Tech n Ops Flashcards
4 v’s of operations
variability, variety, volume, visibility
Primary performance parameters
Cost, quality, flexibility, speed, reliability (ethics and environment)
- Strategy: choose balance of these so competitive advantage
Green impacts
Lubin and Etsy (2010): sustainability not as a second-thought but original design e.g. 3D printing - additive manufacturing - cake to homes.
Hervani et al (2005): green supply chain management - keiretsu style of relationship
packaging, supply chain compliance, revised distribution networks
Societal pressures and repetitional risk defining minimum ethical standards.
- ethical vs financial frontier -> push it out
Sustainability examples
Unilever: Sustainable living plan -> Marmite by-product to be eaten & produce methane to generate power
HP recycling facility
Product-process matrix
Hayes & Wheelwright 1979: project, jobbing, batch, line, continuous
- volume vs variety
Focused factory
Skinner 1974
- “Simplicity and repetition breed competence”
- need congruous tasks - competitive priorities
- cannot achieve high performance in all competitive dimensions simultaneously
Sandcone model
Ferrous & Meyer 1990
- cumulative capabilities to avoid tradeoffs
- quality, dependability, speed, cost
Queuing points
- Identify the bottleneck
- Baulk - don’t join
- Renege - leave
- Deal with seasonality - find products with counter-seasonal demand
- Kingsman formula: cost:service trade-off
- variability, inventory, capacity utilisation
- E.g. IKEA ‘ designing out the bottlenecks’ : design car parks, marked short-cuts, express checkouts
EOQ assumptions
The Q of items that supposedly minimise the total cost of inventory mgmt
Stable demand linear holding costs order costs known and fixed (FX impacting this - OECD 2000 - 95% are SME) no supplier delays / batch limitations unlimited capacity to store ignores stockout costs
Little (92): humans desire simple models that can be applied broadly
Points against EOQ
Taichi Ohno: always challenge the current EOQ - don’t take costs as given - SMED
Williams and Westbrook 1994: mass customisation - EOQ taking last gasps
Inventory costs
Calloni et al (2005):
- Physical - insurance / storage
- Working capital costs (opportunity cost)
- Devaluation costs (quality defects)
- Obsolescence costs
Porter et al (1999): 75% UK use MRP, useful for storage costs etc but not obsolescence as hard to measure
Typical estimate is 20-30% - probably conservative as excludes quality, depreciation and opportunity cost
Challenges with inventory
Contestability: hard to predict demand
Seasonality
Kopczak and Johnson (2003): want to get earlier demand info or impact the demand pattern to match supply and demand. Don’t take as given and try match supply.
Inventory examples
HP: computer’s quickly change specification - in 1995 cost of inventory same as overall profit margin
Ford - owned mines for iron - raw material to cash to 33hrs from 728 - Model T obsolete in 1920s.
Airbus - A320neo not available - 3 year wait time post Boeing crash - Boeing keep producing before outcome?
UPS: late packages $5-30 rev - ‘hot status board’ where haven pilots & planes to ‘rescue volume’ - saves $20m rev.
National Health Service Blood & Transport: shelf life of 5 days
Bullwhip effect
Small disturbances downstream cause increasingly large disturbances, errors and volatility as work upstream
Sterman 1989: Beer game
- ‘misperceptions of feedback’: attribute dynamics to external effects not acknoweledge were internally generated.
- amplification 700%
- now have more decision aids e.g. data on demand
Fisher’s inventory costs and solution
Fisher et al 1994:
- stockout costs:
- markdown costs
- Risk-based production sequencing: use off-peak capacity to produce predictable, free up peak for unpredictable when demand materialises
Adv inventory
- exploitation price reduction
- avoid stockout costs
- Economies of scale: decrease cost of ordering
- buffer/insurance against uncertainty
- increase in value (wine)
- Smooth production
- pipeline inventory (allow for lead times)
- Little Law’s implies minimum needed to run factory: no. in system = arrival rate x wait time
Disadvantage inventory
- obsolescence / perishability
- depreciation, storage, capital costs
- Hids problems: used to maintain delivery despite unreliable production. Can’t see operating inefficiencies (TPS)
TPS Japanese words
Keiretsu - exclusive relationships - light-touch contracts Kanban - pull-scheduling Kaizen - continuous improvement Jidoka - total employee involvement Pokayoke - preventing errors e.g. sim card or USB port - built into design. Muda - waste Andon - line stop authority Heijunka - level scheduling
Author opinions of lean / TPS
Hayes and Pisano: reduces trade-off as pushes out ppf
Krafik (1988): pure Fordism with added glue of teamwork
Bohan (1998): how do you implement a philosophy
Takeuchi et al (2008): studied Toyota 6 years. Practices necessary but not sufficient for the success. They’ve mastered ‘soft innovation’ that relates to corporate culture. Emulating Toyota is about creating culture (not cyst copy practices)
Staats et al (2011): implementation is hard. Non-manufacturing - lack of repetition.
Quality definition and TQM founders
Consistent conformance to customer’s expectations.
- cost of prevention vs that of failure
Deming, Ishikawa, Turing
TQM characteristics
continuous improvement meeting customer requirements reducing rework increased employee involvement process redesign competitive benchmarking management responsibility team-based problem solving constant measurement closer relationships with suppliers
Author opinions of TQM
Benson (1993): in 10 short years became pervasive part of business thinking as quarterly results
Slack (1995): must implement all
Powell (1995): findings suggest features generally associated with TQM..don’t produce competitive adv but certain tacit, behavioural, imperfectly imitable features such as culture, employee empowerment produce adv
Osigweh (1989): concept stretching - ambiguity and empirical vagueness as stretch to new contexts
Hackman & Wakeman (1995): what counts as success, many influence, short vs long term
Issues with hospitals
Professional rivalries
Ethic concerns e.g. care.data
Knowledge-doing gap
Pfeffer and Sutton 1999
Adler et al (2003) solution:
- ‘Performance Improvement Capability’ 5 components
- skills supported by systems, embedded structures, need strategic guidelines that fit with culture