Page 1 of 7 ASSIGNMENT GUIDELINES MODULE : OPERATIONS MANAGEMENT 3 () ASSIGNMENT : 2 ND SEMESTER 2014 References are to the prescribed textbook: Pycraft, M., Singh, H., Phihlela, K., Slack, N., Chambers, S and Johnston, R., 2010. Operations Management Global and Southern African Perspectives. 2 nd ed. Pearson. QUESTION 1 [10] 1.1 Swatch is a good example of the way three sets of competitive abilities in a company relate to each other. The three key contributions to Swatch s success (the three important micro operations) are the way Swatch has: 1. developed its products and services (1); 2. positioned itself in the market (1); and 3. created its products and services (1). The original stimulus for Swatch s success lay in its product design (1). The Swatch design was particularly innovative, incorporating a plastic case, and designed with relatively few parts. This resulted in a watch that was robust, capable of adapting to changes in fashion, and that required relatively inexpensive parts and materials. This allowed the product to be positioned in the market-place as an item of mass fashion (1). It was easily recognisable and stylish, yet sufficiently affordable to sell in large numbers. The design was also very easy to manufacture. Parts were standardised and the design was intrinsically easy to make. This manufacturability combined with higher volumes further reduced the cost of manufacturing the product (1). (6) 1.2 Swatch has a range of products that are essentially very similar, but customised at the last minute (1). This allows it to operate at relatively high volume and low variety for much of its manufacturing process (1). It therefore has a relatively simple and relatively cheap manufacturing operation, while at the same time allowing mass fashion orientation of its marketing (1). Given this, Swatch will have a higher degree of automated machinery (because of the high volume and the standardised parts) and rely less on skilled labour. It will almost certainly put more effort into its design activities than most other watch manufacturers (1). (4)
Page 2 of 7 QUESTION 2 [10] One way of comparing these two processes is to use the four Vs, volume, variety, variation and visibility. The figure below positions each process on the four dimensions. Volume the Fyodorov method is devoted to a single type of eye surgical procedure carried out at high volume. Conventional eye surgery is likely to have far lower volume for each type of eye surgery, partly because it has a higher variety of surgical procedures. (2) Variety as implied above, conventional eye surgery could deal with any sort of eye complaint; Fyodorov specialises in one type. (2) Variation some types of eye surgery will be performed as emergencies, e.g. trauma injuries to the eye. These cannot be predicted in advance and are likely to cause turbulence in planning and some variation in demand level. Fyodorov s method, on the other hand, is used on non-urgent cases that can be queued (stored) as inputs to the process, which will level demand on the process. (2) Visibility both processes are relatively high visibility because the patient has to be there to be processed. However, the extra diagnostics and possibly multi-stage surgery required in conventional eye surgery could be seen as having higher visibility. (2) (2) [10] QUESTION 3 [20] 3.1 This box highlights how Jaguar has always been regarded as excellent at some aspects of quality (such as performance and aesthetics) but very poor at others (such as product reliability). This gives us a clue as to the various dimensions of quality which are important to Jaguar. They are as follows. (Two points per dimension identified and explained, max 10 points) Performance the speed, power, cornering and other aspects of the way the car drives. Fast speed, powerful acceleration, responsive handling, and so on are generally regarded as the mark of a prestige car. (2) Aesthetics the overall appearance of the car should reflect its values. A Jaguar is smooth, luxurious, dashing and sporty! The key question for Jaguar is does the overall appearance and shape of the car reflect these values and appeal to its target customers? (2)
Page 3 of 7 Equipment is the car equipped with the type of things one would expect from a luxury car such as leather seats, global positioning system equipment, adjustable headlights and so on? (2) Finish are the visible areas of the car free from any marks or blemishes? This means an absence of scratches or small marks as well as an appropriate surface finish to all visible surfaces. (2) Build quality this normally refers to how the car feels as doors open and close, windows are raised and lowered and so on. Is there a satisfying solidity about the feel of the car? (2) Reliability when in use does the car (or some part of the car) break down? Do things go wrong? (2) After sales service should the owner have any problems or wish to know something more about the car, is it easy for him or her to do so? (2) All of these can be expanded considerably but the list does give an overall indication of the very many dimensions of quality which are important to Jaguar. (10) 3.2 The changes made by Jaguar (at least those described in the box) were all to the processes within the operation. For example: (Two points per example identified and explained, max 10 points) Training would equip operators with the skills to assemble the car in the correct manner without making mistakes. (2) Statistical process control would enable the operators to make sure that shop floor processes are operating as they should be and preferably improving. (2) Changing the payment system both encouraged operators to learn more skills and prevents them sacrificing quality in order to earn higher wages in the short term. (2) Multi-skilled teams would allow any absent workers to be covered for by people with equivalent skills and, more importantly, encourage continuous improvement to production processes. (2) Totally productive maintenance, improvement teams and benchmarking would likewise allow everyone working at the company to contribute to the general improvement effort. (2) All these changes were important but it is also vital to realise that, without the necessary investment, the changes in Jaguar would have been difficult or even impossible. Yet these issues are connected. It was the success of the company s management in starting these changes which encouraged the parent group (Ford) to invest considerable sums of money in the company, which in turn allowed the changes described above to have a real impact. (10) QUESTION 4 [30] 4.1 Bob seems to be an enthusiast who derives satisfaction from the incorporation of novel technology in the company s products. He sees product development as the main driver of the company, a process which
