11

Professor Warren Harkness

e-mail: harkness@babson.edu
Secretary: Sheila Faherty
Phone number: 781-239-4390
Office Hours; Tomasso 324, Thursday 5:00-6:00pm

BABSON COLLEGE
OPS 7000 Managing Operations
Spring, 2002
Classroom Malloy 201

PURPOSE:

The purpose of this course is to provide you with a basic understanding of the tasks and
challenges facing operations managers, i.e., those people responsible for the vital function of
producing the goods and services in any manufacturing or service organization.

Over the last twenty years we have witnessed dramatic changes in the nature of the
competitive advantage of the world’s market economies. During the 1980s Japan based
businesses were gaining position relative to their American and European counterparts in many
important industries such as consumer and office electronics automobiles, computers, and
telecommunications equipment Ironically, many of the strategies and management methods they
used to accomplish this result were imported from the United States and for the most part
focused on improving the performance of operations. In the 1990s American based companies
responded to this growing competitive threat and loss of market share by implementing their own
performance improvement programs using many of the same methods already at work in Japan.
Most recently U.S. companies have extended their competitive lead by expanding their use of
operations improvement methods into the growing service industry sector.

In this course we will review how operations management forms the foundation for most
of these shifts in competitive advantage. We will do this by taking a look at the basics of
producing goods and services, the raison d'etre of all profit and non-profit organizations. The
course has the following specific objectives:

(1) To achieve an understanding of the operations

function in both profit and non-profit, industrial
and service organizations. Specific concerns include:

(a) how to analyze operating processes and

technological choices;
(b) the economics, tradeoffs, and managerial
problems associated with particular types
of processes;
(c) what people and managers do in operations;
(d) the relationship between operations and
marketing, finance and other functions;

Page 1
22

(e) defining basic terms and concepts such as capacity, utilization,

inventory, lead time, and cycle time;
(f) and the role of operations in competitive
strategy.

(2) To gain a working knowledge of the techniques,

approaches, and skills required to manage supply
pipelines, manage quality, plan for capacity, and
develop and implement long range plans for
improving productivity and competitiveness.

(3) To understand the administrative point of view of

the operating manager, and the demands placed on
these managers.

(4) To develop the analytical and organizational skills

required to assess complex operational
problems, and to develop and execute workable
action plans.

TEACHING METHODOLOGY:

The primary teaching tool is a collection of cases along with several lecture/discussions
on important concepts. A case is a comprehensive exposition of a real managerial situation
describing a set of problems and requiring a plan of action. The case method provides a
pragmatic framework for the learning process. Its success depends heavily on student
preparation and active participation in class discussions. A collection of articles and other
readings provide the necessary background for analysis of the cases.

WEEKLY ASSIGNMENTS:

The attached assignments provide specific questions that often guide and speed your case
preparation. You should read them carefully before preparing for each class.

COURSE MATERIALS:

Cases and articles are available at the Bookstore as well as a textbook, although not required for
the class but a good overall reference book: Operations Management for Competitive Advantage
by Chase, Aquilano & Jacobs.

EVALUATION AND GRADING:

Evaluation of your performance will be based on your class participation, one written
case report, one field research project and a final exam according to the following weights:

Page 2
33

Written Assignment 25%

Field Application 25%
Class Participation 25%
Final Exam 25%

The written assignment will involve the analysis and write-up of a case. The case will be
handed out February 21st and will be due on March 7th. This is an individual assignment.
Your conclusions should be justified qualitatively and quantitatively as appropriate using
supporting exhibits. Exhibits should be placed at the end of the case analysis but do not count as
part of the Four-page Maximum.

