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T H E SYLLABUS OPERATIONS STRATEGY ( F A L L O P M G S

T H E

SYLLABUS OPERATIONS STRATEGY

( F A L L

O P M G S e m e s t e r

5 3 2 2 0 1 3 / 2 0 1 4 )

A M E R I C A N

U N I V E R S I T Y

I N

C A I R O

S c h o o l D e p a r t m e n t

o f

o f

B u s i n e s s M a n a g e m e n t

Instructor name:

Ali H. Awni

Office number:

BEC 2022

Office hours:

5:00 to 6:00 pm Monday and Tuesday, or by appointment

Telephone number:

22615 3264

e-mail address:

ahawni@aucegypt.edu

Course Prerequisites

OPMG 520

Vision of the School of Business

The School of Business sees itself becoming globally recognized as the leading business school connecting the region and the world.

Mission of the School of Business

The School of Business strives to create an environment that fosters the development of principled and innovative business leaders and entrepreneurs who can make a difference.

Mission of the Department of Mangement

Our mission is to develop business leaders who are dedicated to the betterment of society by providing a high quality business education to top caliber students from all segments of Egyptian society as well as from other countries while focusing on continuous improvement and a commitment to excellence in learning, intellectual contributions and service.

In support of this mission the department:

  • a) Provides a high quality contemporary-style business education that blends a global perspective with national cultures and is relevant to the business needs of Egypt and the region.

  • b) Provides programs that encourage the development of an entrepreneurial spirit that emphasizes creativity, innovation, individual initiative and teamwork

  • c) Provides a learning environment that fosters faculty/student communication and promotes lifelong learning and career development

  • d) Encourages faculty development activities that improve teaching, maintain competence and that keep faculty current with ideas and concepts in their field.

  • e) Seeks to develop a portfolio of intellectual contributions to learning and pedagogy, to practice, and to the theory and knowledge base of the disciplines.

Course Outline and Course objectives

“Operations” is what a company "does". It is how it delivers its "product" to customers. It is the core of a company‟s business (whatever that is). This definition of operations can be

applied to almost any organization, industrial, public sector or pure service operations. Operations strategy involves “Policies for using the firm‟s resources to support the business unit‟s strategy for gaining competitive advantage. These policies are usually defined in terms

of the operations objectives of cost, quality, flexibility, and service. Often firms can gain competitive strategic advantage by avoiding tradeoffs between these objectives. For example,

Dell Computer was able to “change the rules of game” and gain significant competitive

advantage by being the first to successfully offer low cost assemble to order computer

through direct mail. Similarly, Fed Ex was one of the first to order reliable overnight package

delivery.” [Arthur Hill, the Encyclopedia of Operations Management Terms, POMS, 2003]

In recent years, managers and business observers have understood that operations have to be managed in the broader context of business strategy. In this sense, decisions on operations capabilities must fit and be consistent with the business strategy. Furthermore, decisions about different areas of operations must be consistent with each other. In this course we will examine how firms can develop a sustainable competitive edge via excellence in operations strategy formulation and implementation.

In this course we apply an analysitcal framework developed by Hayes and Wheelwright at the Harvard Business School. Their famework categorizes the managerial decisions that deal with

operations as either structural, dealing with such “hard” issues as capacity, facilities, technology and management of the supply chain, or infrastructural, dealing with “softer” isseus such as workforce,

quality , material control, and organizaiton. We will study different scenarios in which firms make structural decisions (such as technology choice, capacity expansion, factory focus) and infrastructural policy decisions (relating to entry-exit strategies within the product life cycle, quality management & benchmarking, and procedures for global sourcing & inter-functional coordination). The course has general managerial focus (assessing a situation, taking effective action, getting things done) and includes several articles and HBS cases. The course aims:

  • 1. To present a strategic perspective to the management of the Operations function;

  • 2. To integrate Operations and other functions in a holistic corporate strategy formulation to achieve competitive advantages;

  • 3. To examine different approaches to the development of Operations Strategy.