Page 4 of 7 combines high technology and fashion. The key organisational linkages under Bob s vision of the company are likely to be those between marketing (who should understand the trends in the market) and product development (who understand the potential of new technologies). He seems to give a lot of time to considering the cost consequences of continual product design changes. (One point per example identified, max 6 points) 4.2 (a) The production manager (Two points per example identified, max 8 points) (6) The production manager sees himself as being squeezed between two sets of pressures. The first, from product development, is represented by a series of product changes. No sooner has the production system been set up to make one set of products than it is replaced by another. This continual change prevents the production operation from moving down the learning curve and achieving the stability which will let them reduce costs. (4) The second set of pressures comes from marketing, who want fast delivery both of existing products and of new products. (4)
Page 5 of 7 The production manager must therefore try to achieve: low costs; fast delivery; short time-to-market of new products. (8) (b) The marketing manager (Two points per example identified, max 8 points) The marketing manager certainly does not seem to be interested in costs. Customers for these products are making so much profit from them that they are relatively indifferent to the price they pay. However, the availability of new products is crucial to making a sale. This has two aspects. First, the existing product must be delivered quickly to any customer who places an order. Unless prompt delivery is promised the customer could go elsewhere. Second, the company must be first onto the market with any new fashion or technical development. Being second in following a trend might substantially reduce sales. The quality of the products is also briefly mentioned, as is product reliability. The market manager therefore requires: fast delivery (2); short time-to-market of new products (2); product reliability (2); product quality (2). (8) (c) The new boss (Two points per example identified, max 8 points) The new boss faces something of a dilemma. On the one hand competitiveness in the market clearly requires innovation and product reliability. On the other, although the company is not under price pressure, profitability seems to be unsatisfactory. The only explanation for this is that costs are too high. The key to this problem must be the development of enhanced flexibility. What Pycraft et al. (2010) call response flexibility (that
Page 6 of 7 is the ability to change rapidly and without excessive cost) must be of importance to the production manager. Yet nowhere in the case is exercising flexibility mentioned by the various managers. Two types of flexibility are likely to be important new product flexibility and volume flexibility. New product flexibility means that the operation must be able to introduce new or modified products quickly, and depends on close collaboration between the product and product development departments. Volume flexibility means that the output of the operation can be adjusted quickly. This will be important because of the intrinsic unpredictability of such a fashion oriented market, and depends on a close collaboration between production and marketing. QUESTION 5 [20] Refer to Pycraft et al. (2010, Chapter 3) and a relevant company selected from the Internet. Definition of operations strategy: An operations strategy for a business is the company s plan (1) for how the business will operate to achieve a set of goals. (1) Compare it to a machine; the machine is used to achieve a certain purpose or function, but all components of the machine must operate correctly and in conjunction with each other for the machine to work successfully. An operations strategy in a business is essentially the same thing. It defines how different components of the business will work together to achieve success. (2) Companies define operations strategies differently, based on the management style and needs of the company. (4) (8)
Page 7 of 7 Top-down strategy: What the whole group or business wants to do. (2) Bottom-up strategy: Operations improvements cumulatively build strategy. (2) (4) In allocating marks for a student s description of a selected company s operations strategy, markers may use their discretion. Here are a few brief examples to be used as benchmarks: Retail Walmart is one of the most successful and largest retailers in U.S. history. Its operations strategy is to use low inventory levels and prices to generate faster sales based on low prices and value. Keeping inventory low allows the company to keep prices low for its customers, as well as replace products with new items once inventory is gone. This also increases demand. High demand combined with low prices leads to increased sales for the company. Online Online merchants typically have very different operations strategies than brick-andmortar retailers. For example, the operations strategy for an online merchant likely involves creating and maintaining a website that is easy to use and reliable, so when customers come to the site, they can easily navigate through it to make a purchase. An online merchant's operations strategy puts a lot of emphasis on the design and usability of the site, which includes product photos and descriptions that entice visitors to make a purchase. The checkout process also must be easy and fast. B2B B2B, or business-to-business, companies sell products and services to other businesses and also have different operations strategies than retailers, who sell products and services to consumers. An operations strategy for a B2B company might be to establish the company or management team as industry experts and thought leaders. This is done in a variety of ways, including obtaining speaking engagements at trade shows, publishing articles on different angles within the industry and expanding the company s professional network as much as possible. Companies that have a reputation as the experts in a certain industry are more likely to get business than companies are with no reputation in the industry. Non-profit Non-profit companies often operate similarly to other companies, though the ultimate goal of a non-profit is not about making as much money as possible. Thus, the operations strategy for a non-profit is different than a for-profit company. Non-profit company operations strategies might include fundraising efforts to pay employee salaries and partnering with local organisations to improve or resolve a situation. For example, in an area with a high population of homeless people, a non-profit agency might arise to help create free meal service and shelter to help those in need. (12) PRESENTATION [10]