OPERATIONS & TECHNOLOGY MANAGEMENT

Management 410, Section 01 Summer Quarter 2011

Prof. Felipe Caro

Last Update: June 14, 2011

INSTRUCTOR

Professor Felipe Caro Gold Hall, Room B-420 Phone: (310) 206-0416 E-mail: felipe.caro@anderson.ucla.edu Saturdays: 9:30am 12:45pm & 2:00pm 5:15pm Saturdays 5:30pm 6:30pm (and by Appointment) Tejas Sanghavi (tejas.sanghavi.2012@anderson.ucla.edu) Saturday, August 20, 2011

CLASS HOURS OFFICE HOURS TA FINAL EXAM

REQUIRED TEXT The Goal, 3rd edition, Goldratt and Cox, North River Press, 2004. OPTIONAL REFERENCE TEXT Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009. WEB PAGE LOCATION
http://internal.anderson.ucla.edu/course/2011-2012/fa41001/

COURSE DESCRIPTION
Management 410's purpose is to introduce you to the strategic and operating issues and decisions involved in managing the business and operational processes within an enterprise. An operational process is one that: (1) uses an organization's resources to transform inputs into goods; (2) utilizes them to provide a service or, as is often the case, (3) does both. The course aims to provide you with a conceptual framework and a set of analytical tools to enable you to better understand why processes behave as they do. Given this understanding, you will be positioned to involve yourself in an organization's defining strategic decisions: those relating to key processes affecting your, and your organizational unit's, performance. Further, you will be able to articulate the set of processes that most closely match and enhance your organization's competitive posture. This course is integrative in nature, drawing upon concepts originally introduced in your previous courses on economics, statistics, marketing and accounting, and your concurrent courses in finance and marketing. As we shall see, quantitative approaches are often useful in leading us toward possible solutions. However, in many situations, it is sufficient merely to understand the critical issues and major tradeoffs involved. While many of the operational processes that we will consider in this course will appear familiar, most of you will find yourselves viewing them from a different perspective.

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As you are probably already aware, the business press has been particularly critical in the last few years of the lack of understanding of operations within the ranks of U.S. management as the global extension of more and more companies pointed out the competitive necessities of strong operations. A visible result is an increased operational focus by management and a collateral, very large growth in operational consulting practices. Consulting has changed as well from providing conceptual insights and recommendations to implementing those recommendations. These changes in turn have led to the heavy recruiting of graduating MBAs by management consulting firms. With only ten weeks in this course, it is obvious that you are not going to become an expert in operations management (and we don't intend that you do). Rather, the course is designed to introduce you to what every general manager or consultant should know about the field. Therefore, an important goal of this course is that you understand the fundamental concepts, opportunities and challenges in the area so that, as a manager or consultant, you can act wisely and to the best advantage.

CLASS FORMAT
Basically, the class instructional format will be a dialogue between the students and the instructor, tending toward the Socratic approach should the dialogue languish. It is important to note that strong class participation is founded on adequate preparation. You are expected to thoroughly review the material on every case or reading prior to its discussion in class. When a case is concerned, there is list of specific questions in the class schedule below. It is expected that you do a thorough analysis of the case based on the questions, including the process, the problems and the options. Prepare a plan of action appropriate to the circumstances. When you are prepared, the class discussion is greatly enhanced and everyone learns far more than otherwise.

GRADING
Your grade in this course will be based on individual class participation, an examination and group assignments. We shall try to assess your understanding of the tools and concepts covered; your ability to integrate and apply those concepts and your contribution to the learning experience of the class. To do this, we shall weigh these various activities in the following manner: 1. 2. 3. 4. Class Participation Two Case Write-Ups (15% each) Two Assignments (7.5% each) Final Exam 20% (individual) 30% (group) 15% (individual) 35% (individual)

1. CLASS PREPARATION/PARTICIPATION (20%)

As indicated in the course outline below, readings from the course pack are assigned for most class sessions. The assigned material should be read before class to facilitate comprehension and discussion. A case study is assigned for many sessions and a list of specific questions is given in the class schedule (also below). You should read the case thoroughly and try to answer the questions in order to fully understand the situation, the pertinent facts and the central issues. We shall discuss and analyze the readings and the case together in class. You should aim to contribute to the class discussion. To do that, of course, you must show up. Please arrange your other activities to permit you to attend class; drop me a note if you cannot come. Mostly, our discussions will be free form anyone who has something to contribute can and should.

