
Chapter 1, Slide 15

Finance
Budgeting.
Analysis.
Funds.
MIS
What IT solutions to make it all work together?
Human
Resources
Skills? Training?
# of Employees?
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
Marketing
What products?
What volumes?
Costs? Quality?
Delivery?
Chapter 1, Slide 16

Supply Chain Management
Active management of supply chain activities and relationships to maximize customer value and achieve a sustainable competitive advantage

Upstream Downstream
Second Tier
Supplier
First Tier
Supplier
Ball Corp
Distributor Retailer
Anheuser-Busch M&M Meijer
Final customers
Transportation companies
©2008 Pearson Prentice Hall --- Introduction to Operations and Supply
Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 1, Slide 18

• 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
Chapter 1, Slide 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
Chapter 1, Slide 20

© Supply-Chain Council, 2007
©2008 Pearson Prentice Hall --- Introduction to Operations and Supply
Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 1, Slide 21

• Individual stores sent sales data daily to WalMart’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
Chapter 1, Slide 22

• 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
Chapter 1, Slide 23

• 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
Chapter 1, Slide 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
Chapter 1, Slide 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
Chapter 1, Slide 26

Case Study Introducing
Operations and Supply Chain
Management
LeapFrog