Operations Management Mba
Operations Management Exam – revision notes
Handles & Hinges Case
(p670 of textbook)
Key Points to note
• Historical success based on reputation for high quality unique designs. • Architects specified H&H even in the face of alternative suppliers claiming equivalent products at less than 50% cost. Architects unwilling to potentially spoil multi-million pound projects for the sake of saving a few thousand pounds on fittings. See Garvins 5 categories of quality. • Changing market place due to recession in early 1990s forced H&H into hardware retail sales sector, more price sensitive and quick delivery required. This sector now accounts for 40% of sales but only 15% of profit. This compares with longer lead times and much less price sensitive sales to construction contractors. • Explicit that all production has now changed to “modern” batch production techniques. This presumably includes all sales to retail trade and contractors. Bearing in mind the different requirements in the two sectors there must be a case for treating production separately. Retail key is speed, Construction key is dependability and quality. See 4 “Vs” model…..& Operations performance objectives. • Production planning is complicated by trying to serve two very different sectors from the same production route. Production is often re-scheduled to deal with the immediate requirement. Suggests a level of inventory may be appropriate (this is not implied in the case) particularly for the retail sector. Explicit that retail uses requires standard products so pareto/ABC analysis may be worth trying for inventory management purposes. See Pareto/ABC, forecasting. • There are clearly some issues with not meeting customer expectations in the construction sector. Partly due to use of high quality ( highly polished, hand crafted) samples and v.good photography in brochures. CEO puts this down to customers being too fussy and even the fact that they probably don’t like the fact
Handles & Hinges Case
(p670 of textbook)
Key Points to note
• Historical success based on reputation for high quality unique designs. • Architects specified H&H even in the face of alternative suppliers claiming equivalent products at less than 50% cost. Architects unwilling to potentially spoil multi-million pound projects for the sake of saving a few thousand pounds on fittings. See Garvins 5 categories of quality. • Changing market place due to recession in early 1990s forced H&H into hardware retail sales sector, more price sensitive and quick delivery required. This sector now accounts for 40% of sales but only 15% of profit. This compares with longer lead times and much less price sensitive sales to construction contractors. • Explicit that all production has now changed to “modern” batch production techniques. This presumably includes all sales to retail trade and contractors. Bearing in mind the different requirements in the two sectors there must be a case for treating production separately. Retail key is speed, Construction key is dependability and quality. See 4 “Vs” model…..& Operations performance objectives. • Production planning is complicated by trying to serve two very different sectors from the same production route. Production is often re-scheduled to deal with the immediate requirement. Suggests a level of inventory may be appropriate (this is not implied in the case) particularly for the retail sector. Explicit that retail uses requires standard products so pareto/ABC analysis may be worth trying for inventory management purposes. See Pareto/ABC, forecasting. • There are clearly some issues with not meeting customer expectations in the construction sector. Partly due to use of high quality ( highly polished, hand crafted) samples and v.good photography in brochures. CEO puts this down to customers being too fussy and even the fact that they probably don’t like the fact