Competency coverage

In addition to the specific objectives of the course, the material and activities have been selected to aid students in their progress toward developing the following competencies:

Written and oral communication skills

Group work

Analytical and problem solving skills in a variety of operational setting.

Coverage of learning goals

We will learn by analyzing case situations of real companies facing strategic issues in operations. We will supplement case analysis with readings, class discussions, and group presentations. To obtain the full benefit of the case approach, it is necessary that everyone come to class well prepared. This does not mean that you have "solved the case" or "have all the answers" to the case. Given the complexities of the real world, there is no answer, as such. However, it does mean that you have thoroughly read the case and other assigned materials, have thoughtfully considered the issues raised by the case and the assignment questions, and have done whatever analysis is appropriate. By participating actively in the discussions, you will sharpen your own insights, and those of your classmates.

Your grade in this course will depend on your team work and active participation in class

discussions. What it means: respect to other teams‟ members as well as yours, honesty and

candor, and really listening to others point of view. What it doesn't mean is shying away from debate, or avoiding difficult issues. During the discussions you are encourage to speak out. You can impugn any arguments, not people.

Teaching Method:

The course will be delivered through a mix of lectures and student centered activities. Students will be asked to form groups in the first class session for five case write-ups and one final write-up and

presentation. Group size should be kept at a maximum of 5. Sharing ideas and discussing issues in a group frequently produces insights that a person would not gain by studying alone. I strongly advise against parceling out pieces of an assignment to various group members. The better model is for each group member to do the work separately, then to meet together to form the common document.

You are given a detailed schedules of classes, the reading relevant for each class, the case to be prepared if any, and questions to prepare for the discussion. I expect each student to have read the assigned reading materials, and to be prepared to engage in the class discussions.

Group Case Write-ups: Each group is required to submit a written analysis of the issues in five assigned cases. Each case write-up accounts for 5% of the total grade. Specific instructions regarding the questions, the cases, and the due dates, are given in the detailed schedule below. Write-ups should be single-spaced, using12 point font, and should be 6-10 pages with concise logical modules containing the following sections: 1. Executive Summary 2. Analyses main issues, list of options considered, recommendation with justification (qualitative and quantitative), 3. Implementation; risks and contingencies. Questions, specific to each case, to help guide your thinking are provided. (Do not adopt a direct question and answer format in your report. Avoid simply regurgitating case facts; assume that the reader knows the case data well so you should use relevant case facts to support your analysis and conclusions.) Each case writeup will be graded based on four criteria with equal weight for each: analytical depth, comprehensiveness, managerial realism and presentatation style.

Final Group Case Write-up and Presentation: The final case write-up and presentations are integral part of the course, and should be carried out in groups of five (same team membership as assignments). The assigned cases will complement in-class learning. Each group will select one case that will explore new dimensions of project management. Selection of the cases will be according to the order of your group performance in the first four group write-ups. A case write-up not exceeding 10 pages, also single-spaced, 12 point font, to be submitted in the last class, is expected from each group. Each group will present the assigned case in class and will lead the class discussions and answer the questions of other group members. Each presentation group is expected to submit their writeup to the rest of the students a week ahead, and a copy of the presentation to the instructor at the beginning of the session that the case is discussed.

The final case write-up will be graded similar to the other 5 writeups. The presentation will have similar weight as the final writeup, and will account for the content of the presentation, and how the group presented their analysis and handled questions from members of the other groups.

For the final case, each student will be asked to evaluate the performance of one group, other than his own group, in terms of how they presented their case and the quality of their writeup. Each student will be asked to provide brief reasons for his/her evaluation. The instructor will evaluate the quality of each student's evaluation on group presentation, and the result will be factored into class participation.

