Chapter 1 Outline:

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Chapter 1 Outline:

  1. 1. Bozarth & Handfield, Chapter 1 (2/7/03) Chapter 1 Outline: Introduction to Operations and Supply Chain Management Three Reasons For Studying Operations & Supply Chain Management Operations Management Supply Chain Management Purchasing Logistics Cross-Functional and Inter-Organizational Linkages Important Trends The information revolution Increased competition and globalization Relationship management Careers in Operations and Supply Chain Management Professional Organizations Chapter Summary Discussion Questions Exercises 1
  2. 2. Bozarth & Handfield, Chapter 1 (2/7/03) Chapter 1 Introduction to Operations and Supply Chain Management Let's start off with a question: What do the following organizations have in common? • Wal-Mart, which is not only a leading retailer in the U.S., but has also built a network of world-class suppliers, including Proctor & Gamble, • Longistics, a service firm that provides warehousing and brokerage services - all in addition to its core business of transportation, • Solectron Corporation, a contract manufacturer that assembles everything from Hewlett- Packard printers to television decoding boxes, and • I2 Technologies, a leading-edge developer of supply chain management software. I2's products help its customers plan multi-site warehousing networks, handle supply interruptions, and coordinate operations across multiple sites and firms. While these firms may appear to be in very different, they have at least one thing in common: a strong interest and involvement in operations and supply chain management. The purpose of this book is to introduce you to operations and supply chain management. We will describe how operations and supply chains create value and improve firm competitiveness. We will also emphasize the inter-functional and inter-organizational nature of these areas. 2
  3. 3. Bozarth & Handfield, Chapter 1 (2/7/03) In this chapter, we will describe what is meant by operations and supply chain management. We will also introduce some of the major operations and supply chain management activities that firms are involved with. The detailed discussion of these activities forms the core of this book. We will follow this discussion by looking at some of the major trends that have brought operations and, in particular, supply chain management to the forefront of management thinking. Finally, we will examine some of the career paths in both operations and supply chain management, and look at some of the many professional organizations dedicated to improving managerial practice in these areas. Three Reasons For Studying Operations & Supply Chain Management The study of operations and supply chain management is based on three simple ideas. First, every organization must make a product or provide a service that someone values. Otherwise, why would the organization exist? Think about it. Manufacturers produce goods that are used directly by consumers or as inputs by other manufacturers. Transportation companies provide valuable services by moving and storing these goods. Design firms use their expertise to design products and create corporate images for customers. The need to provide a valuable product or service holds true for non-profit organizations as well. Consider the variety of needs met by government agencies, charities and religious groups, for example. The common thread is that each of the above organizations has an operations function, or operations for short. Simply put, operations is the collection of people, technology, and systems within a company that has primary responsibility for providing the organization’s 3
  4. 4. Bozarth & Handfield, Chapter 1 (2/7/03) products or services. Regardless of what career path you might choose, you will need to know something about your company's operations. As important as the operations area is to a firm, few organizations can – or even want to – do everything themselves. This leads to our second point: Most organizations function as part of larger supply chains. Supply chains encompass all activities associated with the flow of goods from the raw materials stage (extraction), through to the end user, as well as the associated information flows. Supply chains link the operations of many firms together. Consider a store at the local mall selling athletic shoes. The store’s operations provide a valuable service for its customers - a convenient location and wide selection of products. Yet the store is only one link in a larger chain of activities. There are plastic and rubber producers who provide raw materials for the shoes, manufacturers who mold and assemble the shoes, wholesalers who decide what shoes to buy and when, and distributors who move the shoes to all parts of the world. All these parties work together to manage a flow of goods and information that ultimately leads to shoes on a customer’s feet. So where does this lead us? To our third point, and the premise for this book: Organizations must carefully manage their operations and supply chains in order to prosper, and indeed, survive. Returning to our example, think about the types of decisions facing a shoe manufacturer. The manufacturer faces many decisions with regard to its own operations. How many shoes should we make and in what styles and sizes? What kind of people skills and equipment do we need? Should we locate our plants to take advantage of low cost labor or to minimize shipping costs of the finished shoes? At the same time, the shoe manufacturer faces many decisions with regard to its role in the supply chain; that is, the network of other companies it works with to get shoes to the final customer. Typical questions include: From whom should we buy our materials – the lower 4
