Toy Story: Supply Chain Traces Products from Factory to Store Shelves
Supply chain class travels from Austin Target store to Chinese factory to trace product life cycles in person
By Hillary Berquist Funk
Illustration by Eddie Guy
It’s a scene repeated every December in homes across America: on Christmas morning, a jubilant 6-year-old girl rips through red and green paper to find the item that was on top of her wish list to Santa: a baby doll. She squeals and spends the rest of the afternoon playing with her new best friend, introducing her to grandparents, cousins and anyone in the vicinity.
While the girl’s parents would like her to believe the doll came from Santa’s factory in the North Pole, the reality is the doll was purchased, along with millions of others, at a Target store. But how did it reach the shelves in the retail chain? Students in Michael Hasler’s introductory operations management class spent five weeks last summer tracking three products–a doll, lawn furniture and a calculator–upstream through the supply chain, starting at an Austin Target store and ending up in a factory in Shenzhen, China.
The class was more than just an extended field trip, though. “Relating to an experience is key to adult learning,” says Hasler, a lecturer in the Department of Information, Risk and Operations Management. “Everyone has been to a Target, but this forces you to look at the whole operation in a new way.”
Last May, rather than coming to class on campus, 26 students met at a Super Target in Austin and began their course with a brief overview and a series of discussions, tours and interactive games led by Target staff. The goal was to illustrate key concepts, such as replenishment of floor stock, number of employees staffing the checkout lanes and flow of products for tracking through the supply chain.
The students were also introduced to the three products they would be following, which were chosen based on the inventory model used for each item: the “economic order quantity” model, the “newsvendor” model or the “order-up-to” model. (This summer, in addition to the doll and calculator, the class will follow the progress of a bicycle with a visit to the world’s largest bicycle factory in Guangzhou, China.)
The next day the group headed north to the Target Regional Distribution Center in Midlothian, Texas, near Fort Worth, an immense, 1.35-million-square-foot building with a maze of conveyor belts moving thousands of boxes each day. The Target team discussed the roles of consolidators and deconsolidators, productivity improvement efforts, complexities in handling products of different sizes, values and sales cycles and managing people in a dynamic warehouse environment.
Two weeks later, the class flew west to Los Angeles for a day of class and a tour of the Port of Long Beach. The students had behind-the-scenes access to see the process for unloading and reloading a large container ship.
“It was neat to actually get to see a container ship up close with thousands of shipping containers being unloaded for distribution and shipment to all around the continental United States,” wrote junior David Liu on the blog he kept about the trip. “This really helped to put a perspective on where many goods that are made in China/Asia...first enter the United States.”
The students generated process maps of this activity, which were used as a reference as the class progressed and helped them calculate capacities and identify bottlenecks. A few weeks later, the students would compare their Long Beach process maps to new ones they created to capture the workings of the Port of Yantian in Shenzhen, China, the point of origin for many goods shipped to the U.S. from China.
After their tour of Long Beach, the class embarked on the long flight to Hong Kong, where the students had to adjust to the stifling humidity (nicknamed the “Hong Kong stain”) and the long climb to and descent from the campus of the Chinese University of Hong Kong, which is built on the side of a mountain.
“Everywhere you look, lush green mountains reach down to the sea,” wrote junior Jared Pelley on his travel blog. “The [u]niversity is built around one of these mountains and we climb more than 100 steps up the slippery, stone ‘Stairs of Death’ for class each morning.”
Factory as Classroom
During the first two weeks of class in Hong Kong students learned about process analysis and mapping, capacity analysis, batch sizing, line balancing, quality function deployment, bottleneck analysis and the Theory of Constraints, statistical process control and queuing theory.
“This class has been my introduction to the world of operations and production. There’s a science behind production and service,” Pelley wrote. “Yesterday, we learned a mathematical formula to tell you how long people will wait in line for something!”
If it sounds like a heavy course load, that’s because it was. “I covered material in one four-hour session that I would normally cover over two weeks,” Hasler says.
After almost two weeks in Hong Kong, students ventured to mainland China to visit the manufacturing facilities of Target suppliers. The first stop was Hong Kong City Toys, the doll factory. Students observed the entire process from raw material to final packaging for a doll set that they had first seen at the Target in Austin.
A standout moment was when the general manager of Hong Kong City Toys said his most significant challenge was “identifying and resolving his bottlenecks.” At that, the students whipped their heads around and grinned at Hasler, who was observing from the back of the room.
“We had just finished reading and discussing ‘The Goal,’ which focuses on how to identify bottlenecks and manage systems, and we had already seen the other links in the distribution chain,” Hasler explains. “The students realized what they were learning in class really did apply to supply chain in the field. I saw 20 light bulbs go off—it’s one of the absolute highlights of my teaching career.”
After stops at the outdoor furniture and calculator factories, students returned to the final two weeks of class in Hong Kong with a deeper understanding of the supply chain as they learned about applying different inventory models to the appropriate situations.
“We didn’t have to spend time trying to visualize and understand the processes because we were seeing them in real time,” says junior Eva Agoulnik.
Seeing the supply chain process in action not only improved understanding for the students, it resulted in better grades. The average grade on Hasler’s final exam for the course was a 92, which is four to eight points higher than the average for classes that didn’t enjoy the hands-on experience. And Hasler reports that several students decided to change their major to supply chain management after taking the course.
“I’ve taught this course six times,” though only once in this international format, Hasler says. “It makes a huge difference in how they pick up the concepts. It brings ideas to life.”
A Model Educational Moment
The seed idea for the course was planted five years ago, when the university’s Center for International Business Education and Research (CIBER) began collaborating with faculty in supply chain management—which wasn’t even a major at that point—to develop a core course students could take abroad. This would be the eighth summer program developed by CIBER. With a summer accounting program already in place at the Chinese University of Hong Kong, CIBER and the McCombs School’s Supply Chain Management Center of Excellence began working on a new summer program to give students an international perspective on operations management.
Fast forward to May 2009. Hasler and a group of other McCombs faculty and staff met with supply chain executives at Target’s headquarters in Minneapolis. The Target team brought out a map that illustrated the international nature of the company’s supply chain, with stops from a distribution center in north Texas all the way to manufacturing plants in China.
“As we brainstormed we realized there might be an opportunity here to do something more special than the usual academic-industry partnership that creates a case study,” recalls Doug Houseman, senior project manager in Target’s distributed automation group. “That’s where we said, ‘What if we used Target’s supply chain as a kind of instructional backbone that would be an experiential parallel to Mike’s operations management instruction.’ So as you talk about the academic and the theoretical, you can then see the actual at the same time.”
The discussion kicked off a yearlong collaboration in designing the course. The partnership was so successful that Hasler and Houseman, who traveled with the group on their Texas and California stops, put on a webinar last December to share their experience in creating the course—from an academic perspective and an industry point of view. Jared Pelley offered his experience as a student participant. Representatives from other universities and companies, including Arizona State University and Colgate-Palmolive, tuned in to the webinar.
“Turns out it’s a pretty big innovation,” says Hasler, who also shared his experience at two conferences and the McCombs School’s Dean’s Advisory Council meeting last fall. Target will be honored in April with the Blazing Saddles Award at the McCombs School’s corporate recognition dinner. The award recognizes the company that has the most unique and innovative involvement with the school over the past year.