The document discusses several topics related to capacity strategy including:
- Issues around capacity levels, number and location of sites, and managing capacity changes.
- Factors that influence the overall level of capacity such as demand forecasts, capital availability, and economies of scale.
- Questions around who should be involved in decisions regarding number and capacity of sites, site locations, and task allocation.
- Performance measures and competitive objectives impacted by capacity strategy decisions.
Companies are relocating manufacturing and sourcing to regions with lower labour costs to stay competitive. This affects the efficiency of warehousing and distribution. But which elements, in particular, will be strategically important in the next two years?
Markets are changing – as are customer and service requirements. You may have implemented a new manufacturing and supply chain setup, but customers are asking for more frequent and faster deliveries.
The key to staying competitive is how quickly you can get your products from the warehouse to your customers. This can challenge your operations and calls for a review of your warehouse and distribution setup.
We asked our international clients which themes, within warehousing and distribution, they believe will have the most strategic relevance within the next two years. Here are the top five.
SCOR is an acronym for supply chain operations reference model, which was developed to assist businesses in understanding, structuring, and evaluating the performance of supply chains.
A) What is operations management?
B) Operations management is important in all types of organization
C) The input–transformation–output process
D) The process hierarchy
E) Operations processes have different characteristics
F) The activities of operations management
Companies are relocating manufacturing and sourcing to regions with lower labour costs to stay competitive. This affects the efficiency of warehousing and distribution. But which elements, in particular, will be strategically important in the next two years?
Markets are changing – as are customer and service requirements. You may have implemented a new manufacturing and supply chain setup, but customers are asking for more frequent and faster deliveries.
The key to staying competitive is how quickly you can get your products from the warehouse to your customers. This can challenge your operations and calls for a review of your warehouse and distribution setup.
We asked our international clients which themes, within warehousing and distribution, they believe will have the most strategic relevance within the next two years. Here are the top five.
SCOR is an acronym for supply chain operations reference model, which was developed to assist businesses in understanding, structuring, and evaluating the performance of supply chains.
A) What is operations management?
B) Operations management is important in all types of organization
C) The input–transformation–output process
D) The process hierarchy
E) Operations processes have different characteristics
F) The activities of operations management
Demystifying Cloud Economics – Think Big: How to Build an Investment Case for...Amazon Web Services
While cloud is fast becoming the new normal for organisations of all sizes, many IT executives & budget owners still struggle to articulate the business value of moving to the cloud in terms that resonate with the Board and Broader C suite. In this session, we will talk through the impact cloud computing is having on the overall IT cost base, not just the infrastructure layer. We will also cover what the typical non-cost benefits are, how they can be measured and communicated. Finally we will provide a framework that can be used to calculate the transformation costs associated with moving to the cloud.
Blair Layton, Business Development Manager – Database Services, Amazon Web Services, APAC
Use of software (WMS and TMS) to transform a dysfunctional supply chain and revolutionize it.
Available as narrated presentation also. http://www.infor.com/company/webcasts/scmarchive/supplychainbest-rwct/scm042210
A four-year transformation at this tech giant, including a split into consumer and enterprise providers, required extensive payroll and time-management changes.
How to Make Your Move to the Cloud with ConfidenceCloud Spectator
Choosing the right Cloud provider is crucial to the success of your organization. The stability and performance of critical applications; and infrastructure cost management are two of the most pressing concerns for the modern CIO. But selecting the right IaaS provider can be a daunting task, especially considering that price-performance of seemingly similar VM's between providers varies so dramatically.
Because of price and performance discrepancies throughout the industry, you run the risk of grossly over-paying for your infrastructure. Learn how Cloud benchmarking of your applications on the leading Cloud providers can ensure that you're not overpaying for your services. Find out how we helped a client in the Oil and Gas industry save over $1.8M per year in infrastructure costs (a 47% savings) by identifying the actual projected cost of running their applications on the shortlist of providers.
Use cloud performance benchmarking to help you select the right Cloud provider for your specific workloads, or risk the possibility of over-spending on under-performing servers.
This paper consists of basic understanding of JIT and TQM philosophies, the inter-linkages between these and challenges associated in their implementation. Paper also discusses how JIT can feeds to the accomplishment of TQM. JIT and TQM are perfectly complimentary to each other. The objective of both is to expose and correct problems at source, so as to avoid wasting resources on production of defective products. Paper illustrates how TQM and JIT can enhance value for customers and at the same time can ensure higher profits for firm.
This paper discusses IKEA’s corporate and business level strategy and how these strategies are best supported by operations strategies of IKEA. It also discusses how IKEA differentiated itself from its competitors. Paper highlights various operational trade-offs done by company. Paper, on later stage focuses on how supply network contributed to achieving company’s objectives and strategies.
The paper illustrates the role of Supply Chain Management in a Hotel’s Performance. It describes how supply chain management (SCM) system can help hotels to attain a sustainable competitive advantage by improving product quality and service while reducing cost at same time. As integrity of Supply chain is essential so to get benefited by its advantages, on this account, factors affecting the integration of supply chain management are explained. In conclusion Supply Chain Management has strong effects on overall hotel performance.