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2. GROUP CASE WRITE-UPS (30%)

The two case write-ups are to be done in your study group and are intended to analyze various operational issues in manufacturing and service systems. These reports should answer the specific questions for the case discussion in the order given below (see the class schedule) and should be no more than 10 pages in length (including exhibits). Case analysis reports should be submitted before the class in which the case is discussed. Turn in one answer or report per study group and the deadlines are: Donner Company: Manzana Insurance: July 23 August 13 (Session 2) (Session 5)

3. INDIVIDUAL ASSIGNMENTS (15%)

There will be three individual assignments to help you check your understanding of the material covered. You can do your computations using a spreadsheet but you must write down your answers in a brief report using Microsoft Word or any other word processor. You can get partial credit for a wrong answer only if you describe the reasoning behind the calculations. The due dates will be: First Problem Set: Second Problem Set: July 30 August 6 (Session 3) (Session 4)

Case write-ups and individual assignments must be submitted electronically in one single Word or PDF file via myUCLA. There will be a drop-box for each assignment, which will then be uploaded to TurnItIn (UCLA pays for this service in order to detect exceedingly overlaps with material available in the web or submitted in previous years).

4. FINAL EXAM (35%)

The time and place of the final exam for this course will be announced later including more details about the content of the final exam. If you wish to request an accommodation due to a suspected or documented disability, please inform your instructor and contact the Office for Students with Disabilities as soon as possible at A255 Murphy Hall, (310) 825-1501, (310) 206-6083 (telephone device for the deaf). Web site: www.osd.ucla.edu

ATTENDANCE AND MAKE UP EXAM POLICY

We will adhere to the DOTM policy on absences and make up exams. Please refer to the following link: http://www.anderson.ucla.edu/documents/areas/fac/dotm/dotm_absence_policy.pdf

ACADEMIC INTEGRITY
As in all Anderson courses, the school's ethics code will be enforced (see link below). As a general rule, you are not allowed to use any material from previous years or from people that have taken a related class elsewhere. In case of any doubts, please ask the instructor first. In particular, when preparing graded individual assignments you should work alone. You are allowed to talk with each other and help each other on the general theory, but not on specific homework questions. You are welcome to discuss the assignments after submitting them. When preparing graded team assignments, your discussions should be strictly limited to the members of your team. Finally, make sure all sources are correctly cited. Refer to the Rosenfeld Library for examples adapted from the Chicago Manual of Style. Anderson's Honor Code: http://www.anderson.ucla.edu/zone/asa/docs/AndersonHonorCode.pdf

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CASE ANALYSIS: USING THE CASE ASSIGNMENT QUESTIONS

The case assignment questions are provided for guidance in reading and analyzing the particular case. It is important to note that these questions are meant to help you focus your thinking rather than to be the complete definition of a satisfactory case analysis. Your task, as always, is to identify and propose a factbased solution to the most important areas of managerial concern. Narrow these areas to as few as possible two or three is normally appropriate for your in-depth attention. Your ability to zero in on the killer concerns facing management in a situation will serve you well in case interviews.

