Introduction to

Operations and Supply

Chain Management

Chapter Objectives
Be able to:
Describe what the operations function is and why it is
critical to an organizations survival.
Describe what a supply chain is and how it relates to a
particular organizations 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 Operat
ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
2

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

2008 Pearson Prentice Hall --- Introduction to Operat

ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
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 Operat
ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
4

Why Study Operations and

Supply Chain Management?

Three Basic Truths

I.

Pervasiveness

II. Interdependence
III. Profitability and Survival

2008 Pearson Prentice Hall --- Introduction to Operat

ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
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 Operat
ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
7

Interdependence
Most organizations function as part of a
larger supply chain

2008 Pearson Prentice Hall --- Introduction to Operat

ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
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 Operat

ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
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 Operat

ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
10

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 organizations
products and/or services.
2008 Pearson Prentice Hall --- Introduction to Operat
ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
12

Viewing Operations as a
Transformation Process
Transformation
Process
Manufacturing operations

Inputs
Materials
People
Equipment
Intangible needs
Information

Outputs
Service operations

2008 Pearson Prentice Hall --- Introduction to Operat

ions and Supply Chain Management, 2/e --- Bozarth and

Tangible goods
Fulfilled requests
Information
Satisfied Customers

Chapter 1, Slide
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 Operat

ions and Supply Chain Management, 2/e --- Bozarth and

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 Operat
ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
15

Cross-Functional Linkages
Finance
Budgeting.
Analysis.
Funds.

Design
Sustainability.
Quality.
Manufacturability.

MIS
What IT solutions
to make it all work
together?

Operations and
Supply Chain

Accounting
Performance measurement systems.
Planning and control.
2008 Pearson Prentice Hall --- Introduction to Operat
ions and Supply Chain Management, 2/e --- Bozarth and

Human
Resources
Skills? Training?
# of Employees?

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

Material Flows
Upstream

Second Tier
Supplier

First Tier
Supplier

Alcoa

Ball Corp

Downstream

Distributo
r
Anheuser-Busch

M&M

Retailer
Meijer

Final
customers

Transportation companies

2008 Pearson Prentice Hall --- Introduction to Operat

ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
18

Supply Chain Issues

Length of the chain

Complexity
Stability
Physical, informational, and monetary
flows

2008 Pearson Prentice Hall --- Introduction to Operat

ions and Supply Chain Management, 2/e --- Bozarth and

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 Operat
ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
20

SCOR Model

Supply-Chain Council, 2007

2008 Pearson Prentice Hall --- Introduction to Operat
ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
21

Wal-Mart Early 1990s

Individual stores sent sales data daily
to Wal-Marts 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 Operat

ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
22

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.

2008 Pearson Prentice Hall --- Introduction to Operat

ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
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 Operat

ions and Supply Chain Management, 2/e --- Bozarth and

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 Operat

ions and Supply Chain Management, 2/e --- Bozarth and

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 Operat
ions and Supply Chain Management, 2/e --- Bozarth and

Chapter 1, Slide
26

Case Study Introducing

Operations and Supply Chain
Management

LeapFrog