Question

Based on below information: 1. Jack shows us a flow chart of the new warehouse system this week. What does a flow chart tell us? How can we use that information?

Elizabeth: -and it involves getting into a new market.
Gail: Okay, let’s go to it.
Andrew: If the main issue is control, there’s ways to protect ourselves and our interests.
Elizabeth: This is my company.
Maria: And if heads are going to roll, they say start at the top.
Warren: Yes!
Narrator: Welcome to the Mastering Operations Management episode, “Choosing a Strategy”.
Warren: Hey, Jack.
Debbie: Hi, Jack.
Jack: Hey, Warren. Hi, Debbie. How you doing?
Debbie: Good to see you.
Jack: You too.
Warren: How you doing, Jack?
Jack: Hey, bud, come on in.
Warren: What do we got?
Jack: Here you go, operations.
Warren: Okay.
Jack: Current facility on the left.
Warren: Mm hmm.
Jack: New, improved projected facility on the right.
Warren: So why does this one on the right say, “The house that Jack built”?
[Laughter]
Elizabeth, Gail, Andrew, Maria, Warren, Narrator, Debbie, Jack
Jack: Those crazy kids in IT. Anyway, process flow charts have been completed and the architectural firm of Simplify, Eliminate, Automate and Integrate have done a fine job.
Warren: Okay. So what are the highlights?
Jack: Well, barcoding, vertical material movement, and ASRSs do for distribution facilities what quick setups and group technology did for flexible manufacturing facilities.
Warren: Okay.
Jack: Notice, now, for future expansion I look at the performance data on just one ASRS to see how much quicker it is than the current system of picking. With two ASRSs-
Warren: We rule the world.
Jack: Yes. With even more capacity.
Warren: Right. Looks great. Now but what if there’s no volume increase?
Jack: Well, we’ve been talking about bringing more books in-house for quicker shipment. The second ASRS can either be used to double the volume shipped or to ship double the number of titles at current rates.
Warren: Now this figure down here, that’s census, right? That’s not a price tag?
Debbie: Liz won’t like that.
Warren: No, she won’t.
Jack: You’ve got to take a look at the net present value, the internal rate of return on these units.
Warren: Okay.
Jack: I mean you can’t beat that with a stick.
Warren: You’ve included our expected improvements in these numbers, right? Less labor, less space, greater revenue?
Elizabeth, Gail, Andrew, Maria, Warren, Narrator, Debbie, Jack
Jack: Of course I did, but I was conservative, and it still looks pretty good. And I even included installation and start-up costs in the MPV analysis. But we need to see if we can get the IT guys-
Debbie: And gals.
Jack: And gals. We’ve got to pull them off bandwidth and security projects to work on integrating data flow at several places in the system.
Warren: Oh boy. Liz, uh, you and I have known each other for many years and I just want to ask you-
Debbie: [Laughs]
Jack: No, no, wait – no, no, don’t – wait – just – just take your time. Talk about the long-term strategic impact of new technology and process change.
Warren: Yeah, that’s why I have you, Jack, to handle that part of the conversation.
Debbie: You guys will do great.
Jack: You know it.
Warren: We will do great, Debbie. All of us.
Narrator: Now move on to the brief summary of concepts and then to the interactive exercises.