Thursday 28 April 2016
Service Quality Dimensions
In 1988 Parasuraman, Valarie Zeithaml and Len Berry developed SERVQUAL service quality model. They found ten elements of service quality as follows:
1. Competence is the possession of the required skills and knowledge to perform the service. For example, there may be competence in the knowledge and skill of contact personnel, knowledge and skill of operational support personnel and research capabilities of the organization.
2.Courtesy is the consideration for the customer's property and a clean and neat appearance of contact personnel, manifesting as politeness, respect, and friendliness.
3.Credibility includes factors such as trustworthiness, belief and honesty. It involves having the customer's best interests at prime position. It may be influenced by company name, company reputation and the personal characteristics of the contact personnel.
4.Security enables the customer to feel free from danger, risk or doubt including physical safety, financial security and confidentiality.
5.Access is approachability and ease of contact. For example, convenient office operation hours and locations.
6.Communication means both informing customers in a language they are able to understand and also listening to customers. A company may need to adjust its language for the varying needs of its customers. Information might include for example, explanation of the service and its cost, the relationship between services and costs and assurances as to the way any problems are effectively managed.
7.Knowing the customer means making an effort to understand the customer's individual needs, providing individualized attention, recognizing the customer when they arrive and so on. This in turn helps to delight the customers by rising above their expectations.
8.Tangibles are the physical evidence of the service, for instance, the appearance of the physical facilities, tools and equipment used to provide the service; the appearance of personnel and communication materials and the presence of other customers in the service facility.
9.Reliability is the ability to perform the promised service in a dependable and accurate manner. The service is performed correctly on the first occasion, the accounting is correct, records are up to date and schedules are kept.
10.Responsiveness is the readiness and willingness of employees to help customers by providing prompt timely services, for example, mailing a transaction slip immediately or setting up appointments quickly.
By the early 1990s, the ten elements were collapsed into five factors where the authors had refined the model that created the acronym RATER:
1. Reliability:
ability to perform the promised service dependably and accurately;
2. Assurance:
knowledge and courtesy of employees and their ability to convey trust and confidence;
3. Tangibles:
appearance of physical facilities, equipment, personnel, and communication materials;
4. Empathy:
the caring, individualized attention the firm provides its customers.
5. Responsiveness:
willingness to help customers and provide prompt service;
Dari dan Daripada
Ahhhh.... selalu kekeliruan tiba pada saat penggunaan "dari" dan "daripada" . Yang mana satu perlu digunakan ya??? Itu persoalannya. Oleh itu, berikut adalah nota ringkas untuk panduan.
"dari" dan "daripada" adalah kata sendi nama.
"dari" digunakan untuk menyatakan arah (A),tempat(T) dan masa(M)= (ATM)
contoh:
1. Ali berasal dari Johor - (tempat)
2. Dari situ menuju ke sini mengambil masa 15 minit sahaja - (arah)
3. Saya menunggu awak dari jam 10 pagi lagi - (masa)
"daripada" pula digunakan untuk menyatakan orang(O), perbandingan(P) dan asal kejadian(AK)= (APAK)
contoh:
1. Beg tangan itu diperbuat daripada kulit - (asal -usul)
2. Kamal menerima bantuan sekolah daripada Haji Karim - (orang)
3. Walaupun umurnya lebih muda daripada kakaknya, Ahmad mempunyai pemikiran yang lebih matang - (perbandingan)
Semoga kekeliruan tidak wujud lagi....
"dari" dan "daripada" adalah kata sendi nama.
"dari" digunakan untuk menyatakan arah (A),tempat(T) dan masa(M)= (ATM)
contoh:
1. Ali berasal dari Johor - (tempat)
2. Dari situ menuju ke sini mengambil masa 15 minit sahaja - (arah)
3. Saya menunggu awak dari jam 10 pagi lagi - (masa)
"daripada" pula digunakan untuk menyatakan orang(O), perbandingan(P) dan asal kejadian(AK)= (APAK)
contoh:
1. Beg tangan itu diperbuat daripada kulit - (asal -usul)
2. Kamal menerima bantuan sekolah daripada Haji Karim - (orang)
3. Walaupun umurnya lebih muda daripada kakaknya, Ahmad mempunyai pemikiran yang lebih matang - (perbandingan)
Semoga kekeliruan tidak wujud lagi....