The field application project will be a team effort (teams will be formed at the second
class meeting) that is meant to help you apply what you learn in the course to a particular
operation or process that you are familiar with. You will choose a manufacturing or service
operation to study. This operation may be at your current place of work or at another
conveniently-located organization. While there is considerable flexibility in defining the scope
of the project to fit your own interests, a typical project would involve the following:

1. Define the process, including a flow diagram

indicating key steps, information flows and
capacities;

2. Measure the performance of the process in terms

of cost, quality, delivery, etc.;

3. Evaluate how well the process contributes to the

achievement of the company's competitive
strategies;

4. Present a plan of action to improve the performance of the process in terms of

cost, quality, and/or delivery.

You should be prepared to hand in a project proposal (no more than one page) on
February 7th, a progress report (no more than two pages) on March 14th, and the full report
(no more than Five pages not including exhibits) on April 25th.

Class attendance and participation in discussions are important parts of your learning and
grade. Quality of your contributions is more important than quantity. Be prepared to present
your analysis and action in a concise, logical fashion. You should be able to reference specific
case material to support your points. If you absolutely must miss a class, let me know in
advance and submit a two-page executive summary on the case you missed.

If you want you can form study groups for preparation of cases for class, as this will
enhance both your learning and the quality of class discussions. Under no circumstances,
however, should you use notes or papers from other sections or previous years.

I will provide you with a formal evaluation of your class participation performance part
way through the course. But you should feel free to contact me at any time for feedback.

Page 3
44

OPS7000 MANAGING OPERATIONS

Spring 2002 COURSE OUTLINE

Date Topic Case Readings

1/24 1. Course Introduction

1/31 2. Process Analysis Kristen's Cookie (A) Process Fundamentals

Reengineering a Business
Process

2/7 3 Process Implementation MGH CABG Making Competition in

Term Project Proposal Due Healthcare Work

2/14 4. Capacity Management Shouldice Hospital Matching Supply and Demand

in the Service Industry

2/21 5. Forecasting Demand Sport Obermeyer What is the Right SupplyChain

Supply Chain Management for Your Organization
Mid Term Case Assigned An Interview with Victor Fung.

2/28 6. Quality Assurance Duetsche AV Construction and Use of

Control Charts
Zero Defections: Quality Comes
to Services

3/7 7. Scheduling Professional Services

Scheduling Game
Mid Term Case Due

Date Topic Case Readings

3/14 8.Operations & IT Cisco ERP Note on MRP

Term Project Progress Report Due Putting the Enterprise into
Enterprise Systems

3/21 NO CLASS - recess

3/28 9. Operations & Internet Application Making Business Sense

the Internet Paper of the Internet

4/4 10. Operations & Wal*Mart Operations Based Strategy

Competitive Strategy:
Process Capabilities

4/11 11. Operations & Raychem Corp Beyond Toyota: How to Root

Page 4
55

Competitive Strategy: Out Waste and Pursue

Lean Manufacturing Perfection

4/18 12. Operations & Service Ops AT&T Universal Card Managing the Service Profit
Chain

4/25 13. Term Project Presentations

Project Report Due
Final Exam Assigned

5/2 14. Final Exam Due

Case Analysis Questions

Session
2 Case: Kristen's Cookie Company (A)

READ: Process Fundamentals, Reengineering a Business Process

Questions:
1. How long will it take you to fill a rush order?

2. How many orders can you fill in a night, assuming you are open four
hours each night?

3. How much of your own and your roommate's valuable time will it take
to fill each order?

4. How many food processors and baking trays will you need?

3 CASE: Massachusetts General Hospital CABG

Reading: Making Competition Work in Healthcare

Questions:
1. What are the primary challenges in improving operating processes in a
health care environment such as that of MGH?

2. What kind of payoff would you expect to result from these process
improvements? Who would be the beneficiary of such improvement?

3. What implementation approach should Bohmer and Torchiana select? Be

specific as to where you would start, what resources you would bring to
bear, what performance you would expect, and what timeline you would
hope to maintain.

Page 5
66

4. How should MGH balance the tension between process standardization

and process customization?

5. What are the hazards of standardizing the process too rigorously? What
are the dangers of allowing too much freedom to customize?