How to prepare a case: Speed-read to identify what the case is about and what types of information is provided for analysis. Read the case again carefully to understand key facts and basic problems to be resolved. Put yourself in the shoes of the main case protagonist (become managers involved in case issues). Discuss the case with your team members. Sort out the relevant considerations for each problem area. Develop a set of recommendations supported by your analyses of case data. How to present a case: Each study group will present their analysis to their assigned case. Each group is expected to act as hired analysts for senior managers (i.e. the rest of the class) of the organization described in the case. Each group is expected to prepare up to two-page executive summary. Each group presents their analysis and recommendations in precisely 25 minutes (This is a criterion for performance evaluation.). After the presentation completes, the rest of students will ask clarification questions.

Class Participation: Your grade will depend on your preparation of the assignments and the quality of your contribution during class discussions. Your contribution is necessary to create and enhance a positive learning environment for this course. Your grade will be based on the quality and impact of your contributions, not on quantity (although a minimum amount of the latter is necessary to deliver on the former.) Some key characteristics of valuable contributions are:

Relevance: Are your comments timely and linked to the comments of others? Advancement: Do your comments take the discussion farther or deeper than previous comments? Fact-based: Have you used specific data to support the assertions that you are making? Logic: Is your reasoning consistent and logical? Originality: Do your comments merely restate the facts or do they provide new insights? There should be enough opportunities for you to participate. To increase opportunities for effective participation, I will occasionally cold call students. Class participation can also occur in terms of postings on the class discussion group (Blackboard).

Final Report: The final project is intended to assess your individual learning and understanding from the course. The final project offers an opportunity to apply course concepts and to perform an in-depth analysis of any operations that are of interest to you. You can select a business entity in Egypt, a company or set of companies, and write a report around how its competitive position can be enhanced as a result of applying some of the concepts introduced in the course. You should describe the current status of the company/industry, what values the concept can bring to the table, how to quantify the values and costs, and potential benefit and how it can be sustainable. A report not exceeding 8 pages, also single-spaced, 12 point font, to be submitted (emailed) by December 19, 2013, is expected from each student

Course Guidelines:

It is crucial that you attend all the class sessions. If you cannot attend a particular class due to illness or other special commitments, please send an e-mail to me. Or else, I will record your missing classes as absence without reasons and reflect them in class participation. Please show up to class on time and do not use the computer in class for any purpose other than to take notes. You are expected to prepare for class discussions. If you are uncomfortable with being called on in a particular class session, please say so to me in advance of the class. You can exercise this waver once during the semester. Please sit in the same seat in each class. This will help me memorize your names. Late submission of papers is in principle not acceptable.

Text and other reading materials The assigned textbook for this course is: Operations Rules: Delvering Customer Value Through Flexible Operations by David Simchi-Levi, The MIT Press, 2010.

There are many excellent textbooks that discuss operations strategy that may be of interest:

  • 1. Operations Strategy: Principles and Practice by J.A. Van Mieghem. Publisher: Dynamic Ideas, Charlestown, MA. 2008

  • 2. Operations Strategy: Competing in the 21 st Century. S. L. Beckman and D. B. Rosenfield. McGraw-Hill, 2007.

  • 3. Operations, Strategy, and Technology: Pursuing the competitive edge. R. Hayes, G. Pisano, D. Upton and S. Wheelwright. Wiley, 2005.

  • 4. Operations Strategy by Slack and Lewis. Prentice Hall, 3 rd edition, 2011.

  • 5. Manufacturing Strategy by Hill. Irwin McGraw-Hill, 2000.

Assigned readings (including papers & cases) will be posted on Blackboard learning system or handed in class. For further details on the assigned reading refer to the course schedule.

Grading System:

Your grade in the class will depend on two types of assignments/course work: one type part is based on your group work and the other type is based on your individual work. The contribution of each activity to your final grade is as follows:

Case Assignments (5 write-ups)

group based

(25%)

Final Case Presentations & write-ups

group based

(30%)

Class Participation

individual based

(20%)

Final Report

individual based

(25%)

Attendance

As stated in the university catalog, “students are expected to attend class; there is no system of

permitted absences.” Students may not normally receive credit for a course if more than three weeks

of classes (or their equivalent in summer school) are missed. Students are also expected to be very punctual.

For a complete explanation of AUC‟s attendance policy, please the AUC 2010/2011 Catalog.

