All entries for February 2009

February 28, 2009

OPERATIONAL MANAGEMENT LESSON 5 EXERCISE– REFLECTIVE ONLINE LEARNING

OPERATIONAL MANAGEMENT LESSON 5 EXERCISE– REFLECTIVE ONLINE LEARNING

“The IT Sector has a distinctive pattern of levels of integration. For one section of your organisation, write about the advantages and disadvantages of having an integrated supply chain. Comment on your impression of the levels of market force that apply to your chosen section.”

For this exercise I have chosen to analyse the Consultancy Services Supply Chain formed by the group of human resources who finally give final performance to customers, and moreover the evolution this sector has been through from a fully integrated SC to a worldwide decentralised one.

Consultancy Services SC use to be quite a simple one compared to manufacturing companies, just a group of human resources organised by experience, role or process who belonged to the consultancy firm and where used on each of the final customer project.

SC1

But on the last 10 years market trend has evolved drastically based on three main factors:

1)     Business globalisation

2)     Need of cost reduction and cost modularity

3)     the development of the technology capable to work over distance

This market trend has moved consultancy services from a quite simple and comfortable position (A) where customers could afford to pay high price per hour to get what they need when they wanted on a quite predictable environment, to (b) where market has evolved to unpredictability, and customers cannot afford previous prices and now finally to (c) where customers are in fact outsourcing their own processes into IT and consultancy services (c1) and core consultancy services must be delivered on an unpredictable market with low tariffs.

C Mket

This market evolution has provoked a huge change on the Supply Chain of consultancy firms, in order to be capable to cope with this market demands while remain profitable.

SCC

Performance Objectives

A market

B market

C market

Quality

Quality was the main driver when consultancy services were delivering without subcontracting and without global delivery. Client could pay and wanted to pay for quality, so one of the main issues of consultancy firms was knowledge management and attrition control

Quality was still important but not as important as on A market. Customer could not pay such higher tariffs, and market was so unpredictable that they couldn’t afford to wait until best work was done.

Quality is not the driving driver, time to market is. Therefore customer pays for done on time more than done with quality. This causes a reduction on price and therefore a reduction on cost structures, increasing the need to subcontract.

Speed

Market was more predictable, so time to market was not the main issue. Long and mid term impact was enough important to take the necessary time to do things correct

Time to market was getting more important

Time to market is the driving driver, moreover when part of the customer business chain can be provided by consultancy firms (outsourcing). So the distance between the consultancy provider and the customer’s customer is narrowing

Dependability

Consultancy was focused on strategy and not on daily operations, therefore dependability was low

Consultancy began to enter the legacy and operations systems, therefore dependability was getting important

Absolute dependability, customer final service or products can depend on consultancy service given

Flexibility

Market predictability was high, therefore flexibility was less needed, but due to high prices, customer claim for this flexibility. Flexibility was being given by consultancy firms through overcapacity.

Market requires more flexibility, so consultancy firms begin to subcontract part of their SC

Flexibility is a key issue, but prices don’t allow to have overcapacity, therefore GDD must be used

Cost

Customer could afford to pay for high value services

Lower services and less money to be paid

Cost reduction through high scale services

As a conclusion we could see how this market is changing over the years, and how this change has affected what it looked as a simple Supply Chain into a each day more complex one.


OPERATIONAL MANAGEMENT LESSON 4 EXERCISE– REFLECTIVE ONLINE LEARNING

OPERATIONAL MANAGEMENT LESSON 4 EXERCISE– REFLECTIVE ONLINE LEARNING

“For a product or service of your own choice, complete a QFD matrix that relates customer requirements to design characteristics. Justify your entry.”

For this exercise I have chosen the process of designing a TV Series for a Young Public Audience

1)     Importance of Design Process on a new TV series ?

“The purpose of QFD is to try to ensure the design of the product or services meet the perceived needs of customers”.

TV Series is one product that has on the last years improved its popularity so much that in fact it has cannibalised cinema movies market. But due to the high leisure competence this market faces daily, and the increasingly levels of exigencies from customers, the design phase is getting more important every day. Creating a TV Series can be really profitable (if it lasts enough) or a complete disaster (if it only lasts a few chapters), and the key to be successful is (1) to emotionally connect with the audience from the beginning and (2) assure this emotional link doesn’t loss strength through the life of the product.

In fact TV Series Industry is a derivation from movies sector, with two main advantages:

* It is a way of reducing the huge risk of cinema movies (you begin to get revenue once to have all the risks incurred), as you can get revenues from chapter 1, and you don’t have to finish the product (whole series)

* Design phase doesn’t end before the product begins to be “build”, in fact there is a retro feedback process that allows to revaluate the design on a weekly basis,

TV Series Redesign

2)     QFD Analysis – WHAT?

