Production, Distribution

Business 40Week 5Carole K. Meagher16 February, 2005

Agenda

Video Chapter 9 Article Analysis Chapter 15 Week 6 Lead-in

“Digital Domain”

Cluster into your project groups What are some lessons from DD that you

learned from watching the video?

Principles of Operations

How to organize your business so that… You know where your costs are going Your employees know their roles and

responsibilities You can assure customer satisfaction

The Production & Operations Process

InputsInputs Conversion Conversion ProcessProcess

OutpuOutputt

ManufacturiManufacturingng

ServiceService

UB’s Dry UB’s Dry CleanersCleaners

Operations Management Functions Facility Location Facility Layout Quality Control

Baldridge Award ISO 9000/ISO

140000

Manufacturing Sector Operations Management

Form Utility

Manufacturing Processes

Assembly Process

Continuous Process

Intermittent Process Materials Requirement Planning

Enterprise Resource Planning

IT/Customer-Relationship Marketing

Modern Production Techniques

Just-In-Time (JIT) Inventory

Internet Purchasing Flexible

Manufacturing Lean Manufacturing

Mass Customization Competing in Time Technology Assisted

Computer-Aided Design (CAD)

Computer-Aided Manufacturing (CAM)

Dimensions of Quality

Performance

Features

Reliability

Conformance

Durability

Serviceability

Aesthetics Perceived

Quality

Quality Control Standards Six Sigma () Quality Statistical Quality Control (SQC) Statistical Process Control (SPC) Deming Cycle Quality Function Deployment (QFD) Baldridge Award ISO 9000/14000/19011:2002

Control ProceduresPERT/CPM Charts

Control ProceduresGantt Chart

Principles of Productivity

Keep getting better, faster, cheaper Only way to improve profits

What’s Had The Biggest Effect on Productivity?

0% 20% 40% 60% 80%

Computers & Technology

Quality & Customer Satisfaction

Empowering Workers

Hiring Part-Time Workers

Downsizing Percentage of WorkforcePercentage of Workforce

Where did Productivity Rise?

-2%

0%

2%

4%

6%

8%

10%

NonstoreRetail

Telecom Dept.Stores

Comm.Banks

FoodStores

MovieTheaters

Cable/PayTV

Source: BusinessWeek, May 27, 2002

Growth Rate Of Output Per Hour Growth Rate Of Output Per Hour 1990 1990 -- 20002000

Productivity Challenge in the Automobile Industry

PRODUCER LABOR HOURS PER CAR

Toyota 21 Hours

Honda 22 Hours

General Motors 26 Hours

Ford 27 Hours

Daimler/Chrysler 31 HoursSource: Harbour & Associates, Center for Automotive Research

U.S. Productivity Champions 1999-2003

Industry Productivity Gain

Consumer Electronics 14.1%

Computers 12.6%

Software 5.3%

Insurance 5.0%

Metals & Machinery 4.5%

Banking & Finance 3.9%Source: Economy.com Inc.

Article, Groups, Break…

1. What is “channel conflict”? Describe how channel conflict is occurring between Mattel and toy retailers such as Toys R Us.

2. How is Mattel attempting to resolve or diminish this channel conflict?

3. What are the potential benefits to Mattel’s online strategy, including both e-commerce and Internet marketing?

4. What are the potential costs or risks to this online strategy?

The Supply Chain

The Four Ps of Marketing

Distribution

Retailers are part of the

distribution channel Product

Price

Promotion

Delivery Channels

Customer

Web & Email • 24x7 • Visual

Call Center • Convenient • Immediate

Kiosks • Visual • Convenient

Pervasive • Immediate • 24x7

Brick & Mortar • Touch/Feel • Experience driven

Consumers buy what they want, when they want, wherever they want

The basic distribution channel

Channel conflict at many levels…

Wal-Mart’s integrated strategy across the distribution channel:

Wal-Mart Stores Discount stores Supercenters Neighborhood Markets

SAM’s CLUB segment

Factory direct purchasing

Distribution centers MacLane subsidiary

Private label

Utility Functions of Intermediaries

FormForm TimeTime

PlacePlace

PossessionPossession

InformationInformationServiceService

Percent of B2B Commerce from Internet

Source:Source: Forrester Research Inc.

0.2% 0.4%1.0%

2.1%

4.0%

6.3%

9.4%

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

10.0%

1997 1998 1999 2000 2001 2002 2003

*Excludes Service Industries*Excludes Service Industries

Retail Store DistributionAlso relates to product availability

Intensive

Selective

Exclusive

Non-Store Distribution

E-tailing Telemarketing Vending Machines, Kiosks,

Carts Direct Selling Multilevel Marketing Direct Marketing

Where Your Food $ Goes (fig 15.3)

Labor33%

Farmer24%

Building14%

Packaging8%

Misc8%

Trans5%

Profits4%

Advertising4%

What are some things, as a business, you can do to improve profits?

Why People Don’t Shop OnlineSo what is good, not good, to sell online?

1. It isn’t secure

2. It will jeopardize my privacy

3. Usually must pay shipping charges

4. Not enough selection

5. Can’t touch/try things first

6. No satisfaction guarantee

7. Returns are a hassle

8. Won’t arrive on time

9. Hard to find things online

10. Enjoy getting out of house to shop

Source: blink, www.earthlink.net/blink

Logistics

Physical Distribution

Inbound

Materials

Outbound

Reverse

Information

Week 6 Lead-in

Production and Distribution Chapters 9, 15

Weekly assignment… the usual If you are not yet on a group, get into one!