SMOperations_Management_Sustainabil ity_and_ V
Supply_Chain_Management
Operations and Productivity
V V
Background
OperationsVmanagementVhasVcreatedVindustryVgiants.VTheVRitz-
CarltonVHotelVCompany’sVmissionVisVtoVprovideVanVoutstandingVcustomerVexperienceVthroughVaVcom
pleteVfocusVonVqualityVmanagement.VUPSVoperatesVtrucksVthatVrunVforV20VyearsVbecauseVtheirVdrive
rsVcare.VDisneyVhasVmadeVaVscienceVofVaccurateVforecastsVandVqueuingVtheory.VDardenVRestaurantsV(
RedVLobster,VOliveVGarden,VandVothers)VviewVoperationsVasVtheirVstrategyVforVsuccess.VFrito-
LayVdominatesVtheVsnackVmarketVbyVkeepingVfreshVsnacksVonVtheVshelvesVwithVaVproductionVprocess
VthatVconvertsVrawVmaterialsVintoVaVbagVofVchipsVsittingVinVaVgroceryVstoreVinVasVlittleVasVaVdayVorVt
wo.
TheVimportanceVofVoperationsVmanagementVcanVbeVhighlightedVearlyVinVtheVcourseVwithVhumorousV
videosVorVstoriesVaboutV“operationsVgoneVwrong.”VMostVstudentsVcanVshareV“disaster”VstoriesVabout
VpoorVexperiencesVthatVtheyVhaveVhadVdealingVwithVcompanies.VOnVaVmoreVseriousVnoteVcompaniesVs
uchVasVMapleVLeafVFoods,VXLVfoods,VBoeingV(Dreamliner),VandVJohnsonV&VJohnsonV(Tylenol)VprovideV
greatVexamplesVthatVcanVleadVtoVaVfascinatingVdiscussionVofVtheVoperationsVrecoveryVprocess—
whatVtoVdoVandVwhatVnotVtoVdoVwhenVanVoperationalVfailureVgetsVmediaVattention.
ItVcanVbeVusefulVasVwellVtoVspendVsomeVclassVtimeVdiscussingVtheVjobVmarketVforVoperationsVmanag
ementVmajors,VcomparingVstartingVsalariesVandVjobVtitlesVtoVotherVbusinessVmajors.VFindVanVMBAVpr
ogramVwithVaVstrongVoperationsVfocusVandVdisplayVtheVstartingVsalariesVofVthoseVgraduatesV(suchVda
taVareVavailableVonVmanyVMBAVprogramVwebsites).VResearchVshowsVthatV(1)VmoreVCEOsV“learnVtheVro
pes”VbyVcomingVupVthroughVoperationsVthanVanyVotherVfunctionalVarea,VandV(2)VChiefVOperatingVOffi
cerVsalariesVtendVtoVbeVapproximatelyV10%VhigherVthanVtheVsalariesVofVtheVotherV“Chiefs”V(CFO,VCM
O,VandVCIO).
ClassVDiscussionVIdeas
,1. ChooseVanVorganizationVtheVstudentsVwillVbeVfamiliarVwithVandVaskVthemVtoVidentifyVandVdescrib
eVtheVproductVofVthatVorganization.VDirectVtheVdiscussionVtoVhighlightVtheVcomplexVnatureVofVth
eVproductVofferingsVofVmostVorganizationsVtodayVwhereVproductVandVserviceVelementsVareVfound
VtoVsomeVdegreeVinValmostVallVorganizations.
2. HaveVtheVstudentsVchooseVaVfewVdifferentVtasksVorVjobsVandVidentifyVpossibleVproductivityVmeasu
resVforVthese.VTheyVshouldVdescribeVhowVtheyVwouldVgoVaboutVmakingVtheVnecessaryVmeasurem
ents.VStudentVandVfacultyVproductivityVareVeasyVexamplesVthatVcanVgenerateVquiteVaVbitVofVdiscu
ssion.VOneVpossibleVwayVtoVstartVtheVdiscussionVisVtoVaskVwhetherVgradesVorVresearchVoutputVis
VanVeffectiveVmeasureVofVstudentVandVfacultyVproductivity.