Thursday 14 April 2016
Monday 4 April 2016
Jurnals Review
Suggestions for Writing Critical Reviews of Journal Articles
A critical review of a journal article is an evaluation of the article’s strengths, weaknesses and validity. It is used to inform readers of an article’s value through explanation, interpretation and analysis. The reviewer must present information that will allow the reader to make a value judgment about the article.The guidelines and questions listed below are suggestions that should be considered when writing a critical review of an article. Not all of the questions or guidelines will be appropriate for every article, depending upon the purpose of the review.Guidelines and questions to be considered
• Reviews should begin with a full bibliographic citation (author, title of journal article,name of journal, volume, issue, date of publication, pages).
• Is there any biographical information provided about the author? What are the author’s qualifications and authority?
• Who is the intended audience?
• What is the objective or purpose of the research? Is it clearly stated?
• Does the author try to build on past research?
• Does the author define any terms? Are the definitions specific, useful, circular?
• What is the effect of the author’s language? Are the vocabulary and sentence structure appropriate? Does the author maintain neutrality in his/her choice of words and terms or are they emotionally charged or biased?
• Are references given (footnotes or bibliography)? What is the size of the reference section? Are the references recent, important? How are the references used: for support, rebuttal, etc.?
• If the article is a report of a research study, does the author clearly state what was expected to happen? What was the sample for the study and how was it selected? Does the author discuss factors or variables that may have affected the research? Are the methods for measuring results clearly explained and appropriate? Did the expected result occur?
• Are illustrations, tables or graphs used? Do they complement the text? Are they the best method to present data, or are they unnecessary?
• What are the author’s major findings and conclusions? Have these been supported by the author’s analyses, arguments, findings or evidence? Has the author
overlooked anything?
• Is the article referred to by anyone else? (Check the Social Sciences Citation Index for this information.) How is the article used by other authors: background, support,rebuttal, etc.?
• Does the author accomplish the objective?
• Does the author give suggestions for further research or discussion?
Style
Use your own words. If you use those of the author, show the page number in parentheses.
Use a footnote if the quotation is from another source. Consult a style manual
(http://www.umanitoba.ca/libraries/units/dafoe/citing.html) for more precise details on style.
Do not try to write your review by answering all the above-mentioned questions one by one.
Some will not be relevant to your particular book.
At the top of the review, write the title of the book, name of the author, place of publication,
name of publisher, date of publication, and number of pages in the book.
A critical review of a journal article is an evaluation of the article’s strengths, weaknesses and validity. It is used to inform readers of an article’s value through explanation, interpretation and analysis. The reviewer must present information that will allow the reader to make a value judgment about the article.The guidelines and questions listed below are suggestions that should be considered when writing a critical review of an article. Not all of the questions or guidelines will be appropriate for every article, depending upon the purpose of the review.Guidelines and questions to be considered
• Reviews should begin with a full bibliographic citation (author, title of journal article,name of journal, volume, issue, date of publication, pages).
• Is there any biographical information provided about the author? What are the author’s qualifications and authority?
• Who is the intended audience?
• What is the objective or purpose of the research? Is it clearly stated?
• Does the author try to build on past research?
• Does the author define any terms? Are the definitions specific, useful, circular?
• What is the effect of the author’s language? Are the vocabulary and sentence structure appropriate? Does the author maintain neutrality in his/her choice of words and terms or are they emotionally charged or biased?
• Are references given (footnotes or bibliography)? What is the size of the reference section? Are the references recent, important? How are the references used: for support, rebuttal, etc.?
• If the article is a report of a research study, does the author clearly state what was expected to happen? What was the sample for the study and how was it selected? Does the author discuss factors or variables that may have affected the research? Are the methods for measuring results clearly explained and appropriate? Did the expected result occur?
• Are illustrations, tables or graphs used? Do they complement the text? Are they the best method to present data, or are they unnecessary?
• What are the author’s major findings and conclusions? Have these been supported by the author’s analyses, arguments, findings or evidence? Has the author
overlooked anything?
• Is the article referred to by anyone else? (Check the Social Sciences Citation Index for this information.) How is the article used by other authors: background, support,rebuttal, etc.?
• Does the author accomplish the objective?
• Does the author give suggestions for further research or discussion?
Style
Use your own words. If you use those of the author, show the page number in parentheses.
Use a footnote if the quotation is from another source. Consult a style manual
(http://www.umanitoba.ca/libraries/units/dafoe/citing.html) for more precise details on style.
Do not try to write your review by answering all the above-mentioned questions one by one.
Some will not be relevant to your particular book.
