Operations Management
1.16 Organizational Positions and Career Opportunities in P/OMOpportunities in P/OM
1.16.1 Career Success and Types of Processes
Project management is a P/OM responsibility that offers significant advan- tage to those in operations management who know how-to-use project manage- ment methods to innovate quickly and successfully for competitive advantage.
Wheelwright and Hayes (1985) describe such firms as externally supportive, which means that competitive strategy “rests to a significant degree on the firm’s manu- facturing capability.” Chase and Hayes (1991) conclude that Stage IV firms offer services that “raise customer expectations.” Stage IV firms use the systems approach to integrate service and manufacturing activities.
It takes a lot of work to progress through successive stages. It is unlikely that an existing P/OM organization can skip a stage. Only with total reorganization is it possible for a Stage I company to become a Stage III or IV company. Reengineering (REE), which is defined as starting from scratch to redesign a system, is an appeal- ing way to circumvent bureaucratic arthritis and jump stages. However, it is costly and, if not done right, has a high risk of failure. Mastery of this P/OM text will lower that risk.
1.16 Organizational Positions and Career
science of sizing clothing, shoes, etc., is not well developed, so everything that is not customized fits almost everyone poorly. Different systems of sizing are used throughout the world which increases customer dissatisfaction. The situation pro- vides entrepreneurial opportunities for innovators in the P/OM field.
Services often are of the custom variety. The medical doctor sees one patient at a time and treats that patient as warranted. Service processes can prosper by mak- ing them more like manufacturing. In time, manufacturing learned how to pro- cess small batches efficiently. Some service systems, like elevators, lend themselves to batch processes. Various medical experiments have been conducted for treat- ing a batch of patients at one time with a team of healthcare providers. Shouldice Hospital in Toronto repairs hernias on a flow shop-type production line.
Continuous flow processes were developed by a variety of industries, including chemical processors, refineries, and auto assembly manufacturers. Fast-food chains try to emulate this kind of process to handle a continuous flow of information and to assemble sandwiches. Until the late 1970’s, there were basically three different ways to get work done. A fourth (flexible processes) was added when computers began to change the way processes were designed. The four categories are
1. Project. Each project is a unique process, done once, like launching a new product, building a plant, or writing a book. Both service providers and man- ufacturers need to know how to plan and complete projects that are associ- ated with the evolving goals of “temporary” organizations. Projects appeal to people who prefer non-repetitive, constantly evolving, creative challenges.
Projects do not attract people who opt for a stable environment and the secu- rity of fixed goals—associated with the flow shop. There is a unique profile of people who prefer the project environment to other process types and who excel in that milieu.
2. Batch processing. Facilities are set up, and n units are made or processed at a time. Then the facility is reset for another job. When n = 1, or a very few, it is called custom work, and it is done in a custom shop. When n is more than a few, and the work is done in batches, it is called a job shop. The average batch size in job shops is 50. The work arrangement ceases to be a job shop when the work is done in serial flow shop fashion.
With the job shop, many different kinds of goods and/or services can be processed. As the batch size gets larger for manufacturing or services, more effort is warranted to make the process efficient and to convert it to a seri- alized production system. Job shops, with their batch production systems, appeal to people who prefer repetitive assignments within a relatively hectic environment. The job shop generally involves a lot of people interactions and negotiations. The tempo of batch production is related to the variety of the product line and thereby the number of setups, cleanups, and changeovers.
3. Flow shop processing. As the batch size increases so that production can be serialized, either continuously or intermittently, it is rational for both
manufacturing and services to pre-engineer the system. This means that bal- anced flow is designed for the process before it is ever run. It is expected that variable costs will decrease as the fixed cost investments in equipment increase.
Continuous process systems require a great deal of planning and investment.
Flow shops run the gamut from crude setups arranged to run for short periods of times (such as days or weeks) to continuous process systems that have been carefully designed and preengineered for automation. The more automated processes appeal to people who like a controlled, stable, and well-planned sys- tem. The lower costs of flow shop production are related to economies of scale, for example, the investment in consistent process quality can be justified.
4. Flexible (programmable) processing systems. As far back as the 1980’s, a new process category began to emerge that continues to grow faster than any other P/OM segment. Flexibility is derived from the combination of computers controlling machines, making this option the high-tech career choice. People who enjoy working with computers prefer these technologically based envi- ronments. There are two aspects to this attraction. First is the application of the technology to do the work, and second is the programming of the com- puters to instruct and control the equipment that does the work. Associated with the adoption of the new technology is much experimentation. Openness to learning is essential because the systems are continuously changing and need high levels of adaptability. People who like to work with high technol- ogy are attracted to this process configuration which is related to the achieve- ment of mass customization (discussed in Chapter 11).
An assessment has found that this category continues to grow, but the extent of its application has narrowed. Flexibility has been stymied by design constraints and higher costs than had been expected. Each product design decision removes degrees of freedom for further design opportunities. The second crankshaft is easier to make than the seventh one. While progress has been slowed, there is belief that mastery of flexible technology will continue to be improved. Investments in flexible manufacturing systems are condi- tioned by the payoffs resulting from being able to increase variety without incurring large setup costs for each new product design made on the same production line (called economies of scope). As noted above, this is also inter- related with the achievement of mass customization. There is increasing evi- dence that the tipping point for mass customization is near.
Many people prefer working with a specific type of process. There are also peo- ple who prefer to work in either manufacturing or services; these issues usually are more important than type of industry preferences. For an example of the first kind, autos, airplanes, and computers are associated with assembly-oriented industries.
Real advantages often accrue to companies that hire employees from similar but not the same industries. Alan R. Mulally exemplifies this versatility. As President of Boeing Commercial Airlines he was a force behind the 767 and 777. William
Clay Ford (Bill) hired Mulally as President and CEO of the Ford Motor Company.
When asked how he could make that switch, he is said to have replied: “An auto- mobile has about 10,000 moving parts, right? An airplane has two million, and it has to stay up in the air.” Since becoming CEO of Ford Motor Co. in September of 2006, Ford has had a resurgence of success.
Hiring across service industry types is also popular. A person having expertise in the hotel business is likely to be courted for employment by resorts, theme parks, and restaurants. The Ritz Carlton Corporation has made some remarkable competi- tive strides with respect to the quality of hotel service that can be applied broadly to the entire hospitality class of service. Club Med, which represents one of the best of the resort industry, has a very strong—transferable—P/OM orientation. Club Med, Cirque du Soleil, and Four Seasons Hotels and Resorts are operations management cases in the Harvard Business School series (see Horovitz, 1990). Media and enter- tainment are two other service areas with a strong draw on career selection.
Certain industries and services have intense regionality, that is, Florida, Hawaii, Mexico, and the Caribbean represent a cross-section for the resort busi- ness. Thailand was building a reputation for an exotic holiday destination until the tsunami destruction (December 26–27, 2004). It has since rebuilt its beaches, hotels, restaurants, and reputation. Brazil, Greece, Tahiti, and Bali are some other resort destinations to analyze.
Michigan, OH, and within the last 30 years, many Southeastern states of the United States are beehives of automotive activities. At one time, only Detroit was known as the center of the carmaker’s world. Then Toyota, Honda, Subaru, Hyundai, Mercedes, and BMW found new locations far away from Detroit.
New York City, a leader in financial markets, is also a prominent location for product lines in publishing and entertainment; Amsterdam and New York City are preeminent sources for diamond cutting and sales, respectively. Starbucks is grow- ing in Japan, and tourists walk past Starbuck’s Cafe in Beijing’s Forbidden City in China. Global locations compound the complexity of career decisions in operations.