ActiveVClassroomVLearningVExercises
1. LabourVproductivityVisVsometimesVperceivedVtoVbeVdrivenVbyVemployeeVmotivation.VHaveVtheVstu
dentsVsplitVupVintoVsmallVgroupsVtoVdiscussVeffectiveVwaysVtoVmotivateVhourlyVemployeesVvs.Vsal
ariedVmanagers.VIfVproductivityVofVtheseVworkersVisVbelowVexpectation,VwhatVareVgoodVandVpoo
rVwaysVtoVtryVtoVmotivateVthem?VWhatVmethodsVmightVworkVwellVwithVblueVcollarVemployeesVb
utVnotVwhiteVcollarVemployees,VandVvice-
versa?VWhatVmethodsVmightVworkVwellVinVtheVshortVrunVbutVnotVinVtheVlongVrun,VandVvice-
versa?VHaveVeachVstudentVgroupVreportVitsVideasVtoVtheVwholeVclass.V(AndVifVanyVgroupVhasVlittleV
toVsay,VaskVthemVwhatVcouldVhaveVbeenVdoneVtoVmotivateVthemVtoVdoVbetter!)
2. CompaniesVoftenVlocateVinVotherVcountriesVtoVtakeVadvantageVofVlowVwageVrates.VHowever,Vthe
VdifferenceVinVlabourVcostsVshouldVbeVadjustedVtoVaccountVforVproductivityVdifferencesVamongVt
heVworkersVinVtheVtwoVlocations.VOneVwayVtoVdoVthisVisVtoVcomputeVaV“relativeVwageVrate,”VR,V
ofVoperatingVinVanotherVcountry.VNoteVthatVRVisVnotVtheVactualVwageVrateVpaid,VbutVitVisVtheVho
urlyVwageVrateVofVoperatingVinVanotherVcountryVrelativeVtoVtheVhomeVcountry,VafterVtakingVprod
uctivityVdifferencesVintoVaccount.V IfV theV foreignV country’sV workersV areV moreV productive,V RV
willV decrease,V andV vice-
versa.VTheV formulaV isV RV =V (WV ÷V X)(UV ÷V F),V whereV WV =V theV foreignV wageV rateV (inV foreignV curr
encyV perV hour),VXV=VtheVexchangeVrateV(inVforeignVcurrencyVperVlocalVcurrency),VUV=VhomeVcoun
tryVproductivityV(inVunitsVperVhour),VandVFV=VforeignVcountryVproductivityV(inVunitsVperVhour).
AVproblemVcouldVbeVdescribedVasVfollows.VSupposeVthatVworkersVinVBritainVearnV₤10/hour.VTheVex
changeVrateV withV CanadaV isV $1.50V perV ₤1.V CanadianV workersV canV produceV 40V unitsV perV hour
,V whileV British
, workersV atV aV similarV facilityV canV produceV 50V unitsV perV hour.V IfV theV CanadianV wageV rateV is
$14VperVhour,VshouldVtheVfirmVproduceVinVCanadaVorVinVBritain?
HaveVtheVstudentsVtryVtheVexerciseVinVclass.VTheyVwillVprobablyVanalyzeVthisVproblemVbyVcompu
tingVaVlabourVcostVperVunitVinVeachVcountryV(35VcentsVvs.V30Vcents).VThenVintroduceVtheVconcep
tVandVformulaVforVrelativeVwageVrateV(RV=V$12VinVBritain).VBothVapproachesVareVequallyVaccurat
e,VbutVusingVaVrelativeVwageVrateVhasVpoliticalVadvantages,Vi.e.,VitVseemsVeasierVtoVtalkVaboutVo
neVwageVrateVvs.VanotherV($14Vvs.V$12)VasVopposedVtoVcomparingVcostsVperVunitV(35VcentsVvs.V
30Vcents).