At the top of the review, write the title of the book, name of the author, place of publication,
name of publisher, date of publication, and number of pages in the book.
Sunday 3 April 2016
Creating Budget
Creating a budget may not sound like the most exciting thing in the world to do, but it is vital in keeping your financial house in order. Before you begin to create your budget it is important to realize that in order to be successful you have to provide as much detailed information as possible. Ultimately, the end result will be able to show where your money is coming from, how much is there and where it is all going.
The budget has two functions. First, it estimates, as realistically as possible, the cost of completing the objectives identified in the proposal. The sponsor will use the budget details to determine whether the proposal is economically feasible and realistic. Secondly, the budget provides a means to monitor the project's financial activities over the life of the project. In this way, it's possible to determine how closely the actual progress toward achieving the project objectives is being made relative to the proposed budget.
Here's How:
1. Gather every financial statement you can. This includes bank statements, investment accounts, recent utility bills and any information regarding a source of income or expense. The key for this process is to create a monthly average so the more information you can dig up the better.
2. Record all of your sources of income. If you are self-employed or have any outside sources of income be sure to record these as well. If your income is in the form of a regular paycheck where taxes are automatically deducted then using the net income, or take home pay, amount is fine. Record this total income as a monthly amount.
3. Create a list of monthly expenses. Write down a list of all the expected expenses you plan on incurring over the course of a month. This includes a mortgage payment, car payments, auto insurance, groceries, utilities, entertainment, dry cleaning, auto insurance, retirement or college savings and essentially everything you spend money on.
4. Break expenses into two categories: fixed and variable. Fixed expenses are those that stay relatively the same each month and are required parts of your way of living. They included expenses such as your mortgage or rent, car payments, cable and/or internet service, trash pickup, credit card payments and so on. These expenses for the most part are essential yet not likely to change in the budget.
Variable expenses are the type that will change from month to month and include items such as groceries, gasoline, entertainment, eating out and gifts to name a few. This category will be important when making adjustments.
5. Total your monthly income and monthly expenses. If your end result shows more income than expenses you are off to a good start. This means you can prioritize this excess to areas of your budget such as retirement savings or paying more on credit cards to eliminate that debt faster. If you are showing a higher expense column than income it means some changes will have to be made.
6. Make adjustments to expenses. If you have accurately identified and listed all of your expenses the ultimate goal would be to have your income and expense columns to be equal. This means all of your income is accounted for and budgeted for a specific expense.
If you are in a situation where expenses are higher than income you should look at your variable expenses to find areas to cut. Since these expenses are typically essential it should be easy to shave a few dollars in a few areas to bring you closer to your income.
7. Review your budget monthly. It is important to review your budget on a regular basis to make sure you are staying on track. After the first month take a minute to sit down and compare the actual expenses versus what you had created in the budget. This will show you where you did well and where you may need to improve.
PERT MUSTANG
I would like to thank Prof Dr Murali... I like this assigmnet so much.. many friends referred to me to complete it after knowing that i had finished it ealier..
READ Analysis, Attachment and Cover
FITNESS PLUS
QUESTIONS AND ANSWERS:
Q.1: What method would you use to measure the capacity of fitness plus? Has fitness plus reached its capacity?
On the topic of capacity Krawjewski,LarryP.Ritzman&Manoj K.
Malhptra et al.(2010,p.222) states:
“The maximum rate of output of a process or a system.”
In general, there are two methods to measure the capacity of any system or process i.e. in output measures or input measures.
On the topic of output measure of capacity krajewski et al.(2010, p.241) states:
“Output measures of capacity are best utilized when applied to individual processes within the firm.”
For instance, in case of refrigerators manufacturing plant capacity would be measured in terms of the number of refrigerators produced per day. It depends upon the nature of processes involve.
On the topic of input measures of capacity Krajewski et al.(2010, p.241) states:
“Input Measures are generally used for low volume, flexible processes, such as those associated with a custom furniture market.”
For instance, the furniture maker might measure capacity in terms of input measures such as number of workstations or number of workers. If the furniture maker wants to keep up with demand for furniture into labor hours and number of employees required to fulfill those hours. So every process may have different way to calculate its capacity measure.
On the topic of utilization Krajewski et al. (2010, p.25) states:
“The degree to which equipment, space, or the workforce is currently being used, and is measured as the ratio of average output rate to maximum capacity (expressed as a percentage).”
