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