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    Session3 P

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    Aniket Borse
    The document discusses different process views of operations including: 1) FedEx and UPS have different network structures to optimally serve distinct market segments like express and ground delivery. FedEx has an integrated air and ground network for flexibility while UPS operates independent networks. 2) The Swiss watch industry historically relied on manual craftsmanship but faced competition from lower cost automated Japanese producers. It differentiated through high-end quality and exclusivity targeting the luxury segment. 3) Firms can be organized from a process perspective based on the degree of standardization versus customization needed using frameworks like the product-process matrix. Mass production focuses on economies of scale while customization emphasizes variety.

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    Session3 P

    Uploaded by

    Aniket Borse
    24 views14 pages
    The document discusses different process views of operations including: 1) FedEx and UPS have different network structures to optimally serve distinct market segments like express and ground delivery. FedEx has an integrated air and ground network for flexibility while UPS operates independent networks. 2) The Swiss watch industry historically relied on manual craftsmanship but faced competition from lower cost automated Japanese producers. It differentiated through high-end quality and exclusivity targeting the luxury segment. 3) Firms can be organized from a process perspective based on the degree of standardization versus customization needed using frameworks like the product-process matrix. Mass production focuses on economies of scale while customization emphasizes variety.

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    Session1 p

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    Session3 p

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    The document discusses different process views of operations including: 1) FedEx and UPS have different network structures to optimally serve distinct market segments like express and ground delivery. FedEx has an integrated air and ground network for flexibility while UPS operates independent networks. 2) The Swiss watch industry historically relied on manual craftsmanship but faced competition from lower cost automated Japanese producers. It differentiated through high-end quality and exclusivity targeting the luxury segment. 3) Firms can be organized from a process perspective based on the degree of standardization versus customization needed using frameworks like the product-process matrix. Mass production focuses on economies of scale while customization emphasizes variety.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    24 views14 pages

    Session3 P

    Uploaded by

    Aniket Borse
    The document discusses different process views of operations including: 1) FedEx and UPS have different network structures to optimally serve distinct market segments like express and ground delivery. FedEx has an integrated air and ground network for flexibility while UPS operates independent networks. 2) The Swiss watch industry historically relied on manual craftsmanship but faced competition from lower cost automated Japanese producers. It differentiated through high-end quality and exclusivity targeting the luxury segment. 3) Firms can be organized from a process perspective based on the degree of standardization versus customization needed using frameworks like the product-process matrix. Mass production focuses on economies of scale while customization emphasizes variety.

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    © All Rights Reserved
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    of 14

    Session 3:

    Process view of Operations


    FedEx v. UPS
    “…the optimal way to serve very distinct market segments, such as
    express and ground, is to operate highly efficient, independent
    networks with different facilities, different cut-off times and
    different delivery commitments.”

    “Our express air services are integrated with our vast ground
    delivery system: one system handling all products. This integrated
    air and ground network enhances pickup and delivery density and
    provides us with the flexibility to transport packages using the most
    efficient mode or combination of modes.”

    Mieghem 2008
    Linking Business Strategy and
    Operations Strategy
    The Swiss Watch Industry
    Swiss Watch Industry
    • 1970s - 50% of the watches Swiss make
    • 1980s - share reduces to 15%
    – Low cost of manufacturing from Japan, Hong Kong
    – Quartz technology
    – Mass production
    – 500 million units
    • $75 – 450 million units
    • $450 – 42 million units
    • Top segment – 8 million units (97% world wide share by
    Swiss watches)
    Framework: Swiss Watch Industry
    • Competency view and competitive strategy:
    – High-end quality and price;
    - Quality (luxury, exclusivity, durability; in contrast to
    reliability, precision)

    • Resource view:
    – Size: small capacity (1600 companies = cottage industry) +
    contracting
    – Type: manual, flexible, predominantly highly-skilled labor
    (craftsmen)
    – Location and network structure: dispersed, cottage industry
    Framework: Swiss Watch Industry
    • Process view:
    – Sourcing & Customers: Not controlled/managed, not VI.
    Buyer relationships: sell to fragmented small jewelers.
    – Technology:
    • Process: manual: cost = 60% labor, 20% materials, 20%
    OH;
    • Japan - Seiko: wages 1/10th, and labor reduced to 35%
    through standardization & automation.
    • Product: exterior (case, dial, hands) and interior
    movement, which contains about 200 unique parts
    driven by spring
    • Japan – about 50 parts
    How are firms organized from
    Operations perspective?
    Design of Process
    Process Types
    Process Examples Variety Volume
    Job shop Construction, IPO, High Low
    Formula 1 race car,
    Software project,
    Commercial printer,
    R&D firm
    Batch process Defense, pharma Moderate Moderate
    Discrete parts mfg,
    Semiconductors,
    Apparel
    Assembly line Auto assembly, Moderate High
    Fast food like
    McDonalds
    Continuous flow Sugar, oil refinery, Low Very High
    paper mill
    Product-Process Matrix
    Process Technology
    (Flexibility)
    Job Shop (High)
    Jumbled flow C A
    Process segments
    nt
    loosely linked
    e ts)
    ff ici yc
    o s

    In e unit
    rt
    Disconnected line flow
    ppo
    Jumbled flow but a o
    dominant flow exists gh nt
    (hi e
    n m
    Alig
    Connected line flow o f
    (e.g., assembly line) ne sts)
    Zo t co
    o cke
    Continuous, automated, -o f-p
    ib le
    rigid line flow ou
    t
    e as
    Process segments tightly
    linked B ( high Inf D
    Flow Shop (Low)
    Standardized Products Customer Solutions Product
    Commodity products Few Major Products Many Products One of a kind
    High volume Low volume Concept
    (Low) (High) (Variety)
    Source: Mieghem 2008
    Originally proposed by Hayes and Wheelwright
    Service setting
    Organizing processes
    • Mass production • Customization
    – Economies of scale (volume) – Variety
    – PUSH control system – PULL control system
    – Make- to –stock – Make- to- order
    – Anticipation of demand – Higher lead time

    Contemporary Operations: Outside the diagonal??


    • Mass customization
    – Both volume and variety
    – Hybrid PUSH and PULL
    – Standard part of process/product (PUSH)
    – Differentiation part (PULL)

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