Utilization= average output rate / maximum capacity x 100 %
To measure the capacity of Fitness Plus we use the method of input measures as we can calculate the capacity of equipments, space or the workforce is currently being used. Here we refer to maximum capacity as the greatest level of output that a process can reasonably sustain for a longer period.
No, Fitness plus has not reached to its maximum capacity as due to growth in membership and large shifts in demand because with the help of calculations as given below capacity cushion exists. Members of Fitness Plus are using more than one area during each visit which is the main problem of crowding and unavailability of equipments, by the survey from the data collected by the members of Fitness Plus shows that: 30 percent of the members do aerobics, 40 percent use the cardiovascular equipments, 25 percent use the Nautilus machines, 20 percent use the free weights, 15 percent use the racquet ball courts and 10 percent use the tennis courts. We know that approximately 80 members per hour visit the club during three peak hours i.e. 4:00 p.m. to 7.00 p.m.
We can calculate the total members visit the Fitness plus during peak hours and capacity cushions by the data collected from the survey of members as following:
Total Peak Members = Peak Members x Peak Hours
Total Peak Members = 80 x 3
Total Peak Members = 240
Aerobic Room:
There are 35 members capacity in each class. As the members are complaining about the over crowding particularly n this area so we will calculate the number of members in peak time in one hour.
According to the data collected by the survey from members:
80 members enter in the club at peak time. Usually members remain in the club for 1 hour. 30% of the members use the aerobics room so 24 members usually use the aerobics room in the peak time.
Utilization of aerobics room = 24 x 100%
= 35
= 68%
This shows that the aerobics room has not reached its capacity. The cushion of the aerobics room is calculated as:
Capacity cushion of aerobics room = 100% - 68%
= 32%
Workout Room:
As there are 24 pieces of Nautilus equipment in the room so that it can be assumed that one equipment can be used by a 2 members in one hour. So the capacity of the nautilus equipment has the capacity of 48 members at one instant.
According to the data collected by the owner
80 members enter in the club at peak time. Usually member remains in the club for 1 hour. 25% of the members use the nautilus equipment in workout room so 20 members usually use the aerobics room in the peak time.
Utilization of aerobics room = 20 x 100%
=48
= 41.66%
This shows that the workout room has some capacity. The cushion of the workout room is calculated as:
Capacity cushion of workout room = 100% - 41.66%
= 58.34%
Large Workout Room:
As there are 29 pieces of Nautilus equipment in the room so that it can be assumed that one equipment can be used by a 2 members in one hour. So the capacity of the nautilus equipment has the capacity of 58 members at one instant.
According to the data collected by the owner80 members enter in the club at peak time. Usually member remains in the club for 1 hour. 40% of the members use the cardiovascular equipment in large workout room so 32 members usually use the aerobics room in the peak time.
Utilization of aerobics room = 32 x 100%
58
= 55.17%
This shows that the large workout room has 55.17% capacity. The cushion of the workout room is calculated as:
Capacity cushion of workout room = 100% -55.17%
= 44.83%
Free Weight Room:
There is not valid information provided about the free weight room. So we cannot calculate the capacity of the free weights room. But we can calculate the member flow in the peak time in the free weight room area.
According to the data collected by the owner, 80 members enter in the club at peak time. Usually member remains in the club for 1 hour. 20% of the members exercise in the free weight room. So 16 members usually utilize the free weight room in the peak time.
If the number of the equipments is known then the capacity of this area can be calculated. Moreover this area is not of so importance in capacity management because the members are not complaining about this area of the fitness plus.
Racquetball Courts:
There are 8 racquetball courts in the recreation centre of the fitness plus. Assuming if 2 members use one racquetball court at a time then the capacity of the courts will be 16 members in one hour.
According to the data collected by the survey:
80 members enter in the club at peak time. Usually members remain in the club for 1 hour. 15% of the members use the aerobics room so 12 members usually use the aerobics room in the peak time.
Utilization of aerobics room = 12 x 100%
=16
= 75%
This shows that the racquetball court capacity is 75%. The cushion of racquetball court is calculated as:
Capacity cushion of aerobics room = 100% - 75%
= 25%
Tennis courts:
There are 6 tennis courts in the recreation area of the fitness plus. If two members use 1 tennis court in a hour the capacity of the tennis court is 12.
According to the data collected by the owner:
80 members enter in the club at peak time. Usually members remain in the club for 1 hour. 10% of the members use the aerobics room so 8 members usually use the aerobics room in the peak time.
