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BU121 Lecture Notes - Critical Success Factor, Mass Customization, Product Design

Course Code
Roopa Reddy

of 4
Operations (sustainability)
Wednesday, March 13, 2013
2:02 PM
Critical Success Factor
Providing quality products and services
Logistics, distribution, employee commitment and R&D - how
everything links together
3 Decisions at 3 Stages
Planning- starts with product design
Production types and processes (mass production vs. mass
Choice of location and facility layout (link between type of
production, process used, and layout)
Resource planning and supply chain management (product
birth to disposal)
Make or buy? - outsourcing
Inventory management- liquidity
Routing and scheduling (logistics)
Quality and cost control
Harley-Davidson- productivity- quality connection
Application of technology
Service vs. Manufacturing
Both transform "raw material" into finished good, but service:
Raw material is person with unsatisfied need or possession that
requires care
Service is performed NOT produced (not tangible)
Focus on process as well as outcome-> judged on quality of
work AND service
Characteristics are different
Intangible- experience is key, customized, can't be stored
Customer is part of process
Extent of contact contact affects operations
Impacts capacity
Integration of marketing and operations (demand/capacity
Think about demand forecast and set up operations
capacity to meet demand- capacity limit vs. demand (the two affect
each other)
General rule: set capacity slightly ahead of demand
Expensive to add/ sit idle (in inventory)
In short term, turn away customers or outsource at
lower margins
Seasonality- shift demand and capacity requirements by
pricing, price incentives (tell retailers if you buy now it'll be cheaper)
Low contact- set capacity to average demand
Ex. accounting service- they don't have to be there
to watch you work so set it at average
High contact- set capacity at peak demand
Ex. restaurant- having enough tables/servers to
meet demand for peak hours even though at other times, tables
might be empty (planning for peak demand)
Mass Production vs. Mass Customization
Mass Production technology:
Norm of doing business from industrial revolution, but becoming less
prevalent today
Stable market conditions- doing the same thing over and over again in
large quantities
If market conditions were changing, couldn't produce in mass
quantities because you can't sell it
Efficiency vs. effectiveness- focus on being as efficient as possible
Not effective about how you're producing it
Repetition- simplified way to squeeze efficiency out of it
New Economic Reality
Constant change
Customer-driven- customer oriented now (effectiveness)
Customization and innovation- customer is requiring exactly what they
want, want it to suit them (must find way to customize what they're looking
Have to be innovative to meet customer needs and wants
"development that meets needs of present without compromising ability of future
generations to meet their needs" - UN
Measured by triple bottom line (Andy Savitz)
Profit/ Environment/ Society - People / Planet / Profit
(measures profit but also environment int society)
Don't operate just for profit, have 5 critical success factors
"sustainability sweet spot"- place where corporate and societal
interests intersect- new way to measure bottom line
Implies that you can find place where you can meet those
needs and make most profit, improve bottom line by finding that
sweet spot (find all demands there, better way of operating in terms
of profitability)
Dow Jones Sustainability Index
There's movement into only buying sustainable companies,
necessity for the futrue
Global Reporting Initiative- guidelines
1000 companies, 80% of Global Fortune 150
More holistic image of company
Sustainable Operations
The Next Industrial Revolution
Not about stopping growth, continuing growht in different way
because way we have grew so far that it's not sustainable
Raj Patel: The Value of Nothing
Things within costs that we've ignored (pollution etc.) but can't
continue to do that, must be dealt with
Ways to weave sustainability into operations
Product design
"Cradle to Cradle" design
Biomimicry - nature inspired
Product stewardship
Sustainability through servicing
Sustainability of supply chain
Cradle-to-Cradle Design
Take-make-waste model: cradle to grave design (classic approach-
take what we need-raw material, make into something we can sell then throw
it out)
Eco-efficient "less bad" -3Rs design
Eco-effective design based on nature's design principles
"waste equals food" - Cradle to Cradle design
Waste becomes food and goes back to the cradle- loops
back to cradle
Products developed for closed-loop systems
Every single output (waste) is nutrient for something else,
is safe and beneficial
Biological nutrient (go back into earth, nourish earth
and biodegrade) or technical nutrient (taken and made into
something else, take all of waste and make it into something
higher/equal quality in terms of effectiveness and productivity)
More effective in designing products based on nature's design
Ex. Sun Chips compostable bag (biological nutrient)
Initial reaction: customer said bags too noisy, change isn't easy
Ex. Nike (technical nutrient)
Taking apart shoe and using it for basketball/tennis court,
running track
Eliminate concept of waste: ensure there's a closed loop (overall goal)