The University Academic Integrity Policy

All students are expected to agree to and comply with the University Academic Integrity Policy which states

“Valuing the concepts of academic integrity and independent effort, the American

University in Cairo expects from its students the highest standards of scholarly

conduct. The University community asserts that the reputation of the institution depends on the integrity of both faculty and students in their academic pursuits and that it is their joint responsibility to promote an atmosphere conducive to such

standards.”

Detailed information about the University Academic Integrity Policy may be found in the University Catalog and on the University Web site.

OPMG 532 OPERATIONS STRATEGY

Ali H. Awni

Course Schedule Overview

Fall 2013

Session

Date

Topic

Hand in

  • 1 September

9

 

Course overview and expectations, and Introduction to Operations Strategy

  • 2 Competing On Cost

16

September

your brief one- page

Case (1) write-up:

  • 3 Competing through Operations

21

September

bio & reasons to take course& expectations

BYD Company Ltd

  • 4 Industry Guest Speaker

23

September

  • 5 Focused Operations

30

September

Case (2) write-up:

Shouldice Hospital

  • 6 October

7

Decision Categories Work Design Rules & Learning

 

14

October

Eid El Adha

21

October

No lecture - Instructor out of country

  • 7 Competing on Features and Innovativeness - Types of Quality and the Product Development Process

28

October

case (3) write-up:

BMW: The 7-Series Project

 

4

November

Islamic New Year

  • 8 Decision Categories From Vertical Integration to outsourcing

11

November

 
  • 9 Outsourcing Strategies, Contractor-driven Paradigms, & Globalization.

18

November

  • 10 Impacts of Flexibility on Strategic Choices

25

November

case (4) write-up: Lilly

  • 11 Competing on Availability and Time-based Strategies Such As Postponement

2

December

 

2

December

Globalization and Off-shoring

Proposal for final report

  • 12 Decision Categories - the Role of Technology

9

December

  • 13 Group Presentations

16

December

case (5) write-up: ITT Automotive

Group Presentations Write-ups are due

 

19

December

Final Report due

Final Report

OPM 532 OPERATIONS STRATEGY

Ali H. Awni

Detailed Course Schedule

Fall 2013

Session 1: Course overview and expectations, and Introduction to Operations Strategy

This session will cover the course syllabus and expectation, and introduce the concept and principles of operations strategy. Also it will outline current issues in OM (outsourcing, globalization, technology, capacity planning, etc.) and their implication on operations strategy. We also discuss the use of manufacturing and operations as competitive weapons.

Reference Readings:

  • 1. Operations-Based Strategy, Robert H. Hayes and David M. Upton, California Management Review, summer 1998.

  • 2. A framework for Operations Strategy, David Pyke, Tuck School of Business at Dartmouth, October 2000

  • 3. “What is Strategy”, Michael E. Porter, HBR, Nov-Dec 1996

  • 4. An Essential Step for Corporate Strategy, Tim Laseter, Strategy+Business, issue 57, Winter
    2009

  • 5. Steven C. Wheelwright and Robert H. Hayes, "Competing Through Manufacturing," Harvard Business Review, January-February 1985, pp. 99109. Supply Chain Design - Aligning Supply Chain with Needs For companies with different products and markets, different supply chain/operations strategies should be developed. In addition, as a product goes through different stages of the product life cycle, as a technology goes through its technology life cycle, or as a company goes through different stages of development, different supply chain strategies are also warranted. In this session, we examine how companies should align the right supply chain for the right product, the right market, and the right time.

  • 6. “What is the Right Supply Chain for Your Product?” Marshall Fisher, HBR March-April

1997.

Read assigned papers and be prepared to answer the following:

With so much attention and investment being directed toward supply chain management,

why do so many supply chains continue to perform below expectations?

What are the key differences between functional and innovative products?

How do these differences impact the appropriate supply chain design decisions?

Session 2: Competing on Cost

 

Reference readings:

  • 7. Wal-Mart, Inc, Vijay Govindarajan and Julie B. Lang, Tuck School of Business at Dartmouth,

2002.