In preparing yourself for a case discussion, the following steps are recommended: Diagnosis; Analysis of Alternatives; Choice; Plan and Persuasion. In a sense, the guiding questions really can be summarized using the following questions: (1) What are the problems? (2) How do you analyze them? (3) What decisions do you propose and why? (4) Be action oriented!
The following approach is often helpful: 1. Read the first and last paragraphs to get a sense of the context of the situation. Look for any non-standard exhibits, as these may give an indication of the type of useful information that may be needed to analyze the situation. 2. Skim the case and develop a hypothesis for the causes of the problem and its probable solution. 3. Reread the case more carefully searching for evidence to support or disprove your hypothesis. Perform only those analyses that go toward answering specific questions you have formulated in advance. 4. Always come to conclusions and make (or recommend) the required decisions. Support your recommendations with page references from the current readings whenever possible. Unsupported recommendations and conclusions are not acceptable. 5. Lay out the specific actions that need to be taken to implement the decision. Why, Who, When, How and What resources (people, time, money, facilities) are required? Where will you get them if they are not available? 6. One last thing: all implementation plans have risks. An adequate analysis identifies the key, action-specific, implementation risks and how you intend to mitigate/manage them.

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COURSE OVERVIEW
SESSION DATE TOPIC

PERFORMANCE MEASUREMENT 1A July 16 Introduction To 410: The Take-Charge and Pragmatic Manager Performance Metrics: Linking Operations Performance with Financial Performance PROCESS ANALYSIS 1B July 16 2A July 23 2B July 23 Introduction to Process Analysis Job Shop and Batch Flow Operations Part I Job Shop and Batch Flow Operations Part II Assembly Operations Project Management Managing Process Variability PROCESS COORDINATION 3A July 30 Coordination within a Company Part I Coordination within a Company Part II Coordination across the Distribution Channel STRATEGIC OPERATING ISSUES 3B July 30 4A August 6 Introduction to Operations Strategy Strategic Outsourcing Technology Management Operations as a Competitive Advantage IMPROVING OPERATIONS 4B 5A August 6 August 13 Continuous Improvement and Managing Quality Radical Transformation and Business Process Reengineering Measuring Success SUMMARY 5B August 13 Review Session [Toyota] [Manzana] [Laura Ashley/FedEx] [Cisco] [Zara] [Break.com] [Barilla] [Venice Family Clinic] [Kristen's Cookies] [The Goal] [Donner] [Shouldice]

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CLASS SCHEDULE AND ASSIGNMENTS

Important Note: You must have completed reading The Goal before the first meeting on July 16!
Background Readings (on reserve) "Note on How to Approach POM Cases." [HBSP 9-685-061] "How to Avoid Getting Lost in the Numbers." [HBSP 9-682-010]

PERFORMANCE MEASUREMENT

SATURDAY, JULY 16TH SESSION 1A Introduction to Operations / Impact on Financial Performance and Measures of Performance
Readings "Whatever Happened to the Take-Charge Manager?" Nohria and Berkley. HBR JanFeb 1994. "Return-On-Investment and the Operations Manager." [Darden UVA-OM-521]

PROCESS ANALYSIS

SESSION 1B Introduction to Process Analysis / Job Shop and Batch Flow Operations Part I
Readings Gantt Charts.

The Goal.
"How Production Processes Are Organized." pp. 72-73. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009. "Fixed-Order Quantity Models." pp. 398-401. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009. "Production Process Mapping and Littles Law." pp. 69-71. Operations and Supply Management:

Optional Readings

The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009.

SATURDAY, JULY 23TH SESSION 2A Job Shop and Batch Flow Operations Part II
Case: Donner Company [HBSP 9-689-030] DUE: Write-up for Donner Company. Consider the following questions in the given order (no more than 10 pages, including exhibits). 1. [10 points] On which dimensions does Donner compete? What kind of process have they adopted? Why? What are the consequences of the recent quality and lead-time problems?

