Limits of Operational Effectiveness Quality or Lead-Time Productivity Frontier (state of best practice) Cost Low High TQM LEAN JIT.

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Presentation transcript:

Limits of Operational Effectiveness Quality or Lead-Time Productivity Frontier (state of best practice) Cost Low High TQM LEAN JIT

Transcending Trade-offs Skinner suggests separate “focused factories” for volume versus flexibility Achieve simultaneity by building capability successively - first quality, then lead-time, etc. Simultaneity is indicative of slack in existing processes Organizational and technological innovation can shift the productivity frontier upwards

Investment Strategy and Manufacturing Capabilities Invest in capital High fixed costs Allows speed Invest in people Labor becomes a fixed cost Allows high quality and innovative solutions Minimal investment in resources - outsource Capital and labor are variable costs Allow low cost production Investment in capital and people?

Types of Trade-offs Speed and volume flexibility, but high fixed cost and low work force commitment (Capital) High quality and innovative solutions (range flexibility), and high work force commitment, but volume inflexibility (Lifetime) Low cost and volume flexibility, but long lead- times and low work force commitment (Overtime)