CompanyVCasesV(VideoVandVDescriptive)
VideoV1.1
OperationsVManagementVatVHardVRockV(8:26)
HardVRockVisVinterestingVbecauseVit’sVsoVmuchVmoreVthanVjustVaVrestaurant.VManagementVspeaks
VaboutVitsV“experienceVstrategy,”Vwhich,VinVadditionVtoVqualityVfood,VincludesVrock-and-
rollVmemorabilia,Vmusic,Vlighting,VjovialVstaff,VandVaVretailVstore.VTheVvideoVisVsprinkledVwithVscen
esVofVhappyVemployeesVdancingVaroundVorVvolunteeringVinVtheVcommunity.VMostVofVtheVvideoVi
sVspentVcoveringVhowVHardVRockVCaféVapproachesVsomeVofVtheV10VoperationsVmanagementVdec
isions.VForVexample,V(1)VschedulingVisVdrivenVbyVforecastsVthatVareVbasedVonVpriorVsales,Vseasonal
ity,VrecentVtrends,VandVcurrentVlocalVevents;V(2)VcaféVlayoutVfocusesVonVmaximizingVtheVcustomer
VexperienceVandVdrivingVcustomersVtowardVrevenue-
VgeneratingVactivities;VandV(3)VinventoryVmanagementVgoesVwellVbeyondVtheVinventoryVofVfoodVan
dVretailVitems—HardVRockVhasVaV$40VmillionVinventoryVofVrock-and-
rollVmemorabiliaVtoVmanage,VandVeachVrestaurantVgoesVthroughVaVcompleteVchangeoverVofVme
morabiliaVeveryV5–7Vyears.
AsVanVentertainingVpieceVandVoneVthatVcoversVaVvarietyVofVOMVdecisions,VthisVisVcertainlyVaVgoodV
videoVtoVshowVearlyVinVtheVcourseVwhenVdiscussingVChapterV1.VManyVstudentsVwillVhaveVeatenVatV
aVHardVRockVCaféVthemselves,VandVmostVshouldVenjoyVseeingVmemorabiliaVfromVrockVstarsVsuchVas
VMadonnaVandVKISS.VThisVisValsoVaVgoodVwayVearlyVinVtheVcourseVtoVshowVthatVoperationsVmana
gementVisVjustVasVimportantVinVservicesVasVitVisVinVmanufacturing.VPriorVtoVshowingVtheVvideo,Vt
heVinstructorVmightVaskVtheVstudentsVtoVthinkVaboutVtheV10VOMVdecisionsVandVhowVHardVRockVa
pproachesVthem.VAfterwards,VaVdiscussionVmightVrevolveVaroundVaspectsVofVthoseVdecisionsVthatV
areVuniqueVtoVserviceVbusinessesVinVgeneralVandVthenVtoVHardVRockVCaféVinVparticular.VTwoVclear
VdifferencesVaboutVHardVRockVCaféVitselfVareV(1)VbecauseVofVandVcontributingVtoVsuchVsuccessfulV
branding,VtheVcafé’sVretailVsalesV(shirts,Vetc.)VaccountVforVnearlyVtheVsameVamountVofVrevenueVasVt
heVmainVproductV(theVfood);VandV(2)VtheVmanagementVofVtheVmemorabiliaVaroundVtheVworldVrepr
esentsVaVuniqueVandVextremelyVimportantVmanagementVeffortVonVitsVown.
, VideoV1.2
OperationsVManagementVatVFrito-LayV(7:11)
Frito-Lay,V aV subsidiaryV ofV PepsiCo,V hasV overV 40V productV lines,V sevenV ofV whichV haveV salesV exceeding
$1Vbillion.VInVthisVvideo,VtheVtextbookVauthorsVreviewVtheV10VOMVstrategyVdecisionsVandVbrieflyVd
escribeVhowVFrito-
LayVaddressesVeachVone.VForVexample,VtheVcompanyVisVconstantlyVinnovatingVwithVnewVproducts
.VForVqualityVassurance,VitVusesVmultipleVinspectionVpointsVbothVwithinVandVoutsideVtheVfactory,Va
ndVitVutilizesVstatisticalVprocessVcontrol.VTheVplantVappliesVaVproductVfocusVstrategy,VwhichVisVap
propriateVforVaVhigh-volume,Vlow-
varietyVproducer.VAsVrawVmaterialsVareVperishableVandVshelfVlifeVisVrelativelyVshort,VplantVlocatio
nVdecisionsVareVdrivenVbyVproximityVtoVrawVmaterialsVorVmarkets.VTheVplantVhasVlowVemployeeVt
urnover,VdrivenVbyVgoodVbenefits,VrespectVforVpeople,VandVaVstrongVconcernVforVsafetyVandVergo
nomics.VInventoryVlevelsVareVquiteVlow,VandVinventoryVisVturnedVoverV200VtimesVperVyear.VPotato
esVareVdeliveredV10VtimesVperVday.VSchedulesVareVdrivenVbyVdemandVforecastsVandVadjustedVfor
VlocalVevents,VsuchVasVtheVannualVDaytonaV500VautoVrace.VAllVofVtheseVpractices,ValongVwithVexc
ellentVlayout,Vsupply-chain,VandVmaintenanceVpolicies,VhaveVhelpedVtoVmakeVFrito-
LayVtheVworld’sVlargestVsnackVmanufacturer.