  • 8. Lessons in Keeping Business Humming, Courtesy of Wal-Mart U., Virginia Postrel, NY Times, February 28, 2002. [optional]

10.

Rivlin, Gary. "Who's Afraid of China?" New York Times, December 19, 2004.

  • 11. Pletz, John. "Dell Turns Productivity Gains into Market Share." Austin American Statesman, August 26, 2002. Be prepared to answer the following:

    • What are Wal-Mart‟s competitive advantages? How sustainable are those advantages, and what are the threats to Wal-Mart's continued success? How transferable are those advantages as Wal-Mart moves into new formats and especially into new international locations?

    • 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? (Hand in: your brief one page bio & one page for your reasons to take course plus your expectations)

Session 3: Competing through Operations

  • 12. BYD Company, Ltd., HBS . The case considers whether BYD Co., Ltd., the largest Chinese maker of rechargeable batteries, should enter the Chinese automobile industry by acquiring Qinchuan Auto, a state- owned car manufacturer. Set just after BYD's initial public offering on the Hong Kong Stock Exchange in 2002, it describes the development of BYD's labor-intensive approach to battery manufacturing-an approach decidedly different from its more capital-intensive Japanese competitors and one that took advantage of the abundant supply of low-cost labor in China. Highlights the unique benefits and challenges created by BYD's operations strategy and asks students to determine whether the capabilities developed by the company in battery manufacturing can productively be applied to the automobile sector.

    • What is your assessment of Wang‟s initial decision to focus on the manufacturing of rechargeable batteries? Why did he choose to enter an industry that was already dominated by large Japanese manufacturers with strong brand names and highly reliable manufacturing processes?

    • The production process for BYD‟s Japanese competitors relied on several robotic arms per line, with each arm costing RMG 800,000 (approximately US $100,000). At BYD, the functions of those robotic arms were performed by workers. How many workers would a robotic arm need to replace for BYD to justify its purchase?

    • Would you recommend that BYD change its current operations strategy if it were to face competition solely from other nascent Chinese battery companies?

    • Should BYD move forward with the acquisition of Qinchuan Auto? If so, what capabilities does BYD possess to help ensure the success of this strategy? If not, what type of opportunities might represent a better fit for BYD‟s capabilities?

    • Which, if any, aspects of BYD's operations constitute sources of sustainable competitive advantage for the company?

(Hand in case (1) write-up)

Session 4: Focused Operations

In a proactive approach to operations strategy you first set your strategic focus and then find ways to implement it. Read, analyze, and be prepared to discuss the following case:

  • 13. Skinner, W. “The Focused Factory.” HBR (MayJune 1974): 113122.

  • 14. Shouldice Hospital Case. Be prepared to discuss the following points:

    • What are Shouldice‟s competitive priorities?

    • What kind of market have they chosen to focus on?

    • How does their operations strategy support their business strategy?

  • How defensible is Shouldice‟s competitive advantage?

  • Should Shouldice grow? If so, how?

  • How successful is the Shouldice hospital? Compare its cost of delivering services to that of its competitor's. How do you explain this cost differential?

  • What are the reasons for huge patient backlog in the system? What short term and long term measures would you recommend to reduce the patient backlog in the system. Support your analysis.

  • How would you implement the changes you propose?

(Hand in case (2) write-up)

Session 5: Industry Guest Speaker

Our guest speaker will talk about the operations strategy of his company.

Session 6: Decision Categories Work Design Rules & Learning

Operations strategy can be viewed as a way of thinking about important structural investments such as capacity, technology and sourcing. In this session we will see how operations strategy can also guide a more proactive approach to strategic change.

Learning from the Toyota Production System:

  • 15. Spear, S. and H. K. Bowen. 1999. “Decoding the DNA of the Toyota Production System.” Harvard Business Review 77(5):96-106, Sep 1999.