  5. 5. Bozarth & Handfield, Chapter 1 (2/7/03) cost supplier or the higher quality one? Which transportation carriers will we use to ship our shoes? What are their delivery reliability and costs like? The right choices can lead to higher profitability and increased market share, and the wrong choices can cost millions or even put a company out of business. Operations Management Let’s begin our detailed discussion of operations and supply chain management by describing operations a little more fully. As we noted earlier, all organizations must make products or provide services that someone values, and operations has primary responsibility for making sure this happens. The traditional way to think about operations is as a transformation process that takes a set of inputs and transforms them in some way to create valuable goods and services (see Figure 1.1). Consider a plant that makes wooden chairs. Even for a product as simple as a chair, the range of activities that must occur to transform raw lumber into a finished chair can be overwhelming at first. Raw lumber arrives as an input to the plant, perhaps by truck or even train car. The wood is then unloaded and moved onto the plant floor. Planing machines cut the lumber to the right thickness. Lathes shape pieces of wood into legs and back spindles for the chairs. Other machines fabricate wood blanks, shaping them into seats and boring holes for the legs and back spindles. In addition to the equipment, there are people responsible for running and loading the machines, conveyors and forklifts moving materials around the plant, and other people assembling chairs. Once the chairs are finished, still more people pack and move the chairs into a finished goods warehouse, or onto trucks to be delivered to customers. In the background, supervisors and managers use information systems to plan what activities will take place next. 5
  6. 6. Bozarth & Handfield, Chapter 1 (2/7/03) Figure 1.1: Viewing operations as a transformation process Transformation Process Inputs Outputs • Materials • Manufacturing operations • Tangible goods • Intangible needs • Service operations • Fulfilled needs • Information • Satisfied customers It’s important to remember that operations can also provide intangible products, or services, as in the case of a law firm. A major “input”, for example, might be the need for legal advice – hardly something you can put your hands around! The law firm, through the skill and knowledge of its lawyers and other personnel, transforms this “input” into valuable legal advice, thereby fulfilling the customer’s needs. How well the law firm accomplishes this transformation goes a long way in determining its success. Figure 1.1 makes several other points. The inputs to operations can come from many places and take many different forms. They can include raw materials, intangible needs, or even information, such as forecasts of demand. Also, operations are often highly dependent on the quality and availability of inputs. Consider our chair plant again. If the lumber delivered to our plant is of poor quality or arrives late, we might have to shut down production. In contrast, a steady stream of good quality lumber can assure us of high production levels and superior products. Clearly, operations can range from very simple ones—like a hotdog stand—to complex systems of people, technology, and information. As we will see, the scope of operations management activities is enormous. Typical operations activities include new product 6
  7. 7. Bozarth & Handfield, Chapter 1 (2/7/03) development, process selection, quality management activities, forecasting, capacity planning, production planning, and inventory management. Two final points. First, nearly all of operations management activities require coordination with other business functions, including engineering, marketing, and human resources. We will revisit the importance of cross-functional decision-making in operations throughout the book. Second, operations management activities are information intensive. You do not have to be able to assemble a widget yourself to be a successful operations manager -- but you do have to make sure the right people and equipment are available to do the job, the right materials arrive when needed, and the widget is shipped on-time, at cost, and to specifications! Easy, huh? Supply Chain Management As important as a company’s internal operations activities are, the traditional view illustrated in Figure 1.1 still puts most of the emphasis on the activities a particular organization must perform when designing and managing its own operations. But it is not enough for a company to focus on doing the “right” things within its own four walls. The company must also understand how it is linked in with the operations of its suppliers, distributors, and customers —what we refer to as the supply chain. As we noted earlier, the supply chain encompasses all activities associated with the flow of goods from the raw materials stage through to the end user, as well as the associated information flows. Note that these flows of products, services, and information go both up and down the chain. We have already briefly described two supply chains in our discussion of the athletic shoe and furniture industries. Let’s extend our discussion and vocabulary using a product many people are familiar with: A six-pack of their “favorite malted beverage” (see Figure 1.2). 7
