Galanz is a Chinese appliance manufacturer founded in 1978 that initially produced down feather products and later entered the microwave oven business in 1992. It began as an OEM supplier, purchasing components from others, but later invested in R&D and began designing and producing its own magnetrons in 2000. The document discusses Galanz's operations strategy including its transition between OEM, ODM and OBM business models over time. It also identifies both good practices like utilizing production facilities fully and bad practices like poor production planning that Galanz engaged in. Problems faced by Galanz regarding its low cost strategy and developing an international OBM business are presented along with solutions around improving quality and variety and pursuing a global brand through strategic partnerships.

1. Operations Strategy at Galanz
Presented by:
SonalRam

2. Introduction
Headquarter in Shunde, China, Founded in 1978
Produced down feather products for overseas clients
1990 : purchased microwave oven blueprint from Toshiba for USD 300,000
1992 : entered into new business of microwave oven
Purchased magnetrons from foreign suppliers (Toshiba & Panasonic)
1997 : invested in R & D of magnetrons
2000 : designed and produced magnetrons to support its own microwave
production
OPERATIONS STRATEGY AT GALANZ | SONAL RAM

3. OEM | ODM | OBM
OEM: Original Equipment Manufacturer
It’s a company whose products are used as components in the products of
another company, the company that buys products and incorporates or
rebrands them into a new product under its own name.
ODM: Original Design Manufacturer
It’s a company which designs and manufactures a product which is specified
and finally branded by another firm for sale.
OBM: Original Brand Manufacturer
It’s a company that sells an entire product made by a second company or
including a component thereof from a second company sources as its own
branded product.
OPERATIONS STRATEGY AT GALANZ | SONAL RAM

4. Good Practices
Free production line transfer tactic
Full utilization of production facility and labor resources:
Operating 3 shifts per day, 7 days a week and 365 days
Price war : avg. unit cost of production (ACOP)
 Production of 2 million units, price set on avg. unit cost of producing 0.8
million units
ACOP 5 million for 8 million units produced and ACOP 12 million for 15
million units
Investment on R & D
Vertical integration of supply chain
OPERATIONS STRATEGY AT GALANZ | SONAL RAM

5. Bad Practices
3 levels of personnel : slow flow of information
Production of customized products caused decline in production
Overlooked the importance of records
Low cost efficiency achieved, with low quality and less variety
Poor production planning
Synchronization problem between production and R & D
OPERATIONS STRATEGY AT GALANZ | SONAL RAM

6. Problems
To carry on with low cost strategy or
not
Whether develop of OBM business
in international market or not
To continue with OEM/ODM
business or not
Solutions
Work on high quality and more
variety
Should go for it to get world
recognized brand image, which will
aid in global penetration, with the
help of strategic partnership
It doesn’t require additional
investment, thus higher profit and
Galanz can price microwave on higher
side
OPERATIONS STRATEGY AT GALANZ | SONAL RAM

7. OPERATIONS STRATEGY AT GALANZ | SONAL RAM