BUSI 650 Week 1 DB Forum 1: Key Topic/Thread Example

Discussion Board Forum 1: Key Topic/Thread

BUSI 650 Operations Management, Discussion Board Forum 1: Key Topic/Thread

Thread by [Student Name]

The forum's key topic and the molding company are composites standing in for the course's own prompt; the textbook and research cited are real, and the requirements follow Liberty's public course guide for BUSI 650.

Thread

I manage operations for a composite contract manufacturer that injection-molds plastic components for medical-device companies: housings for glucose monitors, inhaler parts and single-use surgical tools. Our largest customer recently asked us to cut prices by 8 percent, shorten lead times from six weeks to three and accept smaller, more frequent orders, all while keeping our defect rate below 200 parts per million. Meredith and Shafer (2016) describe operations strategy as the set of choices about how operations will support the organization's competitive position, usually framed around cost, quality, delivery and flexibility. Our customer is, in effect, asking us to win on all four at once.

The textbook's framework suggests that we probably cannot. The traditional view holds that a plant designed for low cost runs long, stable batches, while a plant designed for flexibility accepts changeovers and idle capacity, so improving one priority sacrifices another. Some researchers have argued that advanced manufacturing technology removes those trade-offs. Boyer and Lewis (2002) tested that argument using survey responses from plant managers and machine operators at 110 sites with newly installed automation. Trade-offs had not disappeared, they reported, although respondents saw only modest gaps between priorities, and the gaps looked different to managers than to people on the floor. New equipment narrowed the gaps between priorities without erasing them.

That result matches our experience. Our newest presses change molds faster than the old ones, which helps flexibility, but every changeover still costs about two hours of capacity and produces start-up scrap. Shorter lead times with smaller orders would mean more changeovers, which would raise our costs, not lower them. A rough count makes the point: moving from monthly to weekly orders on our twelve highest-volume parts would add about 40 changeovers a month, or roughly 80 hours of press time, about two full weeks of one press's capacity on our two-shift schedule. Unless we cut changeover time sharply, the customer's lead-time request and price request pull in opposite directions.

The more useful question is which priority wins orders and which only qualifies us to compete. In medical devices, quality is a qualifier: a supplier with a recall-causing defect loses the business regardless of price. Our evidence suggests that delivery reliability is the order winner, since customers have repeatedly told us that a late shipment stops their assembly line. I would therefore lead on dependable delivery, match the market on cost and treat quality as a nonnegotiable floor. In practice, that means offering the three-week lead time on a limited catalog of high-volume parts that we can schedule in advance, keeping six weeks for the rest and negotiating a smaller price reduction tied to forecast commitments from the customer.

Strategy also depends on management, not just equipment. A study of 732 mid-sized manufacturers across four Western economies scored their management practices (Bloom & Van Reenen, 2007) and found that better practices, such as monitoring performance, setting targets and managing people well, were strongly associated with productivity, profitability and survival. That finding suggests our response to the customer should begin with how we schedule, measure and run the plant before we buy more presses.

My question for classmates: in your organizations, has a major customer ever pushed you to compete on every priority at once, and how did you decide which demands to accept?

References

Bloom, N., & Van Reenen, J. (2007). Measuring and explaining management practices across firms and countries. The Quarterly Journal of Economics, 122(4), 1351-1408. https://doi.org/10.1162/qjec.2007.122.4.1351

Boyer, K. K., & Lewis, M. W. (2002). Competitive priorities: Investigating the need for trade-offs in operations strategy. Production and Operations Management, 11(1), 9-20. https://doi.org/10.1111/j.1937-5956.2002.tb00181.x

Meredith, J. R., & Shafer, S. M. (2016). Operations and supply chain management for MBAs (6th ed.). Wiley.