2. Capacity Strategy Configuring Capacity Managing Capacity Change Type of Capacity Overall Level of Capacity Location of Capacity Timing of Change Magnitude o f Change Issues in capacity strategy Location of changed capacity
3. Efficiency Actual output Effective capacity 3724 4134 90.08% = = = Efficiency Actual output Effective capacity 4622 5437 85.01% = = = Ice C ream Division Canned F ood Division Total Capacity 7896 hrs Planned Loss 3762 hrs Effective Capacity 4134 hrs Actual Output 3724 hrs Avoidable Loss 410 hrs Total Capacity 7896 hrs Planned Loss 2459 hrs Effective Capacity 5437 hrs Actual Output 3724 hrs Avoidable Loss 815 hrs Utilization Actual output Total capacity 3724 7896 47.16% = = = Utilization Actual output Total capacity 4622 7896 58.54% = = = Utilization and efficiency measures for two divisions of a food processing company
4. Forecast level of demand Changes in future demand Uncertainty of future demand Consequences of over/under supply Availability of capital Cost structure of capacity increment Economies of scale Flexibility of capacity provisions Some factors influencing the overall level of capacity OPERATIONS RESOURCES MARKET REQUIREMENTS Overall level of capacity
5. Issues include….. LONG-TERM CAPACITY CHANGE STRATEGY NUMBER OF SITES LOCATION OF EACH SITE ALLOCATION OF TASKS TO EACH SITE CAPACITY OF EACH SITE
6. Questions: “ Who should be involved in these decisions?” “ How does the company make this type of decision?” Questions Options NUMBER OF SITES and CAPACITY OF SITES LOCATION OF SITES ALLOCATION OF TASKS TO SITES LONG-TERM CAPACITY CHANGE STRATEGY Many small sites? Few larger sites? Supply side dominated? Demand side dominated? All sites make all products/services? Each site focuses on a few products/ services? Capacity leads demand? Capacity lags demand?
7. Why is capacity strategy important? Without an appropriate capacity strategy operations will always be struggling to supply markets in a competitive manner Getting capacity strategy right is the starting point for developing competitive operations
8. LONG-TERM CAPACITY CHANGE STRATEGY NUMBER OF SITES LOCATION OF EACH SITE CAPACITY OF EACH SITE ALLOCATION OF TASKS TO SITES What performance measures will all these decisions have a major impact on ? ? How should one judge a capacity strategy ?
9.
10. The three options ….. Time Demand Capacity Volume Time Capacity Leading Strategy Demand Capacity Volume Time Capacity Lagging Strategy Demand Capacity Volume Time Capacity Smoothing Strategy
11. 2 4 6 8 10 12 0 0 2 4 6 8 10 12 Costs / Revenue ($) Volume in thousands of units Forecast demand = 9000 units Cost Revenue Cost, volume, profit illustration
12. 1 2 3 4 5 6 0 0 2 4 6 8 Unit cost (total cost / volume) Volume in thousands of units (a) Nominal capacity limit 1 2 3 4 5 6 0 0 2 4 6 8 Unit cost (total cost / volume) Volume in thousands of units (b) Diseconomies of scale kick in Unit cost curve
13. Physical capacity of facilities Effective Capacity Demand Volume Time Cash flow with extended physical capacity Cash flow with two identical capacity increments Cumulative cash flow Time Expanding physical capacity in advance of effective capacity can bring greater returns in the longer term
14. Required service level Geographical distribution of demand Economies of scale Supply costs Some factors influencing the number and size of sites OPERATIONS RESOURCES MARKET REQUIREMENTS Size and number of sites
15. Required service level Suitability of site Image of location Resource costs Land and facilities investment Resource availability Community factors Some factors influencing the location of sites OPERATIONS RESOURCES MARKET REQUIREMENTS Location of sites
16. 0.4 0.6 0.8 1.0 1.2 London (city) Hong Kong New York (midtown) Singapore Stockholm Amsterdam Madrid Office rents in various cities ($’000 per square metre, January 1999) Source: Richard Ellis, The Economist
17. 60 80 100 120 Unit labour costs in various countries (1998) (includes effects of currency exchange rates and productivity) 140 160 Denmark Britain Japan France Germany Sweden Netherlands Spain Source: OECD, The Economist United States = 100
18. Location A Location B Location of operation Costs / Revenue Revenue Costs (a) Location concerned with profit maximization ; ( b) Location concerned with cost minimization Location A Location of operation Costs / Revenue Revenue Costs Fast food restaurant Electronics manufacturer (a) (b)
19. 1000 2000 3000 4000 150000 4m 3m 2m 1m $US Monthly volume (kg) Current volume Revenue 3 Brayford facilities 1 Bi-line 8 facility & 1 Brayford facility Cost-volume-profit curves for two alternative capacity strategies