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and other U.S. firms such as RCA, Magnavox, Philco, and Zenith were among the world’s most successful consumer electronics firms. In the face of withering competition from the Japanese, however, these firms began to fall by the wayside. Motorola has remained the exception: Today it is one of the world leaders in mobile communication technology, including the manufacture of cellular telephones, paging devices, automotive semiconductors, and microchips used to operate devices other than computers. Motorola has taken on the Japanese head-to-head. Although it may have lost a few battles here and there, the firm has won many more. Motorola heard the call to battle in the early 1980s. The firm then controlled the emerging U.S. market for cellular telephones and pagers but, like many other firms at the time, was a bit complacent and not aggressively focused on competing with the Japanese. Meanwhile, Japanese firms began to flood the U.S. market with lowpriced, high-quality telephones and pagers. Motorola was shoved into the background. At first, managers at Motorola were unsure how they should respond. They abandoned some business areas and even considered merging the firm’s semiconductor operations with those of Toshiba. Finally, however, after considerable soul searching, they decided to fight back and regain the firm’s lost market position. This fight involved a two-part strategy: First learn from the Japanese and then compete with them. To carry out these strategies, executives set a number of broadbased goals that essentially committed the firm to lowering costs, improving quality, and regaining lost market share. Managers were
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000 employees there. he was told by the plant manager that the factory had hoped to increase its productivity by 200% that year. Workers received new training in a wide range of quality-enhancement techniques. he noticed a flag flying in front of the factory emblazoned with the characters P200. to learn how to compete better. especially in Japan. Old plants were shuttered as new ones were built. others focused on learning about other successful Japanese firms. The manager went on to note somewhat dejectedly that it looked as if only a 160% increase would be achieved. Some managers studied Motorola’s own Japanese operation to learn more fully how it functioned. While touring a Hitachi plant north of Tokyo. the firm’s managers soberly realized that they had to forget altogether their old ways of doing business and reinvent the firm from top to bottom. When he asked what it meant. It is currently number three in market share there in both pagers and cellular telephones. At the same time. it received the prestigious Malcolm Baldrige National Quality Award. Even more amazing have been Motorola’s successes abroad. The firm has 20 offices and more than 3. a perfection rate of 99. Motorola controls much of the total market for these products. The firm placed its new commitment to quality at the forefront of everything it did. When Motorola actually achieved this level of quality. Because Motorola had just adopted a goal of increasing its own productivity by 20%.9997%. but especially to Japan. Worldwide.Cases of Operation Management sent on missions worldwide. the firm dramatically boosted its budgets for R&D and employee training worldwide. One manager who visited Japan learned an especially important lesson. It even went so far as to announce publicly what seemed at the time to be an impossible goal: to achieve Six Sigma quality. has regained its Page 2 of 18 pages .
Today. Motorola has set new–and staggering–goals for itself. Major new initiatives are underway in Asia. 2. and is furiously launching so many new products that its rivals seem baffled. It wants to take quality to the point where defects will be counted in relation to billions rather than millions. Page 3 of 18 pages . DISCUSSION QUESTIONS 1. But not content to rest on its laurels. The firm has also made headway in Western Europe against entrenched rivals Philips and Thomson. strategy? strategy as a result of a SWOT analysis. It wants to cut its cycle times (the time required to produce a new product.Cases of Operation Management number-two position in semiconductor sales. Motorola generates over 56% of its revenues abroad. It also wants over 75% of its revenues to come from foreign markets by 2002. the time to fill an order. and/or the time necessary to change a production system from one product to another) tenfold every five years. and Eastern Europe. 3. What are the components of Motorola’s international Describe how Motorola might have arrived at its current Discuss Motorola’s primary business strategy. Latin America.
