Operations Management Part IV

For Friday Friday recitations in KOBL 320 or KOBL S125 Section 101: 9:00 – 9:50 AM in KOBL S125 – Noah Section 102: 10:00 – 10:50 AM in KOBL S125 – Whitney Section 103: 11:00 – 11:50 AM in KOBL S125 – Whitney Section 104: 12:00 – 12:50 PM in KOBL 320 – Jason Section 105: 12:00 – 12:50 PM in KOBL S125 – Addison Section 106: 1:00 – 1:50 PM in KOBL 320 – Vimi Section 107: 1:00 – 1:50 PM in KOBL S125 – Chris Section 108: 2:00 – 2:50 PM in KOBL 320 – Nhan Section 109: 2:00 – 2:50 PM in KOBL S125 – Chris Section 110: 3:00 – 3:50 PM in KOBL 320 – Addison

Reading Assignments Reading Assignments: For this week – Read ‘Interceptor Body Armor’ pp. 1-56, 57 – 60 and 75 to 81 and read ‘End of the Line for GM’ stored in Additional Readings folder on CULearn Quiz Wednesday, April 7th (open from 7 am to 11:30 am) will cover these readings

The Value Equation

Operations Flexibility Types of Flexibility Mass Customization Pitfalls of Flexibility Driving Flexibility

Sources of Competitive Advantage Lower labor costs COST- BASED MGMT Economies of scale Focused production Flexible production Flexible production Increased variety TIME- FLEX MGMT Increased innovation Fast response time Blackburn, “Time-based competition,’’ in Strategic Manufacturing, Moody (ed), Dow Jones-Irwin, Homewood IL, 1990.

Operations Flexibility Flex’i*bil’i*ty: capable and adaptable to change. Perspective of the producer: Flexibility Perspective of the customer: Responsiveness

Factors Driving Flexibility Shorter Product Life-Cycles Fragmented Markets Demand Uncertainty Increased New Product Intro’s Unexpected Competitors Marketplace Factors Need for FLEXIBILITY Operations Factors Pressures to Reduce Inventories Pressures to Improve Quality Process/Product Simplification Changing Supplier Relationships Smaller Plants/Facilities

Like Quality, flexibility is not one-dimensional Types of Flexibility Like Quality, flexibility is not one-dimensional 1. Mix Flexibility 2. Changeover Flexibility 3. Modification Flexibility 4. Volume Flexibility 5. Rerouting/Program Flexibility 6. Resource Flexibility

Changeover Flexibility Types of Flexibility Mix Flexibility Ability to produce a variety of products (goods/services) with the same operational processes. Changeover Flexibility Ability to rapidly change over equipment and technology for a variety of products

Modification Flexibility Types of Flexibility Modification Flexibility Ability to implement rapid design changes; customize standard products to meet customer requirement Volume Flexibility Ability to adapt quickly and easily to changing demand patterns and volumes

Rerouting/Program Flexibility Types of Flexibility Rerouting/Program Flexibility Ability to create products and add value in using alternative methods, routings, techniques. Resource Flexibility Ability to handle variations in input resources (e.g., raw materials) and to use alternative resources

Mass Customization Delivering unique services in large quantities Manufacturing unique products in large quantities Offering customized services & products at (near) commodity prices Customization varies from cosmetic to structural

Mass Customization & Technology Product Structure One-of-a- Kind Multiple Products Product Lines Standardized Commodities Job Shop Flow Shop (batch) Assembly Line Continuous Flow Process Structure Mass Customization

Mass Customization in Context http://www-inst.eecs.berkeley.edu/~eecsba1/sp98/reports/eecsba1g/project3/mass_customization.GIF

Pitfalls of Flexibility Focus vs. flexibility Specialists vs. generalists Cost/flexibility trade-offs Flexibility for whom and what? When does the market reward flexibility? Customization/responsiveness squeeze

Alter design of operations (process) Driving Flexibility Alter design of operations (process) Single vs. multiple steps Focused layouts General purpose equipment Assemble to order vs. make to order/stock

Alter design of product Driving Flexibility Alter design of product Design for manufacturability Shared parts and components Personnel with broad training Information technology to assist Cross-functional design teams

Driving Flexibility Manage demand Manage supply Improved forecasts Yield management Manage supply Alter purchase contracts for quick delivery Bring long lead-time items in-house Process in smaller batches

Driving Flexibility Use slack resources Yield management (induce demand) Multi-tasking of employees/personnel

Flexibility has multiple dimensions Take-Aways Flexibility has multiple dimensions Must strategically understand which are most important, and those that are less so Flexibility involves process design, product design, sourcing design Processes carefully married w/ products To provide appropriate flexibility Product / process matrix can help