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2. [10 points] Flowchart the physical process flow for a typical order. Discuss also the information flows required to operate such a process. 3. [10 points] If the drilling stage were the only stage in the process, which drilling technology would you use for any particular order size: the CNC drill or the manual drill? (Assume that orders cannot be split on multiple machines.) Idem for the profiling stage? How do your proposed policies compare to current practice? Explain why there is a difference, if any. 4. [10 points] Use the donner.xls Excel model to study the throughput times of various order sizes. What type of order is the most profitable? 5. [15 points] Assume 21 days per month and an 8-hour shift. Identify the bottleneck based on September's utilization of each stage of the process. Utilization can be computed as (time required)/(time available). What is the impact of the bottleneck on the plant's total throughput? Why do you think some utilization factors are greater than 100%? 6. [45 points] What specific actions should Mr. Plummer take to solve Donner's lead-time and quality problems? Think beyond the bottleneck and consider also Donner's business strategy. Note that footnote (c) in Exhibit 2 indicates that the setups for the CNC drill and CNC router can be performed offline, which means that the CNC drill can be processing one order while the setup for the next order is being performed simultaneously.

Assembly Operations
Readings "Putting the Service-Profit Chain to Work." Heskett et al. Harvard Business Review. Mar-Apr 1994.

Case: Shouldice Hospital Limited [HBSP 9-683-068] Be prepared to discuss the following questions: 1. How successful is Shouldice Hospital? How do you account for its performance? 2. What actions, if any, would you take to expand the hospital's capacity? 3. How would you implement the changes you propose? Try to anticipate the various staff reactions and problems and what steps you would take to mitigate them. Video: Shouldice Optional Readings "The Henry Ford of Heart Surgery." The Wall Street Journal. November 25, 2009.

SESSION 2B Project Management

Video: Types of Processes Readings "Case: Cell Phone Design Project." pp. 217-218. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009.

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Optional Readings "Critical Path Method." pp. 192-196. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009.

Managing Variability
Optional Readings "Queuing Psychology: Can Waiting in Line be Fun?" CNN. November 20, 2008. "A Long Line for a Shorter Wait at the Supermarket." The New York Times. June 23, 2007. "The Queuing System." pp. 107-122. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009.

PROCESS COORDINATION

SATURDAY, JULY 30TH SESSION 3A Coordination within a Company Part I

Due: First Problem Set Optional Readings "A Single-Period Inventory Model." pp. 393-396. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009. "A Long, Long Wait for a Wii." Business Week. December 6, 2007.

Coordination within a Company Part II

Optional Readings "Yield Management." pp. 372-374. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009. "Revenue Management. Hotels, Airlines, Opera Houses Hope This Tool Will Help Them Maximize Sales and Profits." San Francisco Chronicle. May 25, 1999.

Coordination across the Distribution Channel

Readings "What Is the Right Supply Chain for Your Product." Fisher. Harvard Business Review. MarApr 1997.

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Case: Barilla SpA (A) [HBSP 9-694-046] Be prepared to discuss the following questions: 1. What conflicts or barriers internal to Barilla does the JITD program create? What causes these conflicts? As Giorgio Maggiali, how would you deal with these? 2. As one of Barilla's customers, what would your response to JITD be? Why? 3. In the environment in which Barilla operated in 1990, do you believe JITD (or a similar kind of program) would be feasible? Effective? If so, which customers would you target next? How would you convince them that the JITD program was worth trying? Optional Readings "The Bullwhip Effect." pp. 226-230. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009.

MODULE ON STRATEGIC OPERATING ISSUES

SESSION 3B Introduction to Operations Strategy / Strategic Outsourcing

Case: Laura Ashley and Federal Express Strategic Alliance [HBSP 9-693-050] Be prepared to discuss the following questions: 1. Evaluate the decision to enter a strategic alliance from the perspective of both Laura Ashley and Federal Express. What are the real opportunities and risks from this approach? 2. Evaluate the structure of the relationship. Do the financial arrangements make sense? Is the loose nature of the partnership appropriate or should a more structured approach be taken? Scope out an alternative. What type of leadership was necessary to make such a deal and what leadership skills will be necessary to implement it successfully? 3. How likely is it that the partnership will succeed over the long term and what will it take for both companies to make it successful? Are there specific organizational or human resource policy reforms that would enhance Laura Ashley's performance? 4. Assume the partnership is successful. What new strategic operating capabilities will it provide for Laura Ashley? How, specifically, should they be used to expand its business? Optional Readings "What Is Operations and Supply Strategy?" pp. 25-32. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009. "Outsourcing." pp. 230-234. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009.