  8. 8. Bozarth & Handfield, Chapter 1 (2/7/03) Figure 1.2: A simplified view of Anheuser-Busch’s supply chain 2nd tier 1st tier Distributor Retailer supplier supplier Alcoa Ball Corp Anheuser-Busch M&M Meijer Final customers Transportation companies When the typical customer goes to the store to buy the product, he probably does not consider all of the steps that occur before that six-pack gets into his hands. Take cans, for example. Alcoa extracts the aluminum from the ground and ships it to Ball Corporation, who converts the aluminum into cans. Ball Corporation uses this raw material to produce cans for Anheuser-Busch. In supply chain lexicon, Ball Corporation is a first-tier supplier to Anheuser-Busch because it supplies materials directly to the brewer. By the same logic, Alcoa is a second-tier supplier. The cans from Ball Corporation are combined with other raw materials, such as cartons, grain, hops, yeast, and water to produce the packaged beverage. Anheuser-Busch then sells the packaged beverages to M&M, a wholesaler, who in turn distributes the finished good to Meijer, otherwise known as the retailer. Of course, we cannot forget the role of transportation carriers, who carry the inputs and outputs from one place to the next along the supply chain. As Figure 1.2 suggests, the flow of goods and information goes both ways. For instance, Ball Corporation might place an order (information) with Alcoa, who in turn ships 8
  9. 9. Bozarth & Handfield, Chapter 1 (2/7/03) aluminum (product) to Ball. Anheuser-Busch might even return empty pallets or containers to its first-tier suppliers, resulting in a flow of physical goods back up the supply chain. Of course, there are many more participants in the supply chain than the ones shown above—Anheuser-Busch has hundreds of suppliers and the number of retailers is even higher. We could also draw out the supply chain from the perspective of Alcoa, M&M or any of the other participants. The point is that most of the participants in a supply chain are both customers and suppliers. Finally, the supply chain must be very efficient, as the final price of the good (about $3) must cover all of the costs involved plus a profit for each participant in the chain. While you were reading through the above example, you might have thought to yourself “supply chains aren’t new”—and you’d be right. Yet most participants in supply chains have performed their activities independently of other firms in the chain. This made for disjointed and often inefficient supply chains. In contrast, supply chain management is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by a firm or group of firms to develop and run supply chains in the most effective & efficient ways possible. One of the best-known examples of superior supply chain management is Wal-Mart1. Wal-Mart has made an art of managing the flow of products and information between its suppliers, distribution centers, and individual stores. Daily sales information from individual stores is sent by a satellite network to Wal-Mart's suppliers, who use the information to plan production and ship orders to Wal-Mart. In addition, Wal-Mart uses a dedicated fleet of trucks to ship goods from warehouses to stores in less than 48 hours, and to replenish store inventories about twice a week. The result is higher customer service (because products are 1Stalk, Evans & Shulman (1992), "Competing on capabilities: The new rules of corporate strategy", HBR, Vol. 70, no. 2, pp. 57-69. 9
  10. 10. Bozarth & Handfield, Chapter 1 (2/7/03) nearly always available), lower production and transportation costs (because suppliers only make and ship what is needed), and better use of retail store space (because stores do not have to hold an excessive amount of inventory). But how does an individual firm "manage" a supply chain, particularly since supply chains include multiple firms with potentially conflicting objectives? Supply chain management efforts can range from an individual firm taking steps to improve the flow of information between itself and its suppliers, to large trade organizations looking for ways to standardize transportation and billing practices. Wal-Mart is one instance in which a single, very powerful firm took primary responsibility for improving performance across its own supply chain. In contrast, companies within an industry form councils or groups to identify and adopt supply chain practices that will benefit all firms in the industry. An example is the Automotive Industry Action Group (AIAG), whose mission is, in part, to "foster cooperation and communication between trading partners and their suppliers to improve and reduce variation in business processes and practices."2 Finally, organizations like the Supply Chain Council (SSC) seek to improve supply chain performance across many industries3. Purchasing One major area of supply chain management that deserves special mention here is purchasing. Purchasing (also called "sourcing” or "procurement") activities ensure that the company has suitable sources for the goods and services it needs. In effect, purchasing activities link a firm with its upstream suppliers. Purchasing personnel will often assist in determining which products should be produced internally or purchased. Once the decision is made to purchase a product or service from external suppliers, purchasing initiates the purchasing process. This 2 From http://www.aiag.org/about/. May 31, 1998. 3 From http://www.supply-chain.org/default.htm. May 31, 1998 10