high-quality new boats.Cases of Operation Management Case #02: Product and Service Design “Product Design at Regal Marine” Global firms like Regal Marine know that the basis for an organization's existence is the good or service it provides society.1 shows. Products are born. If the boat is successful. But why must Regal Marine constantly worry about designing new boats? The answer is that every product has a life cycle. it typically has a negative cash flow. Great products are the keys to success.2 shows the four life cycle stages and the relationship of product sales. As you read in the Global Company Profile that opened this chapter of your text. Page 4 of 18 pages . Its differentiation strategy is currently reflected in a product line consisting of 22 models. those losses may be recovered and yield a profit prior to its decline. and profit over the life cycle of a product. growth. With hundreds of competitors in the boat business. As Figure 5. and decline. When Regal is developing a new model boat. Regal continuously introduces innovative. maturity. Figure 5. Regal Marine must work to differentiate itself from the flock. They live and they die. a product's life cycle can be divided into four phases: introduction. costs. The life cycle for a successful Regal boat is three to five years.
or weight. Specifications from the CAD system Page 5 of 18 pages . Design ideas rapidly find themselves in Regal's styling studio. Then it was a redesigned 42-foot Commodore that sleeps six in luxury staterooms. By getting key suppliers on board early and urging them to participate at the design stage.Cases of Operation Management To maintain this stream of innovative new products. a small. the new product was the 3-passenger $11. dimensions.000 Rush. Regal constantly seeks design input from customers. With all these models and innovations. Moreover. The first stage in actual production is the creation of the "plug. with life cycles so short. The CAD system helps the designer determine engineering data such as the strength. The next year. Regal designers and production personnel are under pressure to respond quickly. where Computer Aided Design (CAD) technology speeds the development process. Existing boat designs are always evolving as the company tries to stay stylish and competitive. A Regal design engineer can start with a rough sketch or even just an idea and use the graphic display power of CAD as a drafting board to construct the geometry of the new boat." a foam-based carving used to make the molds for fiberglass hulls and decks. it was a 20-foot inboardoutboard performance boat with so many innovations that it won prize after prize in the industry. A few years ago. Regal improves both innovations and quality while speeding product development. dealers. but powerful boat capable of pulling a water-skier. It also allows the designer to be sure all parts will fit together. the faster it can bring new boats to the market. and consultants. a steady stream of new products is required. Regal finds that the sooner it brings suppliers on board.
Similar molds are made for many of the other features in Regal boats–from galley and stateroom components to lavatories and steps. Why does Regal Marine suffer negative cash flow in introduction stage of its product life cycle? 3. Molds take about 4-8 weeks to make and are all handmade. What strategy does Regal use to stay competitive? 4. Once the plug is carved. What are the likely benefits of the CAD design technology? Page 6 of 18 pages . What kind of engineering savings is Regal achieving by using CAD technology rather than traditional drafting techniques? 5.Cases of Operation Management drive the carving process. Discussion Questions: 1. How does the concept of product life cycle apply to Regal Marine products? 2. Finished molds can be joined and used to make thousands of boats. the permanent molds for each new hull and deck design are formed.
quality can be hard to quantify. quantifiable targets in place. As the first hotel company to win the Malcolm Baldrige National Quality Award. Ritz-Carlton managers and employees now focus on continuous improvement. from maintenance to management. creating the right combination of elements to make the experience stand out is the challenge and goal of every employee. Guests do not purchase a product when they stay at the Ritz: They buy an experience. In the hotel industry. Nineteen processes were studied. Thus. and breakfast service. Page 7 of 18 pages . guest reservation and registration. This period of self-study included statistical measurement of process work flows and cycle times for areas ranging from room service delivery times and reservations to valet parking and housekeeping efficiency. including room-service delivery. The results were used to develop performance benchmarks against which future activity could be measured. message delivery. the Ritz-Carlton risks losing that guest to competition.Cases of Operation Management Case #03: Quality Management “Quality at the Ritz-Carton Hotel Company” Ritz-Carlton. The goal is 100% customer satisfaction: If a guest's experience does not meet expectations. With specific. Before applying for the Baldrige Award. This means a daily commitment to meeting customer expectations and making sure that each hotel is free of any deficiency. The name alone evokes images of luxury and quality. One way the company has put more meaning behind its quality efforts is to organize its employees into "self-directed" work teams. company management undertook a rigorous self-examination of its operations in an attempt to measure and quantifies quality. the Ritz treats quality as if it is the heartbeat of the company.