4
Case: Shouldice Hospital
Read Matching Supply and Demand in the Service
Industries

Questions:
1. How successful is the Shouldice Hospital?

2. How do you account for its performance?

3. As Dr. Shouldice, what actions, if any, would you take to expand the
hospital’s capacity

4. How would you implement the changes you propose?

5 CASE: Sport Obermeyer

READ: What is the Right Supply Chain for Your Company
An Interview with Victor Fung
QUESTIONS:

1. Using the sample data in exhibit 10, make a recommendation for how
many units of each style Wally Obermeyer should order during the
initial phase of production. Assume that all ten styles in the sample
problem are made in Hong Kong, and that Obermeyer’s initial
production commitment must be at least 10,000 units. (Ignore price
differences among styles in you initial analysis.)

2. What operational changes would you recommend to Wally to improve

performance?

3. How should Obermeyer management think (both short-term and long-

term) about sourcing in Hong Kong versus China?

6 CASE: Deutsche AV
READ: Constructing and Using Control Charts, Zero Defections Quality Comes
to the Service Industry

QUESTIONS:

Page 6
77

1. Why does DAV want to use Statistical Process Control?

2. What are the primary challenges to applying SPC to the service

industries as compared to manufacturing?

3. Using the data in exh 4 calculate the 3 sigma control limits for the
policy extension process and determine when the process has been out of
control?

4. Develop an implementation plan for dealing with the problems described

on pg 9 of the case.

5. How would you begin improving the performance of this process

7 Case: Professional Services Scheduling Game

Read: None

Questions: None

8 CASE: Cisco Systems

READ: A Note on MRP, Putting the Enterprise into Enterprise Systems

Questions:

1. What factors had made the difference between success and failure of the
Cisco ERP project? Where had the ERP team been “smart”? Where had
the ERP team been just plain lucky? Do you think that the Cisco team
could do such a project again if they had to? Why? Why not?

2. How important is ERP to the overall Cisco architecture? Do you see the
ERP component as something that will be undertaken by some, most, or
all companies as they build their IT architectures?

3. How does ERP impact business operations management?

9 Case: None
Read: Making Business Sense of the Internet
Questions:

1. What are the existing applications of Internet technology in your

company

2. What internet applications can you envision that could result in

improved performance of your operations processes?

10 Case: Wal*Mart
Read: Operations Based Strategy
Questions:

Page 7
88

1. What are the sources of Wal-Marts competitive advantage in discount

retailing?

2. How sustainable will their position in this market be into the future and
why?

3. How effective will their diversification into food be?

4. How effective will they be with Sam’s wholesale club?

11 CASE: Raychem
READ: Beyond Toyota: How to Root Out Waste and Pursue Perfection
Questions:

1. Imagine that your first job was in a manufacturing company whose plant
looked like Raychem’s plant in 1990, and that your boss asked you to
take charge of an effort to implement just-in-time production system.
What would you do?

2. What is it about manufacturing cells and just-in-time systems that enable

the sort of overhead cost reductions that Raychem was able to achieve

3. How would you characterize the path to performance improvement that

was pursued by the previous ICD management team, compared to the
path Marsland and Vrcelj followed?

4. If you were Vrcelj what would you do to reduce the long lead times from
tooling vendors?

5. Which of the strategic options outlined at the end of the case do you
think ICD should pursue, and why?

12 CASE: A Measure of Delight: The Pursuit of

Quality at AT&T
READ: Putting Service Profit Chain to Work
QUESTIONS:

1. Evaluate the impact of the “bucket of Measures” on UCS’s success. Do

these measures need to change in significant ways?

2. What is your evaluation of the new options (Customer Centered

Measurement and Statistical Process Control) under consideration? How
can internal measures of quality be linked with external results?

3. What are the advantages and disadvantages of linking the compensation

of Associates to measures of quality? Should they continue to do it?

Page 8
99

4. Is there a limit to the pursuit of continuous improvement? Should they

go through with ”raising the bar” again in 1994?

Page 9