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Operations Lecture.doc

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Wilfrid Laurier University
Roopa Reddy

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 customization) • 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 • Controlling • Routing and scheduling (logistics) • Quality and cost control  Harley-Davidson- productivity- quality connection • Improving • Application of technology Trends 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 tradeoff)  Think about demand forecast and set up operations capacity to meet demand- capacity limit vs. demand (the two affect each other) • Manufacturing  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) • Service  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 (quantity) 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 for) • Have to be innovative to meet customer needs and wants Sustainability "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 desig
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