  • 16. Learning to Lead at Toyota, Steven Spear, HBR, May 2004

  • 17. “Getting It Right the Second Time,” Szulanski & Winter, 2002.

For class, please read the assigned articles and be prepared to discuss in class.

  • What are the “things” that Toyota does and the “ways” that it does them that makes them so effective?

  • How would you use the rules in use to design work processes?

  • How does such rigid standardization of processes actually make them more flexible?

  • Why is Toyota so difficult to imitate despite being very open in allowing others to observe their practices?

  • Can you think of applications for Spear and Bowen‟s rules beyond the automotive industry?

Session 7: Competing on Features and Innovativeness - Types of Quality and the Product Development Process

Understand what really defines quality and how it can be used strategically. Reading Materials:

  • 18. "Don't Laugh at Gilded Butterflies." The Economist, April 22, 2004.

  • 19. Christensen, Clayton M. "The Past and Future of Competitive Advantage." MIT Sloan Management Review 42, no. 2 (2001): 105-109.

  • 20. Why Improving Quality Doesn‟t Improve Quality (Or Whatever Happened to Marketing?), California. Management Review, Vol. 35 No. 3, pp. 82-95

  • 21. Garvin, D.A. (1987) “Competing on the Eight Dimensions of Quality”, HBR, November- December, 101-109.

  • 22. BMW: The 7-Series Project (HBS, 9-692-083) Jan 2003 Explores different ways of competing on quality in a luxury product segment and how the product development process affects each of these. Also examines the notion of a prototyping strategy and the role prototyping plays in linking development strategy and manufacturing strategy. Prepare to answer the following questions for class:

  • How does BMW 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? (Hand in case (3) write-up)

Session 8: Decision Categories From Vertical Integration to outsourcing (Determining Organizational Boundaries)

This session will further explore the impact of new types of organizations and in particular the virtual organization on operations.

Read:

  • 23. When and When Not to Vertically Integrate,” Stuckey & White

  • 24. The Power of Virtual Integration: An Interview with Dell Computer's Michael Dell, J. Magretta

What distinctive operational and supply chain capabilities has Dell developed?

If you were a competitor, how would you compete with Dell?

Why have Dell‟s capabilities apparently been so hard to imitate by rivals?

  • 25. “The Samsung Way” Business Week June 16, 2003, 56-64

  • 26. Why Outsourcing is In, Anne Chung, Tim Jackson & Tim Laseter, Strategy + Business, 28,

  • 27. Why Be in Manufacturing?, A view Point, Booz.Allen & Hamilton, 2001 [optional]

  • 28. From Vertical to Virtual, Lawrence Fisher, Strategy + Business 22,

  • 29. Why Cisco Fell, Outsourcing and its Perils, Bill Lanken, Darren Boyd, and Ed Frey, Strategy + Business, 24,

  • 30. Building Deep Supplier Relationships, J. Liker and T. Choi, HBR, Dec 2004 [optional]

  • 31. Alliances and Risk, Financial Times, Managing Risk, pp-6-7, 9 May 2000 [optional]

Session 9: Outsourcing Strategies, Contractor-driven Paradigms, & Globalization

We will have a guest speaker from Li& Fung Egypt to discuss their interesting business model with us. Read the following two papers, one on Li & Fung, and the other one on a major contract

manufacturer in the consumer electronics industry.

  • 32. Fast, Global, and Entrepreneurial: Supply Chain Management, Hong Kong Style- An interview with Victor Fung, Joan Magretta, HBR, September-October 1998.

  • 33. Flextronics: Staying real in a Virtual World, Jeff Ferry, Business + Strategy, issue 37.

Session 10: 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. We will explore the idea of maintaining flexibility to respond to supply chain changes. In this session we look at a company that has

decided to focus on „flexibility.‟

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.

  • 34. Upton, David M. "The Management of Manufacturing Flexibility." California Management Review 36, no. 2 (1994): 72-89.

  • 35. Upton: “What Really Makes Factories Flexible?”

