MGMT 3140 Chapter 9

Summarize how firms organize to meet customer requirements.

-Firms have embraced principles of continuous improvement, total quality management, and six sigma quality (often combined with lean manufacturing) to respond to customer needs. -Baldrige criteria and ISO 9001 standards help firms organize to meet better quality specifications. -Extending these, reengineering efforts are directed at completely overhauling processes to provide world-class customer service.

Identify strategies and dynamic organizational concepts that can improve an organization's responsiveness.

-New and emerging organizational concepts and forms include core capabilities, strategic alliances, learning organizations, and high-involvement organizations.

Discuss why it is critical for organizations to be responsive.

-Organizations have a formal structure to help control what goes on within them. -But to survive today, firms need more than control—they need responsiveness. They must act quickly and adapt to fast-changing demands.

Identify ways that firms organize around different types of technology.

-Organizations tend to move from organic structures to mechanistic structures and back to organic structures as they transition from small batch to large batch and continuous process technologies. -for flexible manufacturing, organizations pursue mass customization via computer-integrated manufacturing and lean manufacturing. -To organize for time-based competition, firms emphasize their logistics operations, just-in-time operations, and concurrent engineering.

what are the 6 primary activities of a value chain

-R&D -inbound logistics -operations -outbound logistics -marketing and sales -service

Describe the qualities of an organic organization structure.

-The organic form emphasizes flexibility. Organic organizations are decentralized, informal, and dependent on the judgment and expertise of people with broad responsibilities. -The organic form is not a single formal structure but a concept that underlies all the new forms discussed in this chapter.

what 3 things does lean manufacturing emphasize?

-quality -speed -flexibility

Deming's 14 points

1. Create constancy of purpose 2. Adopt philosophy of prevention 3. Cease mass inspection 4. Select a few suppliers based on quality 5. Constantly improve system and workers 6. Institute worker training 7. Instill leadership among supervisors 8. Eliminate fear among employees 9. Eliminate barriers between departments 10. Eliminate slogans 11. Eliminate numerical quotas 12. Enhance worker pride 13. Institute vigorous training and education programs 14. Develop a commitment from top management to implement above 13 points

Compared with the mechanistic structure, in the organic structure:

1. Jobholders have broader responsibilities 2. Communication occurs through advice and information rather than through orders and instruction 3. Decision making and influence are more decentralized and informal 4. Expertise is highly valued 5. Jobholders rely more heavily on judgement than on rules 6. Commitment to the organizations goals is more important than obedience to authority 7. Employees depend more on one another and relate more informally and personally

what are the 3 steps to managing valuable resources

1. accumulate the right resources 2. combine the resources to give the organization unique capabilities 3. managers must leverage or exploit their resources

what are the 6 ways in which firms become true learning organizations?

1. by engaging in disciplined and detailed thinking 2. constantly searching for new knowledge 3. valuing and rewarding people who benefit the organization 4. reviewing successes and failures carefully to find lessons and develop deeper understanding 5. benchmarking 6. sharing ideas throughout the organization

what are the key production and organizational concepts that JIT represents

1. elimination of waste. Eliminate all waste of time, people, machinery, space, and materials 2. perfect quality. Produce perfect parts and produce products exactly when needed in the exact quantities needed 3. reduced cycle times. Reduce setup times for equipment, move parts only short distances(machinery is placed in closer proximity), and eliminate all delays 4. employee involvement. The workers make production decisions. Managers and supervisors are coaches. Top management pledges that there will be layoffs due to employees finding new efficiencies 5. value added manufacturing. Do only those things that add value to the finished product. If it doesn't add value, then dont do it. For example, inspection does not add value to the finished product, so make the product correctly the first time so inspection is no longer necessary 6. discovery of problems and prevention of recurrence. Foolproofing, or fail-safing, is a key component of JIT. People try to find the weak link in the chain by forcing problem areas to the surface in order to take preventative measures.

what are the 4 support activities of a value chain?

1. firm infrastructure 2. HR management 3. tech development 4. procurement

what are three major workplace strategies which can help attract and retain millennial employees?

1. flexible work arrangements 2. involvement in decision making 3. different types of recognition

6 conditions that support lean manufacturing

1. people are broadly trained rather than specialized 2. Communication is informal and horizontal among line workers 3. Equipment is general-purpose 4. Work is organized in teams, or cells, that produce a group of similar products 5. Supplier relationships are long-term and cooperative 6. Product development is concurrent, not sequential, and is done by cross-functional teams

What are the 3 components of a strategic triangle

1. the company itself 2. the competition 3. the customer

At six sigma, a product is defect free what % of the time?

99.999996 (fewer than 3.4 mistakes per one million)

Strategic Alliances

A formal relationship created among independent organizations with the purpose of joint pursuit of mutual goals.

what is ISO 9001 (8 parts)

A list of good quality management pracitice requirements. 1. customer focus 2. leadership 3. involvment of people 4. process approach 5. system approach to management 6. continual improvement 7. factual approach to decision making 8. mutually beneficial supplier relationships

Customer Relationship Management (CRM)

A multifaceted process focusing on creating two-way exchanges with customers to foster intimate knowledge of their needs, wants, and buying patterns.

ISO 9001

A series of quality standards developed by a committee working under the International Organization for Standardization to improve total quality in all businesses for the benefit of producers and consumers.

Just-in-time (JIT)

A system that calls for subassemblies and components to be manufactured in very small lots and delivered to the next stage of the production process just as they are needed.

