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This 8 page Class Notes was uploaded by Mr. Erik Weissnat on Wednesday October 28, 2015. The Class Notes belongs to DIT1141 at Villanova University taught by MatthewLiberatore in Fall. Since its upload, it has received 16 views. For similar materials see /class/230561/dit1141-villanova-university in Information technology at Villanova University.
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Date Created: 10/28/15
Chapter 02 Operations and Supply Strategy CHAPTER 2 OPERATIONS AND SUPPLY STRATEGY Review and Discussion Questions 2 Why should a service organization worry about being world class if it does not compete outside its own national border What impact does the Internet have on this As the environment changes rms can nd themselves faced with competition from outside their industry or from outside their home country Even if they do not the principles of a world class rm can be applied to any and all manufacturing and service concerns Benchmarking or rating your rm s performance to the best in your industry or class can provide future strategic directions for improvements The Internet is global by its very nature Retail stores must now compete with Internet stores Local auction houses will be in competition with Internet auction sites such as eBay Virtually all organizations will be impacted in some form by the Internet It is important that this impact be considered 3 What are the major priorities associated with operations strategy How has their relationship to each other changed over the years The four major imperatives are cost quality delivery and exibility In the sixties these four imperatives were viewed from a tradeoff s perspective For example this meant that improving quality would result in higher cost However more recent thought posits that these four imperatives can improve simultaneously and in many industries may be necessary for success The problem then becomes one of prioritizing and managing towards orderly improvement 4 For each of the different priorities in question 3 describe the unique characteristics of the market niche with which it is most compatible Cost is most compatible with products that are commodities ie highly standardized products with many alternative suppliers Quality provides companies a means of l differentiating a product and winning orders or 2 competing in a market and qualifying for orders Quality is now pervasive among all market niches in that customers now expect high quality Speed and reliability of delivery are essential in those markets where there is a large degree of customization In addition reliable delivery may be a competitive advantage in some regions of the world where delivery is difficult due to geographical or political reasons Flexibility is important where customers demand low volume but wide varieties of products 8 What is meant by the expressions order winners and order quali ers What was the order winners for your last purchase of a product or service Order winners are dimensions that differentiate the product or service or services of one rm from another Order quali ers are dimensions that are used to screen a product or service as a candidate for purchase Obviously answers will vary for the order winners from your last purchase Chapter 02 Operations and Supply Strategy 5 Labor Productivity Country Output Input Productivity in Units in Hours Onthnt Inm US 100000 20000 5 00 LDC 20000 15000 133 Capital Equipment Productivity Country Output Input Productivity in Units in Hours Onthnt Inm US 100000 60000 167 LDC 20000 5000 400 Yes You would expect the capital equipment productivity measure to be higher in the US than in a LDC b Multifactor 7 Labor and Capital Equipment Country Output Input Productivity in Units in Hours 011mm Tnmm US 100000 20000 60000 125 LDC 20000 15000 5000 100 20000 Yes labor and equipment can be substituted for each other is a better indicator of productivity in this instance c Raw Material Productivity Therefore this multifactor measure Country Output Input Productivity in Units in Dollars Onthnt Inm US 100000 20000 500 LDC 20000 FC 2000010 1000 The raw material productivity measures might be greater in the LDC due to a reduced cost paid for raw materials which is typical ofLDC s Chapter 02 Operations and Supply Strategy 6 Total Productivity Year Output Input Productivity in Dollars in Dollars 011mm Tnnn 2007 200000 30000 35000 164 5000 50000 2000 122000 2008 220000 40000 45000 153 6000 50000 3000 144000 Partial Measure 7 Labor Year Output Input Productivity in Dollars in Dollars 011mm Tnnn 2007 200000 30000 667 2008 220000 40000 550 Partial Measure 7 Raw Materials Year Output Input Productivity in Dollars in Dollars 011mm Tnnn 2007 200000 35000 571 2008 220000 45000 489 Partial Measure 7 Capital Year Output Input Productivity in Dollars in Dollars 011mm Tnnn 2007 200000 50000 400 2008 220000 50000 440 The overall productivity measure is declining which indicates a possible problem The partial measures can be used to indicate cause of the declining productivity In this case it is a combination of declines in both labor and raw material productivity but an increase in the capital productivity Further investigation should be undertaking to explain the drops in both labor and raw material productivity An increase in the cost of both of these measures Without an accompanying increase in the selling price might explain these measures Chapter 10 Supply Chain Strategy CHAPTER 10 SUPPLY CHAIN STRATEGY Review and Discussion Questions 4 What are characteristics of ef cient responsive riskhedging and agile supply chains Can a supply chain be both ef cient and responsive Riskhedging and Agile Why or Why not Ef cient supply chains are designed to minimize cost that requires high utilization minimizing inventory and selecting