IfVtheVvideoVisVshownVbeforeVtheV10VOMVdecisionVareVcovered,VtheVinstructorVcouldVfirstVaskVth
eVstudentsVtoVlistVtheVmajorVdecisionsVthatVtheyVthinkVthatVoperationsVmanagersVmake.VAfterwar
ds,VtheV10VdecisionsVfromVtheVbookVcanVbeVcomparedVtoVtheVstudentVlists.VThenVtheVinstructorV
canVchooseVaVdifferentVcompany,VperhapsVaVserviceVorganization,VwithVwhichVstudentsVmightVbe
Vfamiliar.VTheVclassVcouldVtryVtoVidentifyVwaysVinVwhichVthatVorganizationVaddressesVtheV10Vdeci
sionsVandVperhapsVcompareVthoseVtoVsomeVofVFrito-Lay’sVtactics.
CinematicVTicklers
1. FawltyVTowers:V“WaldorfVSalad”V(JohnVCleeseVandVPrunellaVScales),VCBS/FOXVVIDEO,V1986V(1979)
ThisVcanVactuallyVbeVtheVfirstVthingVdoneVinVclassVallVsemester.VTheVveryVstartVofVtheVepisodeVco
ntainsVaVfunnyVsceneVaboutVsuppertimeVinVtheVdiningVroomVofVaVbedVandVbreakfastVinVEngland.V
TheVownersVandVstaffVmakeVnumerousVerrors.VAVclassVdiscussionVcanVdirectlyVfollow,VlistingVwha
tVwentVwellV(almostVnothing)VandVwhatVdidn’tV(manyVthings).VThisVclipVcanVstartVaVcourseVoffVwell
Vbecause:V(1)Vit’sVaVveryVeasyVwayV toV createV anV atmosphereV ofV studentV participationV rightV aw
ayV inV theV course—identifyingV poor
Supply_Chain_Management
Operations and Productivity
V V
Background
OperationsVmanagementVhasVcreatedVindustryVgiants.VTheVRitz-
CarltonVHotelVCompany’sVmissionVisVtoVprovideVanVoutstandingVcustomerVexperienceVthroughVaVcom
pleteVfocusVonVqualityVmanagement.VUPSVoperatesVtrucksVthatVrunVforV20VyearsVbecauseVtheirVdrive
rsVcare.VDisneyVhasVmadeVaVscienceVofVaccurateVforecastsVandVqueuingVtheory.VDardenVRestaurantsV(
RedVLobster,VOliveVGarden,VandVothers)VviewVoperationsVasVtheirVstrategyVforVsuccess.VFrito-
LayVdominatesVtheVsnackVmarketVbyVkeepingVfreshVsnacksVonVtheVshelvesVwithVaVproductionVprocess
VthatVconvertsVrawVmaterialsVintoVaVbagVofVchipsVsittingVinVaVgroceryVstoreVinVasVlittleVasVaVdayVorVt
wo.
TheVimportanceVofVoperationsVmanagementVcanVbeVhighlightedVearlyVinVtheVcourseVwithVhumorousV
videosVorVstoriesVaboutV“operationsVgoneVwrong.”VMostVstudentsVcanVshareV“disaster”VstoriesVabout
VpoorVexperiencesVthatVtheyVhaveVhadVdealingVwithVcompanies.VOnVaVmoreVseriousVnoteVcompaniesVs
uchVasVMapleVLeafVFoods,VXLVfoods,VBoeingV(Dreamliner),VandVJohnsonV&VJohnsonV(Tylenol)VprovideV
greatVexamplesVthatVcanVleadVtoVaVfascinatingVdiscussionVofVtheVoperationsVrecoveryVprocess—
whatVtoVdoVandVwhatVnotVtoVdoVwhenVanVoperationalVfailureVgetsVmediaVattention.