Ritz-Carlton believes that a more educated and informed employee is in a better position to make decisions in the best interest of the organization. and cause-and-effect diagrams be used to identify quality problems at a hotel? 5. what work needs to be done. Discussion Questions: 1. Why might it cost the Ritz-Carlton less to "do things right" the first time? 4.Cases of Operation Management Employee teams determine work scheduling. How could control charts. In order that they can see the relationship of the specific area to the overall goals. In what ways could the Ritz-Carlton monitor its success in achieving quality? 2. employees are also given the opportunity to take additional training in hotel operations. and what to do about quality problems in their own areas. Pareto diagrams. What are some non-financial measures of customer satisfaction that might be used by the Ritz-Carlton? Page 8 of 18 pages . What actions might you expect from a company that intends quality to be more than a slogan or buzzword? 3. Many companies say that their goal is to provide quality products of services.
The figure at the bottom of this page shows Dell’s unique e-commerce model. to increase revenues by offering a virtually unlimited variety of PC configurations or customize them. Dell sell high-volume. the personal computer manufacturer highlighted in chapter 7’s Global Company Profile. have previously assembled PCs ready for purchase at retail stores. Competing firms that sell through distributors and retailers have to fill shelves at retailers before a product reaches the customer. Customization allows Dell to satisfy customers by giving them a product that is close to their specific requirements. In addition. Assembly begins immediately after receiving the customer order. in contrast. allowing them to view orders for components they produce as well as current levels of inventory at Dell. Thus a firm like Dell. But PCs across different manufacturers are highly substitutable because they often have the same components. low-cost products directly to end users. Products in the PC industry have life cycles of only a few moths. Dell constructs special Web pages for suppliers. Dell uses direct sales. This allows suppliers to plan based on customer demand and as a result reduces the bullwhip effect. which brings products to market faster than the competition. Traditional PC manufacturers. primarily the internet. has long embraced the internet and e-commerce in its supply chain. Dell. enjoys a huge early-to-market advantage. Dell also uses customized Web pages to enable large business customers to track past purchases and place orders consistent with their current needs. Page 9 of 18 pages . Options are easy to display over the internet and allows Dell to attract customers that value this choice.Cases of Operation Management Case #04: Supply Chain Management “Dell’s Supply Chain and the Impact of E-commerce” Dell. in contrast. introduces a new product to customers over the internet as soon as the first of that model is ready.
Dell holds inventory in the form of components that are common across a wide variety of finished products. Postponement. component modularity. products. Direct sales allow Dell to collect payment for its PCs in a matter of days after they are sold. The direct sales model allows Dell customers to place orders at any time of the day from anywhere in the world and is much cheaper. Dell pays its suppliers according to the more traditional billing schedules. This allows Dell to postpone assembly until after the customer order has been placed.Cases of Operation Management By using direct sales (phone and Internet) to sell PCs. However. Dell’s order processing. retail stores have a huge array of additional costs because of their bricks-and-mortar model. A PC supply chain that includes distributors and retailers finds it nearly impossible to achieve these results. Given its low levels of inventory. Dell maximizes the Page 10 of 18 pages . Dell is able to operate its business with negative working capital because it manages to receive payment for its PCs an average of 5 days before it plays its suppliers for components. Dell is able to eliminate distributor and retailer margins and increase its own margin. and tight scheduling allow low inventory and support mass customization. As a result. and assembly lines are designed such that all components on which customers are offered customization can be assembled in a matter of hours.
Therefore. traditional PC manufacturers are often stuck with PC configurations that are not selling while simultaneously being out of the configurations that are selling. Dell’s e-commerce model results in higher shipping costs than. Although it might seem that Dell. Because these shipments are small (often one or a few PCs). and thus the impact on the overall cost is low. with the end user providing the last portion of delivery. but relative to the price of a PC. however. using large truck shipments to warehouses and retailers. Dell sends individual PCs to customers from its factories. with its build-to-order model. is best equipped to benefit from e-commerce. may also have a lot to gain from e-commerce. transportation cost is low (typically 2% to 3%). The Dell supply chain’s outbound transportation costs are higher. selling through distributors and retailers. in contrast. 5. selling through distributors and retailers. PC manufacturers who sell via distributors and retailers find postponement virtually impossible. a traditional PC manufacturer. is better able to match supply and demand. 3. How has Dell exploited the advantage of the internet to What is the main disadvantage of Dell’s selling PCs over the How does Dell compete with a retailer who already has a PC How does Dell’s supply chain deal with the bullwhip effect? improve performance? internet? in stock? Page 11 of 18 pages . Why? 2. Dell. 4.Cases of Operation Management benefit of postponement by focusing on new PC models for which demand is hard to forecast. Discussion Questions 1. manufacturers selling through distributors and retailers ship with some economy of scale.