vendors based primarily on cost and quality and designing products that are produced at minimum cost Marketresponsive supply chains are designed to minimize lead time to respond to unpredictable demand thus minimizing stockout costs and obsolete inventory costs Risk sharing supply chains are those that share resources so that risks in the supply chain can be shared Agile are those supply chains that are exible while still sharing risks of shortages across the supply chain Generally these supply chains carry excess capacity and higher buffer stocks Vendor in responsive supply chains would be selected for speed exibility and quality It is possible to be both ef cient and responsive and both Riskhedging and Agile but Exhibit 104 helps illustrate why supply chains are generally not both 7 As a supplier which factors would you consider about a buyer your potential customer to be important in setting up a longterm relationship The nancial stability and credit worthiness of the company is of primary importance The reputation of the company visavis their supplier is also very important For example is this a company that is fair with its suppliers and honors its payables in a timely fashion Is the technological match between supplier and customer suf cient Will delivery schedules and quantities be stable facilitating smooth operations 155 Chapter 10 Supply Chain Strategy 9 1 O 2 What are the advantages of using the postponement strategy Process postponement delays the process step that differentiates the product to as late in the supply chain as possible The advantages of this approach are that lower levels of inventory and fewer models are needed to match customer requirements This results in higher levels of customer satisfaction at a lower cost Describe how outsourcing works Why would a rm want to outsource Outsourcing is the act of moving some of a rm s internal activities and decision responsibilities to outside providers The terms of the agreement are established in a contract Outsourcing goes beyond the more common purchasing and consulting contracts because not only are the activities transferred but also resources that make the activities occur are transferred Reasons for outsourcing are listed in Exhibit 106 Some of the major categories from this Exhibit include organizational improvement nancial revenue cost and employee driven reasons What are the basic building blocks of an effective mass customization program What kind of company wide cooperation is required for a successful mass customization program The three organizational design principles for mass customization are 1 A product should be designed so it consists of independent modules that can be assembled into different forms of the product easily and inexpensively 2 Manufacturing and service processes should be designed so that they consists of independent modules that can be moved or rearranged easily to support different distribution network designs 3 The supply networkthe positioning of inventory and the location number and structure of service manufacturing and distribution facilitiesshould be designed to provide two capabilities First it must be able to supply the basic product to the facilities performing the customization in a costeffective manner Second it must have the exibility and the responsiveness to take individual customer s orders and deliver the nished customized good quickly 156 Chapter 10 Supply Chain Strategy Problems 4 a Inventory turnover costs of good soldaverage aggregate inventory value Quarter 1 2 3 4Tota Cost ofgoods sold 280 295 340 350 1265 Raw material 50 40 55 60 WIP 100 105 120 150 Distribution Center Inventory 40 42 43 51 Aggregatelnventory 190 187 218 261 Average aggregate inventory value 190 187 218 2614 214 Inventory turnover 1265214 591 b Focus on reducing WIP 0 Average raw material inventory value 50 40 55 604 5125 Day of supply average aggregate raw material inventory valuecost of goods sold52 512550052 533 6 Results Turnover rate 4000 160 25 Days in inventory 365 25 146 157 Chapter 08 Service Processes CHAPTER 8 SERVICE PROCESSES Review and Discussion Questions Equot How have price and variety competition changed McDonald s basic formula for success McDonald s originally emphasized quick delivery of a limited menu In response to competition McDonald s has continuously expanded its menu Some evidence suggests that service including quick delivery has suffered as a result 3 Could a service rm use production line approach or selfserve design and still keep a high customer focus personal attention Explain and support your answer with examples Yes this is possible In many instances the customer actually desires more technology and feels that the service will not have as high a quality Without it For example dental care with its mechanized Xray techniques requires far less customer time and less exposure to radiation The selfservice design can also support customer needs for example the ATM provides customer access to funds at a variety of locations and 24 hours a day Problems Degree of customerservice contact Buffered Core Permeable system Reactive system some Low High Production sales ef ciency Opportunity phone Hardware order Mail order Customer service catalog compiaints Low High 110 Chapter 08 Service Processes 3 Here is a form that the students could use Task Treatment Tangible Features environment layout and appearance Rating 1 poor 3 average 5 excellent The following is what a completed form might look like 1 Buy a shirt Checkout Task No salesperson Professional efficient bu available not extremely friendly Treatment 3 Tangible Features environment layout and a ance Layout was efficient appearance was excellen 5 Layout was logical time in line was average 3 Rating 1 poor 3 average 5 excellent lll
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