Utilization of aerobics room = 8 x 100%
=12
= 66.66%
This shows that the tennis court utilization is 66.66%. The cushion of the tennis court is calculated as:
Capacity cushion of aerobics room = 100% - 66.66%
= 33.33%
Outdoor Pool:
The member using the large pool area is not given. Moreover this area is not complaint by the members. So the capacity is not an issue for this area.
Whirlpool tubes:
This area is present in the locker rooms of the fitness plus. The data is unavailable and also customer is not concerned about this area so this area can be left.
As above discussed the capacities have been measured by the utilization tool. Neither of the areas has reached their capacities. Every facility has a suitable amount of cushion present in it.
Q.2: Which capacity strategy would be appropriate for fitness plus? Justify your answer.
There are two types of capacity strategies:
Long term strategy
Short term strategy
For present situation Short term strategy would be appropriate for the Fitness plus because they want to expand their business but not have much space and time and neither have much financial resources and long term strategy wants more time and financial resources. We can implement short term strategy by doing market research, taking ideas from employees, by making time table and scheduling and by providing improved equipments.
Administration of Fitness plus should make higher contact with the members of the club and make sure to provide best services to their customers. They have to collect the feedback from their members that what thing is missing in their services it will made high contact with the customers. By taking in mind the strategies of the competitors Fitness Plus can provide better services.
On the topic of constraint Krajewski et al.( 2010,p.284) states:
“Any factor that limits the performance of a system and restrict its output.”
Constraints can occur up or down the supply chain with the firm suppliers or by customers. Bottleneck is a special type of a constraint that relates to the capacity shortage of a process.
On the topic of bottleneck Krajewski et al.(2010,p.284)states:
“A capacity constraint resource (CCR) whose available capacity limits the organization’s ability to meet the product volume, product mix, or demand fluctuation required by the marketplace.”
It is the duty of the employees of the Fitness Plus to understand how to identify and manage bottlenecks in all types of processes and how to provide firms best services by the information determine from the capacity and performance measures.
Fitness Plus has waiting problem for its customers which leads to bottleneck. Members are waiting for their number to get service which creates chaos among them. Members who come first should be served first. The employees should need to increase their efficiency level. This procedure may increase the space, equipment, and peak capacity of some areas, and can reduce or even eliminate them. The owners need to make benchmark so that they can know in which way they are going and can compete with their competitors.
On the topic of benchmarking Krajewski et al. (2010, p.159) states:
“A systematic procedure that measures a firm’s processes, services, and products against those of industry leaders.”
With the help of the benchmarking Fitness Plus come to know about its strength and weaknesses and where they lie in the market.
For future perspectives, they need to work on long term strategy as the growths of their members are increasing. Long term capacity plans deal with investments in new facilities and equipments at the organizational level because they are not easily reversed. These plans cover at least two years into the future but construction lead times can sometimes take longer and result in longer planning time period. In future they have to buy new building to expand the area and determine the economies of scale.
On the topic of economies of scale Krajewski et al. (2010, p.241) states:
“A concept that states that the average unit cost of a service or good can be reduced by its output rate.”
There are two strategies for expanding capacity:
expansionist strategy
wait-and-see strategy
We can adopt expansionist strategy as it stays ahead of demand and fear of insufficient capacity will finish.
On the topic of expansionist strategy Krajewski et al.(2010,p.243) states:
“The expansionist strategy which involves large, infrequent jumps in capacity.”
They have to expand their business in such a way that the members will not effect from it and reduce their construction cost and spread their fixed cost.
Q.3: How would you link the capacity decision being made by Fitness plus to other types of operating decisions?
For the expansion of Fitness Plus two capacity decisions takes place short term strategy and long term strategy. As the members of Fitness plus are growing the members are going to complaint about overcrowding and unavailability of equipments so owners have taken capacity decisions to expand their business. Capacity decisions are closely interrelated with the processes throughout the organization. When owners of Fitness Plus make decisions about the new facilities and about flexibility of their resources they must consider its impact on capacity cushions.
On the topic of capacity cushion Krajewski et al. (2010, p.243) states:
“The amount of reserve capacity a process uses to handle sudden increases in demand or temporary losses of production capacity; it measures the amount by which the average utilization (in terms of total capacity) falls below 100 percent.”
The owners have to consider about the other operating decisions that are linked with the process. First we discuss about the short term planning, by using short term strategy we come to find a solution that was scheduling and process of first come first served, and effective management. Administration of Fitness plus have to keep in mind that it will not affect the other operating activities otherwise it will be in more trouble than before. They have to keep in mind about the competitive priorities like if they want to expand the club they have to make sure that it will not effect the time scheduling of the members and they have to keep the quality maintain.