  11. 11. Bozarth & Handfield, Chapter 1 (2/7/03) involves identifying, selecting and evaluating potential suppliers, developing detailed specifications for the products or services needed by a firm, certifying the quality of suppliers’ goods and services, negotiation of contractual terms and conditions, and developing long-term relationships with key suppliers. Purchasing’s role is increasingly becoming one of an external liaison with suppliers; for instance, personnel may act as facilitators when suppliers become involved in the firm’s new product development process. We cover purchasing activities in detail in Chapter 7. Logistics A second major area of supply chain management is logistics, which we treat more fully in Chapter 8. Logistics focuses on the physical movement and storage of goods and materials. Managers in this area have primary responsibility for evaluating and selecting various transportation options, developing and managing networks of warehouses when needed, and managing the physical flow of materials into and out of the organization. These physical flows are often called in-bound and out-bound logistics, respectively. As we will see, logistics decisions are often tightly intertwined with production and inventory decisions, particularly when businesses must decide where to hold inventory in the supply chain. In some cases, logistics managers help decide on the appropriate type of packaging for products. Logistics personnel also must work closely with marketing to determine the channels (e.g., wholesalers, retailers, mail-order) by which to distribute the firm’s products and services. As we noted early, material and products can also flow back up the supply chain. For example, customers might need to return damaged or outdated products. This process, known as reverse logistics, presents a different set of logistics challenges. An important new trend in supply chain management is the recovery and recycling of products after they have reached 11
  12. 12. Bozarth & Handfield, Chapter 1 (2/7/03) the end of their useful life. Organizations are even now extending their supply chains beyond the final customer to include the acceptance and “dis-assembly” of final products for re-use in new products. In this sense, organizations are seeking to “close the loop”, and eventually transform used products into new products and/or materials that can be returned to the earth without harming the environment. 12
  13. 13. Bozarth & Handfield, Chapter 1 (2/7/03) Cross-Functional and Inter-Organizational Linkages One final point. As you go through this book, you will quickly learn that none of the major operations and supply chain activities takes place in a vacuum. Rather, these activities require the input and feedback of other functions within the firm, as well as suppliers and customers. Table 1.1 lists some major operations and supply chain activities, as well as some of the key outside participants. Look, for example, at process selection. Engineering and IT can help identify and develop the technologies needed, while human resources can identify the people skills and training programs necessary to make the system “work.” Involving marketing and the customers will assure that the process meets the customers’ needs. Finally, finance will need to be involved if the process requires a substantial investment in resources. 13
  14. 14. Bozarth & Handfield, Chapter 1 (2/7/03) Table 1.1: Summary of key operations and supply chain activities. Operations Key Key & Supply Chain Inter-functional Inter-organizational Activities Purpose Participants Participants Process Design and implement the transformation Engineering Customers Selection processes that best meet the needs of Marketing the customer and firm. Finance Human Resources IT Forecasting Develop the planning numbers needed Marketing Suppliers for effective decision making. Finance Customers Accounting Capacity Establish strategic capacity levels ("bricks & mortar") Finance Suppliers Planning and tactical capacity levels (workforce, inventory levels). Accounting Customers Marketing Human Resources Inventory Manage the amount and placement of inventory IT Suppliers Management within the company and the supply chain. Finance Customers Planning Schedule and manage the flow of work through an Marketing Suppliers & Control organization and the supply chain; Match up IT Customers customer demand to supply chain activities. Suppliers Purchasing Identify & qualify suppliers of goods & services; Engineering Suppliers Manage the ongoing buyer-supplier relationships. Finance Marketing Logistics Manage the movement of physical goods Marketing Suppliers throughout the supply chain Engineering Customers Recovery "Close the loop" by recovering and recycling Engineering Suppliers & Recycling used products and materials. Customers 14
  15. 15. Bozarth & Handfield, Chapter 1 (2/7/03) Important Trends As we shall see, operations and supply chain management is as much a philosophical approach as it is a body of tools and techniques, and typically requires a great deal of interaction and trust between companies to work. For right now, however, let's talk about three major developments that have brought these areas to the forefront of management’s attention: • The information revolution • Increased competition and globalization in today's markets • Relationship management The Information Revolution In the early 1960s when computers were first developed, a mainframe computer filled an entire room. With the development of the integrated circuit, the cost and speed of computer power increased exponentially. Today, a laptop computer exceeds the storage and computing capacity of mainframe computers made only 15 years ago. With the emergence of the personal computer, optical fiber networks, and the Internet, the cost and availability of information resources allows easy linkages and eliminates information-related time delays in any supply chain network. Wal-Mart's ability to send daily sales information to its suppliers is just one example. Organizations are moving towards a concept known as electronic commerce, where information transactions are automatically completed via Electronic Data Interchange (EDI), Electronic Funds Transfer (EFT), Point of Sale (POS) devices, and a variety of other 15
