Operations Case Approach **MAKE ASSUMPTIONS CLEAR 1. Read Opening Paragraph: What issues should we be focusing on? 2.

Read Last Paragraph: What requires immediate attention/what is most important? 3. Skim Case 4. Skim the exhibits mark at the top what each one could be used; What info do we have? 1-4: 30 minutes 5. External/Internal Size Up, KSFs 45 minutes 6. Quantitative/Process Flow Analysis 45 minutes 7. Capacity Calculations, Analysis of Bottleneck/Inventory 45minutes 8. Alternatives 45 minutes 9. Decision 30 minutes General Overview 30 minutes Role CUSTOMER FOCUSED

List all constraints and decisions at hand o Is your decision constrained by your role? o Are you just making recommendations? o How much power do you have to implement change? o Do I have limited access to information? (Am I an external consultant)

Key Issues - What are the real issues and what are the symptoms? o Why are they important? Do they impact production? o What is the order of importance? Rank them. o What change will have the most impact? If solved, which will improve my ops the most? - What does the customer want? - What are the opportunities? - Discuss the following: o Variability & Volume high/low (product process matrix) From high var/vol to low var/vol: Project, Job, Batch, Line, Continuous o Quality Control o Infrastructure rewards and incentives of workers/business o Inventory - build-up/backlog of orders? What is it in the basic sense? - How reliable is the data that you have? - Location o How are your operations affected by your location? o Distance between machines o Is there a need for transportation of inventory outside of the plant/back into the plant - Timing o Is the process time-sensitive? E.g. Perishable goods

Does one operation follow another within a certain timeframe? Are we meeting this timeframe? o Is the decision time sensitive? o Are the goods on backorder? o Are we expediting our processes? How does it affect daily operations (consider setup time)? Decision to be Made & Alternatives o What decisions will actually solve the identified issues? o How does solving this operations-related problem influence the firms overall strategy? o Note: operations is almost always a potential source of competitive advantage Business Size-Up: Analysis 45 minutes

NO CASE FACT CLUTTER have a clear concise IMPLICATION External Analysis (if applicable) Industry What is the nature of the industry? (Industry life-cycle: Growth, mature, decline) Some potential factors to look for include Seasonality Recent industry trends Price taker/ price setter (client? competitors? us? market?) How influential are we on the industry IMPLICATIONS: how do the industry trends affect our decision? Are we dealing with commoditized industry with low margins? If so, cost control important, reducing variable costs with operations will be a big deal Competitive Analysis Who are our main competitors? How do we add value and compete? IMPLICATIONS: will the decision allow us to maintain, or improve our competitive positioning? Consumer Analysis Who are your consumers? What do they value? Are their preferences changing? How do they choose amongst competitors? How easily can your customers switch to a competitor? Is this a major threat given the current environment?

 What is your customer relationship based on most? IMPLICATIONS: Is the decision at hand consistent with the needs and preferences of our customers? How do current operations add value? Other considerations Pacing: the movement of product from one station to the next after the cycle time has elapsed Number of products produced (variation) o More models complicate scheduling and increase the need for communication Internal Analysis Look at the business and how it operates What are the defining characteristics of the production process (if applicable)? Is this a labour-intensive or capital-intensive organization? Is highly skilled labour or training a key to competing in this industry? Does this company produce standard or custom products? What types of inventory levels are required, and how does this influence the operations of the business? Can this company benefit from economies of scale? Draw IMPLICATIONS from the facts, and tie these to the following What does this company do best? What type of expertise is required? How does this company compete? What is the companys competitive advantage, and how can/must this be maintained? Key Success Factors Identifying the KSFs allows us to determine whether there is CONSISTENCY in terms of the decision at hand, and what the company must do to succeed and grow. Stick with whatever is identified as the main issue. Main IMPLICATION to draw: Does the decision allow us to capitalize on our internal capabilities, and is it consistent with what is occurring in the external environment? o Relate issues back to goals of the firm (e.g. goal = low op costs, low inventory, high throughput) Some Examples of Key Success Factors Pricing decisions? Price-competitiveness? Ability to keep costs down? Ability to meet special delivery times?

