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Managing Operations

Across the Supply Chain

EBookContent

Chapter1: Introduction to Managing Operations Across the Supply Chain

Chapter Opener

PART1SUPPLY CHAIN: A PERSPECTIVE

FOR OPERATIONS MANAGEMENT

1 Introduction to Managing Operations Acrossthe Supply Chain

X X X

2 Operations and Supply Chain Strategy X X X

What is operations management? Have you ever stopped to consider all of the nuts andbolts of how organizations (business and not-for-profit) deliver goods and services to their

customers? Think of all the details that must be managed to develop product concepts, to

identify sources for raw materials, to decide how products will be made and delivered, and to

establish how to serve customers. Operations management includes all of these types ofdecisions:

Operations mangement is the management of processes used to design, supply, produce,

and deliver valuable goods and services to customers.

In Part 1, Supply Chain: A Perspective for Operations Management, we define the scope of

operations management as well as its strategic role. Chapter 1 explains what operations

management is and why it is important for all managers (accounting, marketing, finance, and

other managers) to understand the basics of this management discipline. Chapter 1 also

introduces an important perspective, the supply chain, as a way to think about how to

coordinate operational activities across different organizations. Chapter 2 describes how

strategic choices in operations management relate to an organizations overall objectives and

to choices made in marketing, finance, and other functional areas. In addition, Chapter 2

explains how to increase competitiveness through effective operations, and finally how to

measure the effectiveness of operations activities.

CHAPTER OUTLINE

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Hewlett-Packard

Reinvents Its

Operations by

Reinventing Its

Supply Chain

HP improved its customer focus and responsiveness by:

Separating its printer business from its PC business.

Building strong partnerships with major retail outlets such as Walmart, BestBuy, and Circuit

City.

Teaming with Walmart to create a build-your-own-PC program.

Redesigning its notebooks and desktops to include more consumer-friendly features.

Acquiring EDS, Inc., to provide a stronger services arm for the company.

HP improved product quality and reduced product cost by:

Merging its PC business with Compaq.

Reducing the number of contract factories used to build its personal computers from 24 to

10.

Creating competition between its suppliers of chips, Advanced Micro Devices and Intel, thus

generating even cheaper microchip prices.

Continually improving internal operational processes through Six Sigma and other quality

management programs.

These changes illustrate how HP used improvements both within its internal operations and in

activities involving its suppliers, distributors, and customers to create competitive advantages.

Today, HP provides its customers with immediate access to in-stock, attractively designed, and

competitively priced computers through multiple distribution channels including direct sales,online sales, and a wide variety of retail stores. The company is also growing its support

services business. As a result, the new HP has gained ground on competitors such as Dell and

IBM.

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2011 McGraw-Hill Higher Education

Any use is subject to the Terms of Use and Privacy Notice.

McGraw-Hill Higher Education is one of the many fine business es ofThe McGraw-Hill Companies.

In this book, Managing Operations Across the Supply Chain, we bring together two important

business concepts: operations management and the supply chain. The book is mainly about

operations management, but we will study operations management using a supply chain

perspective. This perspective means that this book considers operational activities that cross firms'

boundaries, involving suppliers and customers of all types. This larger network of organizations

makes up a firm's supply chain.

The HP story illustrates the need for this broad perspective of operations management. In order

to turn their business around, HP had to improve their relationships with suppliers and customers

as well as improve their own internal operations. Operations management by definition spans a

large number of activities that take place both inside and outside the business firm.

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