  • 36. Disposable Factories, The Boston Consulting Group, March 2006. [optional]

  • 37. Eli Lilly & Co: The Flexible Factory Decision (1993) Case (No. 9-694-074).

Read the case, and consider the following questions:

  • How has the competitive environment in pharmaceuticals been changing in the late 1980‟s and early 1990‟s? What are the implications for the role of manufacturing within Eli Lilly?

  • What type of flexibility does the "flexible facility" provide? What is the value of this flexibility to Lilly? How much is Lilly paying for the flexibility?

  • How does each facilities option affect Lilly‟s cost structure and capacity management rules? How does each affect their product development capabilities?

  • Make a qualitative cost-benefit analysis of the facility options.

  • What facility policy do you recommend for Eli Lilly? Back up financial evaluation. (Assume a weighted average cost of capital of 8% and an average inflation rate of 4% for both construction and operating costs.)

  • For what types of products does the proposed flexible facility provide an efficient (i.e. low cost) manufacturing capability?

  • Describe other options that Lilly should be contemplating. (Hand in case (4) write-up)

Session 11: Competing on Availability and Time-based Strategies Such As Postponement

Fast-response global supply networks: An analysis of how Zara (Inditex) has become a global benchmark for integrating design, production, distribution and retailing to create a formidable global supply network for highly fashionable apparel.

  • 38. Zara, Kasra Ferdows, Michael Lewis and Jose A.D. Machuca, Supply Chain Forum, An International Journal, Vol. 4(2), 2003

  • 39. Rapid-Fire Fulfillment, K. Ferdows, M. Lewis, and J. Machuca, HBR, November 2004.

Read the Zara cases/papers, and prepare to answer the following questions:

  • What are the order winners and qualifiers for the markets in which Zara is competing for business?

  • Examine Zara‟s value chain, material procurement, retail store strategy, replenishment operations, and design process. What is innovative about Zara?

  • How well does the production and distribution system allow them to meet the needs of the market?

  • In what ways is Zara a company that uses information smartly?

  • In what way has Zara mastered the “postponement” strategy?

  • What could be the challenges faced by Zara as it attempts to continue its aggressive growth plan?

    • 40. Maximizing the Benefits of Modularity, Part I, Designing Strategic Flexibility into Your Products and Processes, Part II, Implementing Modular Strategies in Your Organization, Ron Sanchez, IMD International Institute for Management Development, Perspectives for Managers, No. 88, May 2002

    • 41. Planning for Product Platforms. Robertson, D., Ulrich, K., MIT Sloan Management Review 39 (4), 19-31, 1998.

Session 11 b: Globalization and Off-shoring related Critical issues in Operations Strategy

Globalization of operations is an important change that many managers have been experiencing in

recent years. In this session we explore the long-run impacts of globalization, and to what extend should a firm be concerned with the extent of outsourcing and the loss of jobs to locations such as China?

  • 42. What is Globalization Doing to your Business? The Boston Consulting Group, 2004.

  • 43. The New World Map in Textiles and Clothing, OECD Policy Brief, 2004.

  • 44. Beyond Off shoring: Assess Your Company‟s Global Potential. D. Farrell, HBR, December
    2004

  • 45. Smarter Off shoring, Diana Farrell, HBR, June 2006

  • 46. Making the Move to Low-Cost Countries, Till Vestring, Ted Rouse, Uwe Reinert and Suvir Varma, Bain & Company, 2005 [optional]

  • 47. "Meet the Global Factory." The Economist, June 20, 1998.

  • 48. "The Great Hollowing-out Myth." The Economist, February 19, 2004. [Global Cost Competitiveness, Outsourcing, and the Hollow Corporation]

  • 49. Fishman, Ted C. "The Chinese Century." New York Times Magazine, July 4, 2004. [Implications of Outsourcing on Competitiveness/the Role of China and Low Cost Locations]

Session 12: Decision Categories - the Role of Technology

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. ITT Automotive

discusses tradeoffs with automation and standardization. We will explore two issues: 1) the choice of process technology; in particular, the relationship between the level of automation and opportunities for process improvement and 2) the strategic management of process technology in the global plant network. This case will specifically explore the management of process technology development for additional plants. One of the questions to be explored is how far a company should go in implementing “copy exactly”? The case focuses on the level of automation to be used in the production of a new system, and whether all plants should use the same process technology. In general, when should copy exactly be used?

