Professional Documents
Culture Documents
Case Problem OPM
Case Problem OPM
CASE PROBLEM
OPERATION MANAGEMENT
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Cases of Operation Management
For years Motorola 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 low-
priced, high-quality telephones and pagers. Motorola was shoved
into the background.
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DISCUSSION QUESTIONS
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Cases of Operation Management
French-Fried Automation
While in Detroit the significance of the technological process lies in
production, at McDonald's it lies in marketing. A carefully planned design is
built into the elaborate technology of the foodservice system in such a
fashion as to make it a significant marketing device. This fact is impres-
sively illustrated by McDonald's handling of that uniquely plebeian
American delicacy, french-fried potatoes.
French fries quickly become soggy and unappetizing; to be good,
they must be freshly made just before serving. Like other fast-food
establishment, McDonald's provides its outlets with precut, partially cooked
frozen potatoes that can be quickly finished in an on-premises, deep-fry fa-
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cility. The McDonald's fryer is neither so large that it produces too many
French-fries at one time (thus allowing them to become soggy) nor so small
that it requires frequent and costly frying.
The fryer is emptied onto a wide, flat tray adjacent to the service
counter. This location is crucial. Since the McDonald's practice is to create
an impression of abundance and generosity by slightly overfilling each bag
of French-fries, the tray's location next to the service counter prevents the
spillage from an overfilled bag from reaching the floor. Spillage creates not
only danger underfoot but also an unattractive appearance that causes the
employees to become accustomed to an unclean environment. Once a
store is unclean in one particular (area), standards fall very rapidly and the
store becomes unclean and the food unappetizing in general.
While McDonald's aims for an impression of abundance, excessive
overfilling can be very costly for a company that annually buys potatoes
almost by the trainload. A systematic bias that puts into each bag of
French-fries a half ounce more than 'is intended can have visible effects on
the company's annual earnings. Further, excessive time spent at the tray
by each employee can create a Cumulative service bottleneck at the
counter.
McDonald's has therefore developed a special wide-mouthed scoop
with a narrow funnel in its handle. The counter employee picks up the
scoop and inserts the handle end into a wall clip containing the bags. One
bag adheres to the handle. In a continuous movement the scoop descends
into the potatoes, fills the bag to the exact proportions its designers
intended, and is lifted, scoop facing die ceiling, so that the potatoes funnel
through the handle into the attached bag, which is automatically
disengaged from the handle by the weight of the contents. The bag comes
to a steady, non-wobbling rest on its flat bottom.
Nothing can go wrong-the employee never soils his hands, the floor
remains clean, dry, and safe, and the quantity is controlled. Best of all, the
customer gets a visibly generous portion with great speed, the employee
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remains efficient and cheerful, and the general impression is one of extrav-
agantly good service.
Mechanized Marketing
Consider the other aspects of McDonald's technological approach to
marketing. The tissue paper used to wrap each hamburger is color-coded
to denote the mix of condiments. Heated reservoirs hold pre-prepared
hamburgers for rush demand. Frying surfaces have spatter guards to
prevent soiling of the customer. Nothing is left to chance or the employees'
discretion.
The entire system is engineered and executed according to a tight
technological discipline that ensures fast, clean, reliable service in an
atmosphere that gives the modestly paid employees a sense of pride and
dignity. In spite of the crunch of eager customers, no employee looks or
acts harassed, and therefore no harassment is communicated to the
customers.
What is important to understand about this remarkably successful
organization is not only that it has created a highly sophisticated piece of
technology, but also that it has done this by applying a manufacturing style
of thinking to a people-intensive service situation. If machinery is to be
viewed as a piece of equipment with the capability of producing a
predictably standardized, customer satisfying output while minimizing the
operating discretion of its attendant, that is what a McDonald's retail outlet
is. It is a machine that produces, with the hell of totally unskilled machine
tender, a highly polished product. Through painstaking attention to total
design and facilities planning, everything is built integrally into the machine
itself, into the technology of the system. The only choice available to the
attendant is to operate it exactly as the designers intended.
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QUESTIONS:
1. What are the characteristics of the McDonald's "product" that make it
successful?
2. Explain how the design of the product and the design of the service
delivery are intertwined in the McDonald's example.
3. McDonald's approach to assembly-line service has become the norm
for the fast-food industry. There are, however, variations to their
approach that competitors emphasize as a marketing tool. How do
the design of the product, design of the service, and design of the
service delivery system differ for a company such as Wendy's? In
other words, how are the marketing strategies of Wendy's versus
McDonald's reflected in their product/service/delivery system design?
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Discussion Questions:
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Discussion Questions
1. Although it might seem that Dell, with its build-to-order model,
is best equipped to benefit from e-commerce, a traditional PC
manufacturer, selling through distributors and retailers, may
also have a lot to gain from e-commerce. Why?
2. How has Dell exploited the advantage of the internet to
improve performance?
3. What is the main disadvantage of Dell’s selling PCs over the
internet?
4. How does Dell compete with a retailer who already has a PC
in stock?
5. How does Dell’s supply chain deal with the bullwhip effect?
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QUESTIONS
1. GM and Ford have quickly pushed the development of large Internet
sites to create an environment where suppliers must compete for
business. Ford and GM argue that these Internet sites should
reduce cost because the negotiations are streamlined. How do you
think the suppliers view these sites?
2. Rather than having vendors compete against one another, Toyota is
interested in treating suppliers as partners. Is Toyota just being old-
fashioned in its views?
3. A major reason for the differences in opinions may be the difference
in what Toyota considers "competitive" components. These are the
components that would mostly be bought using the Internet trading
sites. Who is right? Are steering wheels and wire connectors
competitive components?
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The day of the rock concert itself is not the end of the project
planning. “It’s nothing but surprises. A band not being able to get to
the venue because of traffic jams is a surprise, but an 'anticipated'
surprise. We had a helicopter on stand-by ready to fly the band in,”
says Tomasso.
Discussion Questions
1. Identify the critical path and its activities for Rockfest. How long
does the project take?
2. Which activities have a slack time of 8 weeks or more?
3. Identify five major challenges a project manager faces in events
such as this one.
4. 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, level 3, and level 4 tasks.
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References
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