  16. 16. Bozarth & Handfield, Chapter 1 (2/7/03) approaches. The late 1990s and early 2000s saw the emergence of on-line “trading communities” that put thousands of buyers and sellers in touch with one another4. The old “paper”-type transactions are becoming increasingly obsolete. At the same time, the proliferation of new telecommunications and computer technology has made instantaneous communications a reality. Such information systems -- like Wal-Mart's satellite network -- can link together suppliers, manufacturers, distributors, retail outlets, and ultimately, customers, regardless of location. Increased Competition and Globalization The second major trend is increased competition and globalization of businesses. The rate of change in markets, products, and technology is increasing, leading to situations where managers must make decisions on shorter notice, with less information, and with higher penalty costs. New competitors are entering into markets that have traditionally been dominated by "domestic" firms. At the same time, customers are demanding quicker delivery, state-of-the-art technology, and products and services better-suited to their individual needs. In some industries, product life cycles are shrinking from years to a matter of two or three months. One management guru even compared current global markets to the fashion industry, in which products go in and out of style with the season. Despite the imposing challenges of today’s competitive environment, some organizations are thriving. These firms have embraced the changes facing today's markets, and have put a renewed emphasis on improving their operations and, in particular, supply chain performance. For instance, Johnson Controls can now receive an order for seats from a Ford assembly plant, make the seats, and deliver the order -- all within four hours. This requires 4 Ariba (see www.ariba.com) is just one example of a business-to-business (B2B) exchange. 16
  17. 17. Bozarth & Handfield, Chapter 1 (2/7/03) incredibly flexible operations within Johnson's own manufacturing systems, as well as dependable information links with its supply chain partners. To survive, many firms today find that they must increase market share on a global basis and be on the “ground floor” of rapid global economic expansion. Simultaneously, these firms must vigorously defend their domestic market share from a host of “world class” international competitors. To meet this challenge, managers are seeking to find ways to rapidly expand their global presence. They must position inventories so products are available when customers (regardless of location) want them, in the right quantity, and for the right price. This level of performance is a constant challenge to organizations, and can only occur when all parties in a supply chain are “on the same wavelength”. Relationship Management The information revolution has given companies a wide range of technologies for better managing their operations and supply chains. Furthermore, increasing customer demands and global competition have given firms the incentive to improve these areas. But this is not enough. Any efforts to improve operations and supply chain performance are likely to be inconsequential without the cooperation of other firms. As a result, more companies are putting an emphasis on relationship management. Of all the activities operations and supply chain managers perform, relationship management is perhaps the most difficult, and is therefore the most susceptible to break down. A poor relationship within any link of the supply chain can have disastrous consequences for all other supply chain members. For example, an unreliable supplier can virtually cripple a plant, leading to inflated lead times and resulting in problems across the chain, all the way to the final customer. 17
  18. 18. Bozarth & Handfield, Chapter 1 (2/7/03) To avoid such problems, firms must manage the relationships with their upstream suppliers as well as their downstream customers. In many American industries, strong supply chain relationships like those found Japan might not develop readily. Firms are often geographically distant, and there are not as many small, family-owned suppliers as in Japan. In the case of high-tech firms, many components may be sole-sourced from overseas suppliers who are proprietary owners of the required technology. In such environments, it becomes more important to choose a few, select suppliers, thereby paving the way for informal interaction and information sharing. Careers in Operations and Supply Chain Management At this point you might be asking yourself, "If I choose to work in operations or supply chain management, where am I likely to end up?" The answer: Anywhere you like! Operations and supply chain personnel are needed in virtually every industry. Salaries for operations and supply chain personnel also tend to be highly competitive, reflecting the important and challenging nature of the work, as well as the relative scarcity of qualified individuals. Finally, you might be asking yourself, "What would my career path look like?" Many operations and supply managers find that over their career, they work in many different areas. Table 1.2 lists just a few of the possibilities. 18
  19. 19. Bozarth & Handfield, Chapter 1 (2/7/03) Table 1.2: Potential career paths in operations & supply chain management Analyst Uses analytical and quantitative methods to understand, predict, and improve processes within the supply chain. Commodity Manager Acquires knowledge in a specific market in which the organization purchases significant quantities of materials and services. Helps formulate long-term commodity strategies and manage long-term relationships with selected suppliers. Customer Service Manager Plans and directs customer service teams to meet the needs of customers and support company operations. Works closely with marketing and sales, logistics, and transportation departments. International Logistics Manager Works closely with manufacturing, marketing, and purchasing to create timely, cost-effective import/export supply chains. Logistics Services Salesperson Markets transportation, warehousing, and specialized services to other companies. Production Manager Supervises production in a manufacturing setting. Responsible for a wide range of personnel. Purchasing Manager Identifies global sources of materials, selects suppliers, arranges contracts, and manages on- going relationships. Supplier Development Manager Measures supplier performance, identifys 19