  • 50. ITT Automotive (1994). HBS Case #9-601-099.

  • 51. Lapré, M. A., and L. N. Van Wassenhove. "Learning Across Lines: The Secret to More Efficient Factories." Harvard Business Review 80, no. 10 (2002): 107-111. Be prepared to answer the following:

    • 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?"

    • Is this new process working? What evidence do you have?

    • 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 Jergen Geissenger, how would you go about implementing your recommendations? How would you overcome resistance from the plants? As Steve Dickerson, the plant manager of Asheville, North Carolina, what line of reasoning would you use to convince senior managers 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 this class we will explore the impact of information systems on strategy. For example, how important enterprise systems are. Read:

  • 52. Davenport “Putting the Enterprise Into the Enterprise System,” Harvard Business School Publishing, Jul. Aug. 1998, (pp. 440-451) (Hand in case (5) write-up

Session 13: Final Group Presentations

(Group Presentations Write-ups are due)

For your group project each group will be assigned a different case from the following cases. Your group will hand-in the write-ups to all the other groups and the instructor a week ahead to allow enough time for them to review it. Allocations of case and days of presentation will be according to the performance of your group in the first four group write-ups.

1)

American Connector Company (A), Case (No. 9-963-035). [Strategic Positioning]

Study how corporations can structure their operations to provide variety. Introduce the concept of "focus" and the link between processes and strategy. Case examines issues related to benchmarking a competitor's manufacturing capabilities and productivity. The case allows us to vividly contrast the two companies' manufacturing strategies and their implications for productivity and flexibility. Be prepared to answer the following.

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

  • How big are the cost differences between DJC‟s plant and ACC‟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 competes? How much is due strictly to the differences in the

efficiency of the operations?

  • Are there differences in the pattern of decisions by decision category? Focus on the "fixed factory overhead" line item: determine how much of the difference between ACC and DJC is a function of strategic decisions and how much is related to operating effectiveness. Provide a quantitative assessment.

  • What should American Connector's management at the Sunnyvale plant do?

2)

Esquel Group: Transforming into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel, Stanford Graduate School of Business, Case

GS-48

  • How did brining the different manufacturing activities in-house help Esquel to maintain high quality of their product and service offerings? What other initiatives did the company take in an effort to maintain high quality of its products and services?

  • Do you think Esquel was right in becoming a vertically integrated company? What do

you see as the pros and cons of this strategy for Esquel? In your opinion, what are some

of the unique characteristics of Esquel‟s business that made vertical integration their

chosen strategy?

  • What are some of the initiatives the company took in an effort to become a more service oriented, modern organization? What are the benefits the company realized as a result?

  • What are some of the initiatives Esquel took to improve employees‟ quality of life, to have a positive impact on the society, and to conserve the environment? Do you think that such initiatives would have been possible to justify by a public company?

  • What do you think Esquel should do following the elimination in January 2005 of textile quotas mandated by the WTO?

3)

Applichem (A) (Abridged). HBS Case 9-685-051. [Facilities Strategies on a Global Basis - Evaluating and Justifying Capital Investments]

Applichem manufactures the same chemical product in four plants, each of which is located in a different country. The company has completed a major study comparing the productivity and performance of these plants. Using the data from the study, students must decide which, if any, plants to close. The case requires you to think about the relevant metrics for comparing the performance of plants that operate very differently and in different countries. An important issue is the distinction between physical measures of productivity and financial

measures of performance. Finally, the case allows you to think about what management might do to ensure that productivity improvements are shared across the plant network. Prepare to answer the following questions:

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?

Individual Feedback: Share with other colleagues your favorite (and not so favorite) topics of the course.

19 December: Individual Report due (e-mail Final Report to instructor)