Step 1 – Identify customer requirements

As potential audience is young population, their key requirements could be leisure related (music, videogames, computing), social networks, dealing with youth social issues (relations with parents, first love relations, approach to sex, school or high school), sports, etc

What

Step 2 – Competitive Scores

Competitive Scores

Step 3 – Key Design Characteristics

How

Step 4 – Relation between What and How

WhatvsHow

Step 5 – Technical Assessment

Techncal_Assessment

Step 6 – Correlation between design characteristics

Correlation

Conclusion

On TV Series value chain, designing process is inherent to almost all the stages, as it must not only assure it reflects the customer requirements at the beginnig., but it also must evolve according customer need through the whole life of the product.

QFD


February 21, 2009

OPERATIONAL MANAGEMENT LESSON 3 EXERCISE– REFLECTIVE ONLINE LEARNING

OPERATIONAL MANAGEMENT LESSON 3 EXERCISE– REFLECTIVE ONLINE LEARNING

Create a new entry in your log using the subject ‘Operations Management Lesson 3 Exercise’. This is a good time to complete a process map of your own and comment upon the findings. If you work in an area with high levels of contact with customers, you should think about extending the analysis into a service blueprint, which will define degrees of visibility of the process.

  

On this exercise I am going to analyse why it is important for a company like IBM to have a well designed catering service process and, how the costs of providing this subsidised service be highly recovered through and improve on final performance (payback).

1)     What performance is this process trying to achieve?

The cost of giving catering service to employees includes not only the cost of the given food, but also the opportunity cost of using space for the restaurant, the cost of setting it up, the wages of the employees or subcontracted company, etc.

Why should a company like IBM think about investing this money on employees, when today it is really easy to give a similar service through restaurant tickets?

There are several answers for this question, and they all take you into the same final message, “because it makes you save money” through efficacy (more time) and efficiency (better time employment).

Efficacy

* On Spain the scheduled time for lunch varies from one hour to an hour and a half, what on a yearly basis represents around 330 hours.

* If by providing this service, you can reduce this length to around 40 minutes, it means your employees can work more than 180 hours per year, what it means one whole month of work saved

* On Spain the number of hours not worked due to illness or accidents is quite high, by having the restaurant on the office, you reduce this issue as employees don’t go outside and don’t have to drive or take public transport, so you have more days available

Efficiency

* Spanish lunch is really far from other’s countries fast food idea. Spanish tradition is to have 3 dishes for lunch, so depending on the kind of food consumed; it will be the performance of the employee on the next two hours. By delivering this service IBM assures not only the quality of the food but what their employees eat

* By having a shared restaurant, employees eat together, what improves the relationship between them and finally eases to work as a team, reducing the space between employees

* By sharing the same table, sometimes employees keep talking about the job, and it is a good moment to through brainstorming solve blocked situations

So the cost incurred on the restaurant can be easily recovered through work efficacy and efficiency.

2)     Process flows objectives

* Reduce the time spent on having lunch by employees

* Assure flexibility on the time chosen to have lunch

* Reduce the number of illness days

* Help on having a wealthy way of living

* Increase employees personal and professional knowledge

3)     Process flows risks

* If process is not well designed and employees spent too much time, it is no worthy at all

* Employee must appreciate the service as a reward from the company and not as a prolongation of the “daily nightmare”

4)     Process flows success keys

* Balanced Speed of process, so it is not too fast (employee could feel they don’t rest at all) and not to slow

* Balanced Hourly Employees Distribution, so it is not under usage on some hours and over usage on others

* Quality of food and balanced quantity

5)     Understanding cycle time

So, how many minutes must last each cycle time, since the employee faces the restaurant until it leaves it. As we have described on success keys, this indicator is critical as it can mark the difference between receiving the catering service as a reward or as a way of retaining the employee on the job location.

Assuming each employee has on average 90 minutes to have lunch, and the fact the company wants to reduce it to around 40 minutes, and this includes coffee time, we can establish a good cycle time on 30 minutes, leaving 10 minutes to take coffee or smoke.

So how do we define the process in order to not exceed this level? Well this can be done through several adaptations on the process:

* Not offering coffee on the restaurant but on a bar right close to the restaurant, in order to improve restaurant rotation and reduce conversation time around the coffee

* Not giving full comfort to the restaurant facilities, not reducing the noise levels and others, so the employees prefer to talk during coffee time and not lunch time

6)     Defining capacity

How many people can eat at the same time? In order to adapt needed resources to this capacity.