SATURDAY, AUGUST 6TH SESSION 4A Technology Management

Due: Second Problem Set

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Readings "The Operations Edge: Creating a Competitive Advantage through Operations." pp. 3649. Operations Strategy and Technology: Pursuing the Competitive Edge. Hayes, Pisano, Upton and Wheelwright. Wiley. 2004.

Case: Cisco Systems, Inc.: Implementing ERP [HBSP 9-699-022] At the end of the case, Pete Solvik has a number of questions. Please think about these questions and be prepared to give your answers: 1. What factors made the difference between success and failure of the Cisco ERP project? 2. Where had the ERP team been "smart"? 3. Where had the ERP team been just plain lucky? 4. Do you think that the Cisco team could do such a project again if they had to? Why? Why not? 5. How important is the ERP to the overall architecture? Do you see the ERP component as something that will be undertaken by some, most or all companies as they build their Information Age IT architectures? Optional Readings "Software as a Service. A Question of Demand." The Economist. 386(8561): 55. January 5, 2008.

Operations as a Competitive Advantage

Case: Zara [UCLA Case, to be distributed in class] Be prepared to discuss the following questions: 1. What makes Zara different from other specialty apparel retailers? 2. What are Zara's core competences? 3. What should Zara's approach be to determine its sourcing mix? 4. Where are competitive threats to Zara likely to come from? Will their strategy scale up once the network of stores grows comparable to The Gap? Should Zara continue to own most of the stores? Video: Zara Optional Readings "Zara Thrives by Breaking All the Rules." Business Week. October 9, 2008.

IMPROVING OPERATIONS

SESSION 4B Continuous Improvement and Managing Quality

Optional Readings "Quality Management and Six Sigma." pp. 132-146. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009. "Lean Supply Chain Design Principles." pp. 280-289. Operations and Supply Management: The Core. 2nd edition. Jacobs and Chase. McGraw-Hill. 2009.

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"From 0 to 60 to World Domination." The New York Times. February 18, 2007. "Motor World: Where Toyota went wrong." Fortune. February 1, 2010. "Planning the Sequel." The Economist. June 17, 2010.

SATURDAY, AUGUST 13TH SESSION 5A Radical Transformation/Business Process Reengineering (BPR)

Readings "Reengineering Work: Don't Automate, Obliterate." Hammer. Harvard Bus. Rev. JulAug 1990.

Case: Manzana InsuranceFruitvale Branch (Abridged) [HBSP 9-692-015] DUE: Case write-up on Manzana. Address the following questions in the given order and applying the concepts we have learned so far. 1. [10 points] On which dimensions does Manzana compete? Does the Fruitvale Branch have any major performance problems? 2. [15 points] Assess and discuss their current operating policies and incentive structure. In particular, determine the revenue net of commissions for each request relative to the processing time. 3. [35 points] To understand the causes of the long turnaround times, use the spreadsheet on the course website and answer the following questions: [Processing Time] Compute the utilizations (defined as time required/time available) and identify the bottleneck? If there was no waiting or wasted time, what would be the total average throughput time? [Waiting Time] How much waiting time (Wq) do you expect at each stage? How does it compare to Fruitvales actual turnaround time? How much backlog (L) do you expect for the whole system? Use an M/M/S queuing model, but briefly discuss the assumptions and explain your computations. [Wasted Time] In light of the HBR article "Reengineering Work: Don't Automate, Obliterate," can you explain the causes of Fruitvale's turnaround time problems?

4. [10 points] How did Fruitvale get into its current situation? 5. [30 points] Based on your analysis and the concepts we have learned in this course, propose a reengineering plan. Set your priorities and discuss the implementation challenges of your plan.

Measuring Success
Readings "Putting the Balanced Scorecard to Work." Kaplan and Norton. Harvard Bus. Rev. SepOct 1993.

SESSION 5B Class Wrap-Up: Review of Key Concepts

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