500 forms a day are flowing out. human resources limitations. the manager of Claims Processing. and as a temporary fix. there appear to be no easy fixes for the problem.500 forms for claims a day are now flowing into the office for processing-. Ms. Cook will also initiate worker-training programs that explain the entire claim processing flow. some customers are threatening legal action. from the time it arrives to the time a check is mailed. Meanwhile. Claims Processing managers and employees are to be trained in JIT principles. fewer than 2. as the workload has overwhelmed the existing system. Data entry skills will Page 12 of 18 pages . Cook has brought in part-time personnel from MICI sales divisions across the country to help. something must be done. With JIT principles firmly in mind. but economical. action taken to fix the problem. As a result. Sally Cook. Iowa. managers will redesign jobs to move responsibilities for quality control activities to each employee. holding them responsible for quality work and any necessary corrections. Under the current administrative procedures. and as expected. and facility constraints. With support from her bosses. Unfortunately. The Des Moines office is responsible for processing all of MICI's insurance claims for the entire nation. But clearly. has gone froth 10 days to 10 weeks. Cook has decided to try a JIT approach to claim processing. They are to work down the claims backlog while a new JIT system is installed. The total time to process a claim. as well as provide comprehensive training on each step in the process. record levels in claims followed. MICI management wants aggressive. Over 2. is particularly distressed as she knows that a claim seldom requires more than 3 hours of actual work. The company's sales have experienced rapid growth during the last year.Cases of Operation Management Case #05: Just-In-Time “Mutual Insurance Company of Iowa” Mutual Insurance Company of Iowa (MICI) has a major insurance office facility located in Des Moines.
6. employees. Nebraska. An example of the current departmental layout and claim processing flow pattern is presented in Figure S 12. emphasis will be placed on cross training to enable workers within departments to process a variety of customer claim applications in their entirety. Additionally. reduce data entry time. Making changes in work methods and worker skills leads logically to a need for change in the layout of the Claims Processing Department. She also had the team visit the Kawasaki motor cycle plant in Lincoln.Cases of Operation Management also be taught to both employees and managers in an effort to fix responsibility for data accuracy on the processor rather than data entry clerks. The team believes it should revise the layout of the operation and work methods to bring them in line with "group technology cell" layouts. Page 13 of 18 pages . They hope the changes will also save training time. Cook established a team made up of supervisors. To help ensure the successful implementation of this phase of the changeover. This potential change represents a major move from the departmental layout of the past. Cook and her supervisors are also reexamining the insurance and claim forms currently in use. and cut work-in-process. The team concluded that a change in the office facilities is necessary to successfully implement and integrate JIT concepts at MICI. to observe their use of work cells to aid JIT. They want to see if standardization of forms will cut processing time. and an outside office layout consultant. and will -be a costly step.
However. Accounting. varies depending on the claim from requirements (larger claims have to be approved by more people). customer claims arrive for processing at the facility and flow through a series of offices and departments to eventually complete the claim process. for example. the MICI facility currently Page 14 of 18 pages . the number of workers for each claim may vary from two to four. For this reason.Cases of Operation Management Figure S12. The number of employees. While the arrangement of the offices and workers in Figure S12. So while all forms must pass through the same three departments (Customer Claim Entry.6: Claims Processing Layout As can be seen in this figure. not all of the 20 flows are configured the same. each consisting of the same three departments. and Customer Claim Approval).6 is typical. the entire facility actually operates 20 additional flows.