ItVcanVbeVusefulVasVwellVtoVspendVsomeVclassVtimeVdiscussingVtheVjobVmarketVforVoperationsVmanag
ementVmajors,VcomparingVstartingVsalariesVandVjobVtitlesVtoVotherVbusinessVmajors.VFindVanVMBAVpr
ogramVwithVaVstrongVoperationsVfocusVandVdisplayVtheVstartingVsalariesVofVthoseVgraduatesV(suchVda
taVareVavailableVonVmanyVMBAVprogramVwebsites).VResearchVshowsVthatV(1)VmoreVCEOsV“learnVtheVro
pes”VbyVcomingVupVthroughVoperationsVthanVanyVotherVfunctionalVarea,VandV(2)VChiefVOperatingVOffi
cerVsalariesVtendVtoVbeVapproximatelyV10%VhigherVthanVtheVsalariesVofVtheVotherV“Chiefs”V(CFO,VCM
O,VandVCIO).
ClassVDiscussionVIdeas
,1. ChooseVanVorganizationVtheVstudentsVwillVbeVfamiliarVwithVandVaskVthemVtoVidentifyVandVdescrib
eVtheVproductVofVthatVorganization.VDirectVtheVdiscussionVtoVhighlightVtheVcomplexVnatureVofVth
eVproductVofferingsVofVmostVorganizationsVtodayVwhereVproductVandVserviceVelementsVareVfound
VtoVsomeVdegreeVinValmostVallVorganizations.
2. HaveVtheVstudentsVchooseVaVfewVdifferentVtasksVorVjobsVandVidentifyVpossibleVproductivityVmeasu
resVforVthese.VTheyVshouldVdescribeVhowVtheyVwouldVgoVaboutVmakingVtheVnecessaryVmeasurem
ents.VStudentVandVfacultyVproductivityVareVeasyVexamplesVthatVcanVgenerateVquiteVaVbitVofVdiscu
ssion.VOneVpossibleVwayVtoVstartVtheVdiscussionVisVtoVaskVwhetherVgradesVorVresearchVoutputVis
VanVeffectiveVmeasureVofVstudentVandVfacultyVproductivity.
ActiveVClassroomVLearningVExercises
1. LabourVproductivityVisVsometimesVperceivedVtoVbeVdrivenVbyVemployeeVmotivation.VHaveVtheVstu
dentsVsplitVupVintoVsmallVgroupsVtoVdiscussVeffectiveVwaysVtoVmotivateVhourlyVemployeesVvs.Vsal
ariedVmanagers.VIfVproductivityVofVtheseVworkersVisVbelowVexpectation,VwhatVareVgoodVandVpoo
rVwaysVtoVtryVtoVmotivateVthem?VWhatVmethodsVmightVworkVwellVwithVblueVcollarVemployeesVb
utVnotVwhiteVcollarVemployees,VandVvice-
versa?VWhatVmethodsVmightVworkVwellVinVtheVshortVrunVbutVnotVinVtheVlongVrun,VandVvice-
versa?VHaveVeachVstudentVgroupVreportVitsVideasVtoVtheVwholeVclass.V(AndVifVanyVgroupVhasVlittleV
toVsay,VaskVthemVwhatVcouldVhaveVbeenVdoneVtoVmotivateVthemVtoVdoVbetter!)
2. CompaniesVoftenVlocateVinVotherVcountriesVtoVtakeVadvantageVofVlowVwageVrates.VHowever,Vthe
VdifferenceVinVlabourVcostsVshouldVbeVadjustedVtoVaccountVforVproductivityVdifferencesVamongVt
heVworkersVinVtheVtwoVlocations.VOneVwayVtoVdoVthisVisVtoVcomputeVaV“relativeVwageVrate,”VR,V
ofVoperatingVinVanotherVcountry.VNoteVthatVRVisVnotVtheVactualVwageVrateVpaid,VbutVitVisVtheVho
urlyVwageVrateVofVoperatingVinVanotherVcountryVrelativeVtoVtheVhomeVcountry,VafterVtakingVprod
uctivityVdifferencesVintoVaccount.V IfV theV foreignV country’sV workersV areV moreV productive,V RV
willV decrease,V andV vice-
versa.VTheV formulaV isV RV =V (WV ÷V X)(UV ÷V F),V whereV WV =V theV foreignV wageV rateV (inV foreignV curr
encyV perV hour),VXV=VtheVexchangeVrateV(inVforeignVcurrencyVperVlocalVcurrency),VUV=VhomeVcoun
tryVproductivityV(inVunitsVperVhour),VandVFV=VforeignVcountryVproductivityV(inVunitsVperVhour).