Ability to offer product customization? Flexible operations/reactive to customer needs? Providing superior product quality or customer service? Innovation? 1hour and 30 minutes

Quantitative Analysis/Process Flow Demand

o What is it currently? o Are there changes coming? What could they be? Process Capacity o Draw a process flow diagram write relevant numbers on case exhibit (re-draw if necessary) # of resources, cycle time, capacity o CALCULATION CHART: Cycle time: maximum amount of time allowed for work on 1 unit at each station Resource # of Rate or Capacity Downtime Net Demand CU% Resources Cycle Capacity Time Resource 1 Resource 2 Calculate ideal capacity per operation ((cycle time x demand/output) / total available time at operation) where is the bottleneck? Calculate Downtime/Wait Time (could be in the case, or could be a logical assumption) Calculate capacity utilization at each operation: (DEMAND or CURRENT OUTPUT) / (IDEAL CAPACITY WITHOUT DOWNTIME, INVENTORY) Calculate Net Capacity (Ideal Capacity - Extras) o Extras: any downtime carried through the process as a result of prior downtime (is there inventory still feeding our operation?) Re-calculate Capacity Utilization: Current Output/Net Capacity Calculate inventory (minutes at BN) = WIP inventory / Capacity at BN; where is inventory buildup occurring (in front of/behind bottlenecks)? o Throughput time: time it takes for 1 unit to pass through the entire process WIP Inventory/Output WIP = Throughput Rate x Throughput Time o How does variability/upstream/downstream interference affect cycle time (even if capacity utilization is below 100)? o Compare demand to total and effective capacity

 Bottleneck o o o o o

Are we below, meeting, or exceeding demand?

What is causing the bottleneck? E.g. Machine utilization, labour utilization Look for buildup of WIP How can we better utilize capacity/improve operations? How do we ensure the bottleneck is being fully utilized Once we address this bottleneck, do we create a new bottleneck? How do we address that? o Note: Bottleneck could be different processes at different times of the day/year o If you can change your bottleneck, what should you change it to? Analysis o Further quantitative analysis: Costs of overtime, downtime, new machinery, etc. What will effect be on capacity/utilization? What are the likely effects on costs of various changes in capacity, configuration, schedule, etc.? o Show significant points of analysis/make a case for how to fix the problem YOUR way o People, equipment, facilities, production Variability o o o o Inventory o o o o o o o How much inventory do we have? Where is it? Why do we have it? What does it cost to own it? What would happen if we had less or more? How do we decide how much to have? What would it take to reduce the inventory to near 0? 45 minutes What are the sources of variability? Predictable? How variable is demand? When, how and why? Can it be reduced?

Alternatives & Options

Note: Remember the option to do nothing is usually available. ** HAVE DECISION CRITERIA Evaluate the alternatives presented in the case (if any) o Identify main pros and cons (qualitative aspects) o How does it address the issue? o Justify why you would/would not go ahead with one of these? o Quantify the Costs of Alternatives

E.g. Second shift: how much will that cost Can this cost be covered? Any savings?? Dont do numbers for option that is clearly a no-go Clearly state qualitatively why this option is not feasible Do we have enough time to implement this alternative to see a difference within the time constraint? (1 week to make changes, cant buy and train new mechanic on machine) Tie back to industry analysis, business size up

NOTE: state all assumptions Present some original alternatives (suggest 2-3 additional): o Add a second shift (perhaps less expensive and more efficient) o Hire new personnel (Cost? Do they perform a new function or just more of the same?) o Add equipment (How expensive is it to acquire another one of our bottlenecks if it is a machine) o Reduce the batch size half or smaller than current batch (justify additional setup costs) Do the Alternatives Address? o Capacity: Maximum rate of items produced in a given time o Inventory Increase/ decrease costs Increase time to go through entire process Can smooth out process and act like buffer o Variability More or less product from day to day Increase inventory Increase capacity Decision & Implementation Decision o Begin by clearly stating your decision and its impact on current operations o USE BULLET POINTS o Identify reasons for choosing said decisions; numerical reasons? Better utilization times; 90% before, 95% now Faster throughput time; 4 days before, 2 days now Qualitatively, does it support KSF? o Explain why you didnt choose the other alternatives 30 minutes

o Explain how changes will impact customers, plant, workers, etc. Are there union, mechanical, or plant issues? How will issues be addressed? Action Plan & Implementation o Outline a specific implementation plan and timeline (Step 1, 2, 3, etc.) o Especially for short-term and long-term issues o Discuss key risks with your recommendations and analysis and how you will mitigate those risks Write-Up As __, I recommend the following actions(insert preferred alternative and justification) These steps will add value and keep the firm competitive by Quality will be more consistent because Our flexibility is improved because we are better able to respond to interruptions, delays or losses in supplier or internal operations because of Variability will be managed by Control of the process will be improved by the implementation of Pressure on the bottleneck will be alleviated by The added costs of the proposed alternative are justifiable because Some obstacles that may be encountered as a result of the proposed changes are These problems will be mitigated by