  20. 20. Bozarth & Handfield, Chapter 1 (2/7/03) suppliers requiring improvement, and facilitates efforts to improve suppliers’ processes. Supply Chain Manager Reviews existing procedures and examines opportunities to streamline production, purchasing, warehousing, distribution, and financial forecasting to meet product distribution needs. Systems Support Manager (MIS) Provides analytical support in the management of logistics information, supplier performance data, materials requirements, and scheduling processes. Transportation Manager Manages private, third party and contract carriage systems to assure timely and cost efficient transportation of all incoming and outgoing shipments. 20
  21. 21. Bozarth & Handfield, Chapter 1 (2/7/03) Professional Organizations If you decide to pursue a career in operations or supply chain management, you will find a number of professional organizations willing to help you. These organizations have professional certification programs that establish an individual as a professional within his or her particular area. Most organizations also have regular meetings at the local level, as well as national and international meetings once or twice a year. Some of these organizations are described here, along with their web sites. APICS (www.apics.org). APICS describes itself as “the educational society for resource management.” It is a widely-recognized professional society for persons interested in operations and supply chain management. APICS currently has more than 67,000 members and 160 chapters throughout the U.S. and its territories. NAPM – National Association of Purchasing Management (www.napm.org) provides national and international leadership in purchasing and materials management, particularly in the areas of education, research, and standards of excellence. Established in 1915, NAPM has grown to 40,000 members. CLM – Council of Logistics Management (www.clm1.org) seeks to be the preeminent professional association providing worldwide leadership for the evolving logistics profession through the development, dissemination, and advancement of logistics knowledge. 21
  22. 22. Bozarth & Handfield, Chapter 1 (2/7/03) ASQ – American Society for Quality (www.asq.com) is a leader in education and all aspects of quality improvement, including the Baldrige Award, ISO 9000, and continuous improvement activities. If you are a student, it is not too early to start thinking of joining one of these organizations. In fact, many of them provide scholarships for college education, and can help defray expensive education costs. Chapter Summary Operations and supply chains are pervasive to business. All organizations must provide a product or service that someone values. This is the primary responsibility of operations. Furthermore, most organizations do not function independently, but find that their activities are linked with those of other organizations via supply chains. Careful management of operations and supply chains is therefore vital to the long-term health of nearly every organization. Because operations and supply chain activities cover everything from planning and control activities to purchasing and logistics, there are numerous career opportunities for students interested in the area. Trends in information systems and global competition, as well as the growing importance of maintaining good relationships with other supply chain partners, will only increase these opportunities. Finally, there are many professional organizations, including APICS, CLM, and NAPM that cater to the career development of professionals in operations and supply chain management. 22
  23. 23. Bozarth & Handfield, Chapter 1 (2/7/03) Discussion Questions 1. When a customer calls Dell Computers to order a PC, Dell builds a PC based on the customer's unique requirements, and ships the PC directly to the customer -- all in a matter of hours. What do you think Dell Computer's supply chain looks like? How important are Dell's suppliers and transportation partners to the success of the supply chain? 2. One of your friends states that "operations and supply chain management are primarily of interest to manufacturing firms." Is this true or false? Give some examples to support your arguments. 3. Think of all the different services provided by a typical college. How many can you name? What resources are required to perform these services? What are the important performance considerations -- quality, cost, etc. -- for these services? 4. Early in the chapter, we argued that "every organization must make a product or provide a service that someone values." Can you think of an example where poor operations or supply chain management undercut a business? 23
  24. 24. Bozarth & Handfield, Chapter 1 (2/7/03) Exercises 1. Visit the web sites for the professional organizations listed at the end of the chapter. Which of the careers listed in these web sites are mentioned in the chapter? Which ones sound most appealing to you? 2. Draw out the transformation process at a manufacturing plant. At a hospital. At a church. What are the inputs? The outputs? 3. Visit the web site for the Supply-Chain Council at http://www.supply-chain.org. What is the purpose of the council? Who are some of the members? What are some of the job openings listed with the web site? 24

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