AVproblemVcouldVbeVdescribedVasVfollows.VSupposeVthatVworkersVinVBritainVearnV₤10/hour.VTheVex
changeVrateV withV CanadaV isV $1.50V perV ₤1.V CanadianV workersV canV produceV 40V unitsV perV hour
,V whileV British
, workersV atV aV similarV facilityV canV produceV 50V unitsV perV hour.V IfV theV CanadianV wageV rateV is
$14VperVhour,VshouldVtheVfirmVproduceVinVCanadaVorVinVBritain?
HaveVtheVstudentsVtryVtheVexerciseVinVclass.VTheyVwillVprobablyVanalyzeVthisVproblemVbyVcompu
tingVaVlabourVcostVperVunitVinVeachVcountryV(35VcentsVvs.V30Vcents).VThenVintroduceVtheVconcep
tVandVformulaVforVrelativeVwageVrateV(RV=V$12VinVBritain).VBothVapproachesVareVequallyVaccurat
e,VbutVusingVaVrelativeVwageVrateVhasVpoliticalVadvantages,Vi.e.,VitVseemsVeasierVtoVtalkVaboutVo
neVwageVrateVvs.VanotherV($14Vvs.V$12)VasVopposedVtoVcomparingVcostsVperVunitV(35VcentsVvs.V
30Vcents).
CompanyVCasesV(VideoVandVDescriptive)
VideoV1.1
OperationsVManagementVatVHardVRockV(8:26)
HardVRockVisVinterestingVbecauseVit’sVsoVmuchVmoreVthanVjustVaVrestaurant.VManagementVspeaks
VaboutVitsV“experienceVstrategy,”Vwhich,VinVadditionVtoVqualityVfood,VincludesVrock-and-
rollVmemorabilia,Vmusic,Vlighting,VjovialVstaff,VandVaVretailVstore.VTheVvideoVisVsprinkledVwithVscen
esVofVhappyVemployeesVdancingVaroundVorVvolunteeringVinVtheVcommunity.VMostVofVtheVvideoVi
sVspentVcoveringVhowVHardVRockVCaféVapproachesVsomeVofVtheV10VoperationsVmanagementVdec
isions.VForVexample,V(1)VschedulingVisVdrivenVbyVforecastsVthatVareVbasedVonVpriorVsales,Vseasonal
ity,VrecentVtrends,VandVcurrentVlocalVevents;V(2)VcaféVlayoutVfocusesVonVmaximizingVtheVcustomer
VexperienceVandVdrivingVcustomersVtowardVrevenue-
VgeneratingVactivities;VandV(3)VinventoryVmanagementVgoesVwellVbeyondVtheVinventoryVofVfoodVan
dVretailVitems—HardVRockVhasVaV$40VmillionVinventoryVofVrock-and-
rollVmemorabiliaVtoVmanage,VandVeachVrestaurantVgoesVthroughVaVcompleteVchangeoverVofVme
morabiliaVeveryV5–7Vyears.
AsVanVentertainingVpieceVandVoneVthatVcoversVaVvarietyVofVOMVdecisions,VthisVisVcertainlyVaVgoodV
videoVtoVshowVearlyVinVtheVcourseVwhenVdiscussingVChapterV1.VManyVstudentsVwillVhaveVeatenVatV
aVHardVRockVCaféVthemselves,VandVmostVshouldVenjoyVseeingVmemorabiliaVfromVrockVstarsVsuchVas
VMadonnaVandVKISS.VThisVisValsoVaVgoodVwayVearlyVinVtheVcourseVtoVshowVthatVoperationsVmana
gementVisVjustVasVimportantVinVservicesVasVitVisVinVmanufacturing.VPriorVtoVshowingVtheVvideo,Vt
heVinstructorVmightVaskVtheVstudentsVtoVthinkVaboutVtheV10VOMVdecisionsVandVhowVHardVRockVa
pproachesVthem.VAfterwards,VaVdiscussionVmightVrevolveVaroundVaspectsVofVthoseVdecisionsVthatV
areVuniqueVtoVserviceVbusinessesVinVgeneralVandVthenVtoVHardVRockVCaféVinVparticular.VTwoVclear
VdifferencesVaboutVHardVRockVCaféVitselfVareV(1)VbecauseVofVandVcontributingVtoVsuchVsuccessfulV
branding,VtheVcafé’sVretailVsalesV(shirts,Vetc.)VaccountVforVnearlyVtheVsameVamountVofVrevenueVasVt
heVmainVproductV(theVfood);VandV(2)VtheVmanagementVofVtheVmemorabiliaVaroundVtheVworldVrepr
esentsVaVuniqueVandVextremelyVimportantVmanagementVeffortVonVitsVown.
