Lecture Notes

Part I: Manufacturing and Operations as Competitive Weapons
1 Introduction to Course and Concept and Principles of Operations Strategy (PDF)
2 Developing a Manufacturing and Operations Strategy Prepare to answer the following questions for class:

How serious is the threat of DJC to American Connector Company?

How big are the cost differences between DJC's plant and American Connector's Sunnyvale plant? Consider both DJC's performance in Kawasaki and its potential in the United States.

What accounts for these differences? How much of the difference is inherent in the way each of the two companies compete? How much is due strictly to differences in the efficiency of the operations? Are there differences in the pattern of decisions by decision category?

What should American Connector's management at the Sunnyvale plant do?
Part II: Key Elements and Decision Categories in a Manufacturing Strategy
3 Introduction to Decision Categories, the Role of Technology Prepare to answer the following questions for class:

What are the economics of the new molding process compared with the old lathe technology?

What are the other pros and cons of the new process?

Should Miller manage the improvement process with the new technology any differently from the process used with the lathe technology? If so, how?

Construct a three-year manufacturing plan for Miller to present to the management committee.
4 The Role of Technology and Multiple Plants This class will explore the management of process technology for additional plants. We will examine questions on how to manage the development strategy. One of the questions to be explored is how far a company should go in implementing copy exactly.

Prepare to answer the following questions for class:

What are the implications for both cost and flexibility of automation? Do you agree with the assertion made by one of the managers in the case: "If you automate, you stagnate?"

What are your recommendations regarding the issue of standardizing process technology across all plants? Are there motives behind this proposal, other than those stated in the case?

As Juergen Geissinger, how would you go about implementing your recommendation? How would you overcome resistance from the plants? As Steve Dickerson, the plant manager at Asheville, North Carolina, what line of reasoning would you use to convince senior management that full automation is the less desirable alternative?

As Klaus Lederer, what option would you like to see pursued? How do various options fit into the broader corporate strategy of ITT Automotive?

In general, when should copy exactly be used?
5 Capacity, Environmental Issues Prepare to answer the following questions for class:

What opportunities and risks did Ken McRae face as he contemplated taking APM into the fine papers market? Be specific with respect to technological, operations, and capital investment (as well as other) considerations.

How has the environment fared in this battle?

As Ken McRae, what technology and operations strategy options are available? Which do you think he ought to pursue? Why?
6 Facilities Strategies on a Global Basis

Comparisons of Plant Productivity
Prepare to answer the following questions for class and for the Applichem writeup:

Compare the performance of Applichem's 6 Release-ease plants.

Why were some plants "better" performers than others?

How would you advise Joe Spadaro to configure his worldwide manufacturing system?
7 Summary Lecture on Facilities Strategy and Globalization (PDF) Based on the cases from the previous classes, try to develop a formal method for developing a facilities strategy on a global basis.
8 Vertical Integration We will explore the reasons why or why not a company should vertically integrate. In addition to the Sensormatic situation, we will explore the issues faced by a biotech company in determining whether they should buy or build new capabilities.

Prepare to answer the following questions for class:

What are the tag requirements and available capacities under the different options through 1984?

Should Sensormatic integrate into injection molding? If so, how?

What other advice would you give to Ron Assaf about his manufacturing operation?
9 Supplier Management: Numbers of Suppliers (PDF) Prepare to answer the following questions for class:

As Brian Davis, what recommendations would you make regarding the two-supplier proposal for the new Back-end process tool? Which supplier(s) would you select and what problems is Intel likely to encounter in implementing your recommendation?

What other changes in Intel's operations strategy would you recommend?
10 Planning and Materials (PDF) In this class, we will explore the importance of planning scheduling and operating systems, such as the Toyota production system.

Prepare to answer the following questions for class:

What makes Zara different from other specialty retailers?

Where are the competitive threats to Zara likely to come from?

Which decision categories are key to Zara's strategy. Are planning and materials critical? Why or why not?

What should Zara's approach be in determining its sourcing mix?
11 The Logistics System and the Supply Chain Prepare to answer the following for class discussion:

Is this a concept that large numbers of consumers will flock to? Why or why not? Would you use it?

Does the concept create value in any supply chain? To whom does it create value for? How much value?

What players can implement such a concept? Can eShip?

Is there value in the high-tech approach? Will something simpler work?

Can you think of other instances where a concept in distribution and logistics (instead of production) might add value or support the business strategy?
12 The Supply Chain (cont.) Guest lecture.
13 Organization, Human Resources and Workforce Teams Prepare to answer the following for class discussion:

How well has the innovative work system at SEP survived the test of time?

What adjustments are needed to implement JIT and TQS? Evaluate the JIT/TQS implementation process to date. Will it be easier or harder to implement JIT in machining versus A&T?

What should Ivan Gargarian do?
14 Information Systems, Enterprise Systems and the Impacts of the Electronic Economy

Summary of Strategic Decision Categories (PDF)
In this class we will explore the impact of information systems on strategy. For example, how important enterprise systems are. Other areas will include: the potential of the virtual organization and the concept of agility, improvements in the supply chain, and strategies for servicing customers. We will also use this class to summarize the module on decision categories.

Prepare to answer the following questions for class:

How effective was the Alliance implementation? Should performance go beyond what is stated?