Total number of employees eating at the same time = (catering capacity x standard time) / cycle time

Can the company influence the flow of employees?. This can be done through two ways;

* By defining employee’s shifts, but this wouldn’t be appreciated by employees who could feel a trim of their freedom.

* By implementing tools that help employees to know the best time to access the restaurant

On IBM Barcelona for example they face the 2nd method by (1) measuring the number of employees by hour and showing this graphic on a diagram at the beginning of the row, so employees could know when is the best time to access, and (2) by installing a webcam on the row so every employee could online see the length of the row.

7)     Example of defined Process

On the following diagram we described IBM catering service on Madrid.

Catering IBM Mad Diagram

8)     Shape of the process

Analysing the previous diagram we observe a symmetric design on the restaurant. This allows in fact doubling the speed of the process in the slower tasks (lane + tray + food).

9)     Balancing losses

Analysing the previous diagram we can identify balancing losses mainly on two areas:

* on the top left and right corners, where each employee speed depends on the speed of the rest of the lane filling their trays

* on the top of the diagram where catering employees fill the employee’s tray with the desired food

10)     Little’s law

Will be left lane faster than right one?

11)     Conclusion

The design of the catering services can impact severely on the efficiency and efficacy of the employee´s performance.

I hereby include the diagram on PPT file.

l3.ppt


February 08, 2009

OPERATIONAL MANAGEMENT LESSON 2 EXERCISE– REFLECTIVE ONLINE LEARNING

On this exercise I am going to analyse two quite different processes one from manufacturing and the other one from services.

a)     The process followed by an international high scale clothes retail company as Spanish Zara

b)     The process followed by a local psychologist, called for example Doctor

1)     Volume and Variety Analysis

*  Zara like other international clothes retailers is a high volume retailer, but one of its main advantages to other retailers is they are also high variety retailer.

*  Doctor is a really low volume “company” as the number of patients treated daily is really low, on the other hand the levels of variety of this patients ant the given treatments is close to infinite, thanks to the complexity of human brain

VV1

2)     Performance Objectives

Performance Objective

ZARA

DOCTOR

Quality

Low quality associated with low prices

X High Quality, ad for the patient this relation can be the basement of their daily life

Speed

High speed on time to market (each week new models are available) and high speed on the buying process decision

High speed on time to market (doctor must be available on any time) and low speed on buying process or session

Flexibility

No direct flexibility (client cannot but buy what is already made), and mid indirect flexibility (company is continuously analysing buying patterns and fashion trends to weekly adapt their models)

X High Flexibility, doctor must alter the treatment online as the patient gives proper details

Dependability

X Low, daily clothes absolutely substitutable and not linked to special occasions (weddings, parties, etc)

X High, the performance on the rest of daily acts are linked to the outcome of this task

Cost

High efficiency required as margins are really tight

Levels of efficiency established by daily time table

3)     Performance Objectives trade offs

Analysing the relation between the different Performance Objectives, we observe Doctor can trade off with Cost and Speed on Delivery, while Zara can trade off with Dependability and Quality.

TO2

4)     Operations Profiling

Applying the Slack et all diagram of the 4Vs, we observe Doctor operations profile is close to be ideal, while Zara operations profile is not, this is due to the business model adapted by Zara that tries to combine volume with final flexibility through a complex time to market operations design that combines R&D with Fashion trend Observation and really fast time to market on long scale.

4Vs3

5)     Process choice

We can categorise Doctor as a Professional services process and Zara as a mix between Batch and mass processes.

6)     Lazy L analysis

Doctor is always going to be on the same place on the “Lazy L” Analysis, as it cannot move into the right and low side due to the specific casuistic of this medical branch. The only way of moving could be incorporating new medical branches and moving from a small local psychiatric office to a huge hospital.

Zara began with a small shop of house coats for women, and over the years has moved into a long scale international clothes retailer that bases its success on delivering a high variety of cheap clothes with a weekly renewal of models, thanks to observation and a huge time to market based on great logistic operations. Today Lazy L analysis

Ll4

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Anexess

I hereby leave the xls file with the diagrams used in case you want to use any

l2-diagrams_used.xls


February 2009

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  • Ignacio, You have produced a very good blog for lesson 8, your last blog. Your chosen example is an … by Neil McPhater on this entry
  • Hi Ignacio I have read your blog 3 I can not see any other blogs by on this entry
  • Hi Neil as you have told me I have included at the beginning of the blog the question asked on lesso… by on this entry
  • Ignacio, In ypur blog section 7) you have included a very good process map (including it on a PPT fi… by Neil McPhater on this entry
  • Hi Ignacio your blog looks very good a quite spectaculary comparison between the Zara cloth and a Do… by on this entry

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