OPERATIONS MANAGEMENT
HOW NOTEBOOKS ARE MADE
TABLE OF CONTENTS
Introduction
The Video
Analysis & Methodology
Analysis of the Supply Chain
Lean Systems
Quality Control
Forecasting/Inventory
New Product Development
Legal Perspectives
References
VIDEO - MEAD SCHOOL SUPPLIES
ANALYSIS & METHODOLOGY
First Tier – E-Mails to Different Firms
Second Tier – Financial Statements filed with the SEC
Third Tier – Industry Analyses, News Reports, Westlaw Database
SUPPLY CHAIN ANALYSIS
SUPPLY CHAIN ANALYSIS
Paper Suppliers
From all over the world
Increasing gradually from Brazil & China
Wood suppliers  Paper suppliers  Mead
SUPPLY CHAIN ANALYSIS
Notebook-Producing Machinery Suppliers
Mainly from India & China
Extremely fixed machinery
Part Suppliers  Machinery Suppliers  Mead
SUPPLY CHAIN ANALYSIS
Problem 1 : Fixed Machinery
Difficult to modify the size of notebooks
Problem 2 : Change to New Sources of Wood Supply
Until now : Mead has been mainly supplied within America.
Current : Low price in Brazil & China
Problem 3 : Excessive Dependence
The ten largest distributors take up 49%, and
Office Depot & Staples account for 24% of the total sales.
QUALITY CONTROL
Automated production process
Machines do most of the work
Problem?
Equipment failure ⇒ Quality risk ⇒ lost of customers/profits, creates waste,
delays production schedule
Solution
Hire workers
Quality inspection (random selection)
Mechanics on site for maintenance and inspection of machinery
Emergency reporting system
FORECASTING
Financial statement explicitly mentions demand seasonality
Peak Season : back-to-school
Why? Back to School Season! Third Quarter in America, Fourth Quarter in Australia
FORECASTING
Question : How can we reduce demand seasonality?
Global Expansion
3rd Q America, 4th Q Australia
+ Asia/South America : 1st Q Back to School Season / ex. Moleskine
With global expansion into Asia/South America; can reduce seasonal trends
INVENTORY
Current Situation : Demand Seasonality
Influence on Inventory
Inventory level increased during light demand periods (first, second quarters)
for preparing for heavy demand periods(third, forth quarters)
→ Makes inventory holding costs high
How to reduce Inventory Holding costs
Capital, storage and warehousing, insurance if forecasting correctly
Maintaining quality of inventory and managing if using EDI technology
Must innovate the inventory system.
INVENTORY
Forecasting Correctly
Notebook industry has constant market size → Mead uses past data
By forecasting correctly, Mead can choose suitable storage and warehousing.
Can reduce fixed costs related to inventory.
Implement EDI Technology
Using electronic document interface (EDI) technology results in
faster turnaround, less paper work, and savings on handling
By using EDI technology, Mead can reduce inventory costs by having more
information about inventory
NEW PRODUCT DEVELOPMENT: ANALYSIS
Nature of MEAD products
School and office suppliers with no distinct features
No breakthrough/innovative product lines
Why is MEAD successful?
Dominating N. America as a first mover
Consumers do not expect much innovation
NEW PRODUCT DEVELOPMENT
Suggestion 1
Eco-friendly, high quality products
"Would you be ready to pay more to
benefit from products/services that help
reduce the level of carbon emissions?"
8%
15%
28%
49%
Yes, certainly
Yes, Probably
No, probably not
No, certainly not
NEW PRODUCT DEVELOPMENT
Suggestion 2
Business-purpose notebooks
vs
Caution : Difficult to change size or paper of products in a fixed machine
To extend product lines , must order new machines, plants… etc. etc.
LEGAL ISSUES
Potential danger 1 : Injuries and accidents
Safety measures are needed
Increase employee satisfaction and morale
Potential danger 2 : Harmful chemicals
Some paper mills have higher cancer rates due to Abestos, a dust-like fiber
Meet governmental requirements
REFERENCES
ACCO Brands Income Statement Q3 2012
ACCO Brands Financial Statements 2010
The Stationary, Office and School Supplies Market in the EU, CBI Market
Survey 2009
Trends in Manufacturing Paper Products, Accenture Research 2008
KMAC Brand Power Analysis
Lineomatic Graphic Industries
Westlaw Legal Database