High-Involvement Organization

A type of organization in which top management ensures that there is consensus about the direction in which the business is heading

learning organization

An organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.

Control (i's to We's)

Both partners encourage their internal stakeholders who are involved in the alliance

Relationship (i's to We's)

Both partners work hard on developing a positive working relationship

ordinary capabilities

Capabilities pertaining to basic administrative and operational functions

what is diseconomies of scale

Difficulty of efficiently controlling a firm's operations when it becomes too big

Economies of Scope

Economies in which materials and processes employed in one product can be used to make other related products

Size also creates _________ __ _____; materials and processes employed in one product can be used to make related products

Economies of Scope

large batch operations (example)

GM, ford, Chrysler, Chipotle

Explain how a firm can be both big and small.

Historically, large organizations have had important advantages over small organizations. Today small size has advantages, including the ability to act quickly, respond to customer demands, and serve small niches. -The ideal firm today combines the advantages of both. It creates many small, flexible units, while the corporate levels add value by taking advantage of its size and power.

what does ISO stand for

International Organization for Standardization

reengineering (example)

Procter & Gamble used reengineering to make its products more competitive. The company learned that the average family buying its products rather than private-label or lower-price brands paid an extra $725 per year. That figure, P&G realized, was far too high and warned that the company's high prices could drive the company to extinction. Other data also signaled the need for P&G to change. Market shares of famous brands such as Comet, Mr. Clean, and Ivory had been drop- ping for 25 years. P&G was making 55 price changes daily on about 80 brands, and inaccurate billings were common. Its plants were inefficient, and the company had the highest overhead in the business. It clearly had to cut prices, and to do that, it had to cut costs.

What are the 5 ways in which I's can become We's? The best alliances are true partnerships that meet these criteria:

Relationship Metrics Differences Control Management

Differences (i's to We's)

The partners embrace differences in one another

Metrics (i's to We's)

The partners measure how they're going to succeed, not just the end result

technology

The systematic application of scientific knowledge to a new product, process, or service.

concurrent engineering

a design approach in which all relevant functions cooperate jointly and continually in a maximum effort aimed at producing high quality products that meet customers needs

mechanistic organization

a form of organization that seeks to maximize internal efficiency

what is another name for small batch operations

a job shop

continuous process

a process that is highly automated and has a continuous production flow

small batch operations (example)

a small custom metalworking company

what is rightsizing

a successful effort to achieve an appropriate size at which the company performs most effectively

Total Quality Management (TQM)

an integrative approach to management that supports the attainment of customer satisfaction through a wide variety of tools and techniques that result in high-quality goods and services

lean manufacturing

an operation that strives for the highest productivity and total quality, cost effectively, by eliminating unnecessary steps in the production process and continually striving for improvement

ambidextrous organization

an organization that is simultaneously good at exploitation and exploration

organic structure

an organizational form that emphasizes flexibility

large firms are best for ______ and _______.

buying and selling

what should a company do first: -commit to excellence and leadership in capabilities and strengthen them OR -commit to winning market share for specific products

commit to excellence and leadership in capabilities and strengthen them

describe the Japanese concept "kaizen"

continuous improvement

Successful organizations use their strengths to do what better than competitors?

create value by meeting customer requirements better than the competition

Small firms are the best for unleashing ____ and ______

energy and speed

research and development (R&D)

focus on innovation and new products

dynamic capabilities

higher-level strategic capabilities (compared to ordinary ones) that aid rapid adaptation

Marketing and sales

identify customer requirements and get customers to purchase the product

six sigma quality

its a set of statistical tools to identify and eliminate virtually all causes of defects, standardizing the process to reach the lowest predictable level of any cause of customer dissatisfaction

what is six sigma mixed with lean manufacturing called

lean six sigma

in ____________, depending on the product, duplication and inefficiency in distribution can cost far more than making the product itself

logistics

flexible factories

manufacturing plants that serve customers needing fast turnaround on relatively small orders (produce one product at a time)

a firm that is large offers what kind of power?

market power

what is another name for large batch operations

mass production

Service

offers customer support, such as repair, after the item has been bought

what tends to be the organizational structure in a small batch organization

organic

inbound logistics

receiving, storing, and distributing inputs of a product

what is exploration

seeking and creating new ways to meet future demands

A method of systematically analyzing work processes to identify and eliminate virtually all causes of defects, standardizing the processes to reach the lowest practicable level of any cause of customer dissatisfaction

six sigma quality

Time-based competition (TBC)

strategies that reduce the total time needed to deliver the good or service

Large batch

technologies that produce goods and services in high volume

small batch

technologies that produce goods and services in low volume

core capability

the knowledge, expertise, or skill that underlies a companies ability to be a leader in providing a range of goods or services

downsizing

the planned elimination of jobs or positions

mass customization

the production of varied, individually customized products at the low cost of standardized, mass produced products

Value Chain

the sequence of activities that flow from raw materials to the delivery of a good or service, with additional value created at each step

computer-integrated manufacturing (CIM)

the use of computer aided design and computer aided manufacturing to sequence and optimize a number of production processes

what is the goal of reengineering

to revolutionize key organizational systems and processes by seeing it from the customer's perspective of how they would potentially want the company to operate

Today's Strategic alliances

today, even fierce competitors are working together at unprecedented levels to achieve their strategic goals

Operations

transforming inputs into the final products

outbound logistics

warehouse the product and handle its distribution

Traditionally, when have companies downsized?

when product demand falls and seems unlikely to rebound in the short run

When is JIT not the most efficient choice

when the costs of delivery exceed the costs of storage