Discussion Questions 1. Source: Adapted from Marc J. What would the restructured cell layout for claim processing in Figure S 12.6 look like? Draw it. 2. Cook.117systern is in place. Schniederjans. Identify the attributes you would expect the Claims Processing Department at MICI to have once the new ". Topics in Just-in-Time Page 15 of 18 pages . All of these people work for Ms. What assumptions are you making about personnel and equipment in the new group technology cell layout? 4. How will the new JIT oriented system benefit the MICI operation? Explain.Cases of Operation Management maintains a staff of over 180 office workers just to process and route claims. 3.
“It’s okay to change it as long as you keep on track. or WBS):† talent booking.month mark. project management is a key planning tool. and merchandising. Tomasso enters all of these into the MS Project software.8 (see page 100 in textbook) identifies 26 of the major activities and sub activities. their immediate predecessors. he checks and corrects his schedule twice a week. For the first 3 months.000 enthusiastic fans. and planning the annual Rockfest. Page 16 of 18 pages . show production. travel. he updates his progress weekly. Then at the 6-month mark.” he states. which is attended by well over 100. With Hard Rock’s constant growth in hotels and cafes. “Without Microsoft Project. marketing/PR. Table 3. As the event approaches. sponsorships. ticketing. At the 9. remodeling of existing cafes. “there is no way to keep so many people on the same page.” Tomasso is in charge of the Rockfest event. like many organizations. Tomasso updates his MS Project charts monthly. and time estimates. Early in the project management process. online promotion. managers rely on project management techniques and software to maintain schedule and budget performance. each of these is further divided into a series of subtasks. Using a WBS. scheduling for Hard Rock Live concert and event venues. The challenge is pulling it off within a tight 9-month planning horizon. Tomasso identifies 10 major tasks (called level 2 activities in a work breakdown structure. Tomasso devotes greater energy to its activities. television.Cases of Operation Management Case #06: Project Management “ Managing Hard Rock’s Rock Fest At the Hard Rock Cafe.‡ Tomasso alters the MS Project document and the time line as the project progresses.” says Hard Rock Vice-President Chris Tomasso. operations.
Which activities have a slack time of 8 weeks or more? 3. but an 'anticipated' surprise. Why is a work breakdown structure useful in a project such as this? Take the 26 activities and break them into what you think should be level 2. A band not being able to get to the venue because of traffic jams is a surprise. How long does the project take? 2. On completion of Rockfest in July. Identify five major challenges a project manager faces in events such as this one. Page 17 of 18 pages . level 3. 4. Identify the critical path and its activities for Rockfest. Discussion Questions 1. Tomasso and his team have a 3month reprieve before starting the project planning process again. and level 4 tasks. We had a helicopter on stand-by ready to fly the band in.” says Tomasso.Cases of Operation Management The day of the rock concert itself is not the end of the project planning. “It’s nothing but surprises.
Robert Jacobs. “Reengineering Technology. 1993 Ricard B. Krajewski and Ritzman. at Wake Forest University. Seventh Edition. W. Inc. Page 18 of 18 pages ... at the Case Studies in Team Excellence Competition.” Inc. 185. T. J. 2004. Pustay. Heizer. Prenhall.” The Ohio manufactures’ Association. Griffin. Service Operation Management. NJ: Prentice Hall.Cases of Operation Management References Brian McWilliams. International Business: A Managerial Perspective. Horngren. Operation Management for Competitive Advantage. Reproduced by permission of Addison Wesley Longman. March 19. Dator. Aquilano. Ohio. Columbus. (pages 647/648) © 1999. 1996 the small Factory. 2003). 2000 Saladin. Addison-Wesley Publishing Company. Chase. Brooke. “Huffy Bicycles. 1996 Addison Wesley Longman. G. Render Russell Barry and Roberta S. Operation Management. W. and S. R. Operations Management: Strategy and Analysis. 3rd ed. 11th ed. case prepared as a basis for classroom discussion. tenth edition. and Render. Prentice-Hall. 2001 Murdock Robert G. 2006 Russell Roberta S.. 6th ed. All rights reserved. Cost Accounting. Operation Management. Foster. NJ: Prentice-Hall. (Upper Saddle River. October 6.. Inc. C.. and M. and Taylor III. 1990 Presentation of the Alternative Work Structure Team. Nicholas J. Bernard W. M.. p. Upper Saddle Rivers. Second Edition. B.
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