, VideoV1.2
OperationsVManagementVatVFrito-LayV(7:11)
Frito-Lay,V aV subsidiaryV ofV PepsiCo,V hasV overV 40V productV lines,V sevenV ofV whichV haveV salesV exceeding
$1Vbillion.VInVthisVvideo,VtheVtextbookVauthorsVreviewVtheV10VOMVstrategyVdecisionsVandVbrieflyVd
escribeVhowVFrito-
LayVaddressesVeachVone.VForVexample,VtheVcompanyVisVconstantlyVinnovatingVwithVnewVproducts
.VForVqualityVassurance,VitVusesVmultipleVinspectionVpointsVbothVwithinVandVoutsideVtheVfactory,Va
ndVitVutilizesVstatisticalVprocessVcontrol.VTheVplantVappliesVaVproductVfocusVstrategy,VwhichVisVap
propriateVforVaVhigh-volume,Vlow-
varietyVproducer.VAsVrawVmaterialsVareVperishableVandVshelfVlifeVisVrelativelyVshort,VplantVlocatio
nVdecisionsVareVdrivenVbyVproximityVtoVrawVmaterialsVorVmarkets.VTheVplantVhasVlowVemployeeVt
urnover,VdrivenVbyVgoodVbenefits,VrespectVforVpeople,VandVaVstrongVconcernVforVsafetyVandVergo
nomics.VInventoryVlevelsVareVquiteVlow,VandVinventoryVisVturnedVoverV200VtimesVperVyear.VPotato
esVareVdeliveredV10VtimesVperVday.VSchedulesVareVdrivenVbyVdemandVforecastsVandVadjustedVfor
VlocalVevents,VsuchVasVtheVannualVDaytonaV500VautoVrace.VAllVofVtheseVpractices,ValongVwithVexc
ellentVlayout,Vsupply-chain,VandVmaintenanceVpolicies,VhaveVhelpedVtoVmakeVFrito-
LayVtheVworld’sVlargestVsnackVmanufacturer.
IfVtheVvideoVisVshownVbeforeVtheV10VOMVdecisionVareVcovered,VtheVinstructorVcouldVfirstVaskVth
eVstudentsVtoVlistVtheVmajorVdecisionsVthatVtheyVthinkVthatVoperationsVmanagersVmake.VAfterwar
ds,VtheV10VdecisionsVfromVtheVbookVcanVbeVcomparedVtoVtheVstudentVlists.VThenVtheVinstructorV
canVchooseVaVdifferentVcompany,VperhapsVaVserviceVorganization,VwithVwhichVstudentsVmightVbe
Vfamiliar.VTheVclassVcouldVtryVtoVidentifyVwaysVinVwhichVthatVorganizationVaddressesVtheV10Vdeci
sionsVandVperhapsVcompareVthoseVtoVsomeVofVFrito-Lay’sVtactics.
CinematicVTicklers
1. FawltyVTowers:V“WaldorfVSalad”V(JohnVCleeseVandVPrunellaVScales),VCBS/FOXVVIDEO,V1986V(1979)
ThisVcanVactuallyVbeVtheVfirstVthingVdoneVinVclassVallVsemester.VTheVveryVstartVofVtheVepisodeVco
ntainsVaVfunnyVsceneVaboutVsuppertimeVinVtheVdiningVroomVofVaVbedVandVbreakfastVinVEngland.V
TheVownersVandVstaffVmakeVnumerousVerrors.VAVclassVdiscussionVcanVdirectlyVfollow,VlistingVwha
tVwentVwellV(almostVnothing)VandVwhatVdidn’tV(manyVthings).VThisVclipVcanVstartVaVcourseVoffVwell
Vbecause:V(1)Vit’sVaVveryVeasyVwayV toV createV anV atmosphereV ofV studentV participationV rightV aw
ayV inV theV course—identifyingV poor