Can Alliance be used effectively to assist in new product introductions?

In general, what are the implications of the web and new information technologies on manufacturing and operations? What are the ways in which the IT can be used for competitive advantage?
Part III: Different Approaches to Manufacturing Strategy
15 Introduction to Different Approaches to Competition

Competing on Costs
Prepare to answer the following questions for class:

What gives Dell its competitive advantage? What are its cost advantages?

Why can others not duplicate its model?

What are the bases of lower costs in other industries?
16 Competing on Quality: Sources of Quality and Different Measures of Quality Prepare to answer the following questions for class:

What are Delamere's strengths and weaknesses? What does it deliver to customers that other vineyards do not? What does it take to be outstanding in the wine business?

What types of uncertainty does Richardson face?

What does quality mean in winemaking?

What principles and concepts should one apply to improving a production system such as winemaking?

What should Richardson do? How will his personality and experience shape his decision?

Extending the notion of quality, what are the sources of quality for manufacturing and service operations? How transportable are they?
17 Competing on Features and Innovativeness: Types of Quality and the Product Development Process Prepare to answer the following questions for class:

How does one define quality?

What are the causes and consequences of BMW's quality problems with newly launched products? What should be done to improve "launch quality"?

What are your recommendations to Carl-Peter Forester concerning the R-series prototypes? What should he do regarding future development projects?

What changes would you recommend in the way BMW develops new models? What attributes of newly launched products would you expect to improve as a result of these recommendations? Which attributes might deteriorate?

What recommendations would you make to Chairman von Kuenheim regarding BMW's strategy to compete against new Japanese entrants into the luxury car market?
18 Competing on Availability and Timebased Strategies Such As Postponement Prepare to answer the following questions for class:

Critique the POS concept. Will it address the competitive dilemma faced by National Bicycle?

What are the differences between mass production and POS, and in particular, how does the cost of producing and delivering a bicycle differ?

Estimate the capacity of the POS concept without overtime.

What lead-time should National Bicycle offer to its POS customers?

How does one evaluate the strategic question of offering custom products? What does this case indicate about this question?
19 Impacts of Flexibility on Strategic Choices Flexibility is often viewed as a strategic approach like cost or quality. But flexibility is more of a means toward strategic ends and we will explore this. The concept of agility, which extends flexibility has received a great deal of press and is based on the concept that companies can form temporary alliances and gain a competitive advantage. The new organization becomes a virtual corporation, another concept popularized in the press. We will also explore these concepts.

Prepare to answer the following questions for class:

What are the major risks and uncertainties that Incat is facing?

How does it design its operating system to deal with these uncertainties and risks?

Which of the options should it select?

How does a company in general develop flexibility? What strategic advantages does flexibility give?
Part IV: Globalization, Outsourcing and Other Critical Issues in Operations Strategy and Policy in the 21st Century
20 Power and Control and the Technology Supply Chain Prepare to answer the questions on page 10 of the case.
21 Outsourcing Strategies, Contractordriven Paradigms, and Asian Sourcing and Globalization (PDF) This class will explore some of the particular issues in a global environment, such as flexibility and long lead times and overseas contracting.

Prepare to answer the following questions for class:

What are the key aspects of the market for toys? How does Mattel deal with the great uncertainty of the market? How do such techniques differ from a market such as personal computers?

Critique the outsourcing strategy. Should die-cast cars be a core product?

What is the true labor cost assuming productivity of 60 hours/1000 cars for China, 90 for Indonesia, 50 for Thailand, and 30 for Malaysia? What are the implications of these differences?

If Mexico has the same productivity is the same as Thailand, should Mexico be considered?

How should Mattel satisfy its capacity needs?

How does one think about using Asia (and in particular China) in one's operations strategy?
22 Supplier Power and Overseas Sourcing

Moving up the Value Chain in Outsourcing
Prepare to answer the following questions for class:

Should you accept the offer from the OEM for an exclusive contract for Phone 4?

If you are an OEM, would you accept an offer from Flextronics for an ODM phone?

What are the opportunities and risks for Flextronics as it progresses from stage to stage as a CM, CDM and ODM? What are the opportunities and risks for an OEM as it does business with Flextronics at each stage?

Would you aggressively pursue the strategy of being an ODM?
23 Global Cost Competitiveness, Outsourcing, and the Hollow Corporation Prepare to answer the following questions for class:

What has been Whistler's traditional approach to manufacturing?

What are the implications of each manufacturing option with regard to:
- Cost?
- Quality?
- The company's ability to introduce new products?
- Responsiveness to market demand?

What are the risks associated with each of these options?

What problems is Charles Stott likely to face in the next five years and how should operations be configured to deal with them?

How can a company in general compete without doing manufacturing? Can the hollow corporation work?
24 Implications of Outsourcing on Competitiveness

The Role of China and Low Cost Locations
This session will further explore globalization and how it affects competitiveness in an advanced economy.

Prepare to answer the following questions for class:

What are the longrun impacts of globalization?

In particular, should a country such as the U.S. be concerned with the extent of outsourcing?

Should it worry about the loss of jobs to locations such as China?
25 Conclusions and Wrap Up This class will conclude the course and discuss some summary issues. These include:

How a company implements a strategy?

Future trends in operations and manufacturing.

Policy issues for a society on the future.