On the topic of quality Krajewski et al. (2010, p.198) states:
“A term used by customers to describe their general satisfaction with a service or product.”
For instance, the company has to carry the House of Quality even they wanted to expand their club. The house of quality is a kind of conceptual map that provides the means for interfunctional planning and communications. By economies of scale, we can reduce our cost but keep in mind about the quality assurance as it plays vital role.
The whole process should be design in a way that it will not effect the other operating decisions.
As, for long term strategy we have to plan in such a way that it will not effect on competitive priorities, quality and process design. As we use expansionist strategy which involves large and infrequent jumps and which removes insufficient capacity members are using aerobic room, nautilus and cardiovascular more than others but to keep in mind the expansion in aerobic, nautilus and cardio vascular room we have also keep in mind about the capacity cushion in racquetball, tennis, yoga rooms and outdoor pool that as capacity of members are increasing we also keep in mind the capacity of these rooms which not cause any problem in future regarding capacity. We are also concerned with the relocation of new building which can also cause some problems and effect other operating decisions. We have to plan our process design in such away that the capacity would expand in such manner that addition to aerobic room, nautilus room and cardiovascular room the capacity of other rooms also increase so that in future if
membership grows in the same way then there should be no problem regarding capacity expansion.
CONCLUSION:
Fitness Plus needs to work on short term strategy as they can overcome the present situation and they can face their competitors in market by without expanding their area and use of their financial resources and can maintain their memberships in January by using scheduling method and with effective employees. Owners must take feedback from their customer once in a month so that they can work on their weaknesses and come to know about their strengths and opportunities which they can use against their competitors and serve their members in utmost manner. They need to provide improved equipments so that the customers who are making complaints can be satisfied. By this they can create competitive edge from their competitors. With the help of continued market research they can control their capacity requirements. By having more profits and as they stable financially they can expand their area in future they can adopt long term decisions by constructing a new building this will increase their capacity and can build their more name in market. From this more customers can attract towards them and the customers who are dissatisfied with them can also return back and satisfied with them. This will lead Fitness Plus into the light of success and they can achieve their goals.
Q.1: What method would you use to measure the capacity of fitness plus? Has fitness plus reached its capacity?
On the topic of capacity Krawjewski,LarryP.Ritzman&Manoj K.
Malhptra et al.(2010,p.222) states:
“The maximum rate of output of a process or a system.”
In general, there are two methods to measure the capacity of any system or process i.e. in output measures or input measures.
On the topic of output measure of capacity krajewski et al.(2010, p.241) states:
“Output measures of capacity are best utilized when applied to individual processes within the firm.”
For instance, in case of refrigerators manufacturing plant capacity would be measured in terms of the number of refrigerators produced per day. It depends upon the nature of processes involve.
On the topic of input measures of capacity Krajewski et al.(2010, p.241) states:
“Input Measures are generally used for low volume, flexible processes, such as those associated with a custom furniture market.”
For instance, the furniture maker might measure capacity in terms of input measures such as number of workstations or number of workers. If the furniture maker wants to keep up with demand for furniture into labor hours and number of employees required to fulfill those hours. So every process may have different way to calculate its capacity measure.
On the topic of utilization Krajewski et al. (2010, p.25) states:
“The degree to which equipment, space, or the workforce is currently being used, and is measured as the ratio of average output rate to maximum capacity (expressed as a percentage).”
Utilization= average output rate / maximum capacity x 100 %
To measure the capacity of Fitness Plus we use the method of input measures as we can calculate the capacity of equipments, space or the workforce is currently being used. Here we refer to maximum capacity as the greatest level of output that a process can reasonably sustain for a longer period.
No, Fitness plus has not reached to its maximum capacity as due to growth in membership and large shifts in demand because with the help of calculations as given below capacity cushion exists. Members of Fitness Plus are using more than one area during each visit which is the main problem of crowding and unavailability of equipments, by the survey from the data collected by the members of Fitness Plus shows that: 30 percent of the members do aerobics, 40 percent use the cardiovascular equipments, 25 percent use the Nautilus machines, 20 percent use the free weights, 15 percent use the racquet ball courts and 10 percent use the tennis courts. We know that approximately 80 members per hour visit the club during three peak hours i.e. 4:00 p.m. to 7.00 p.m.
We can calculate the total members visit the Fitness plus during peak hours and capacity cushions by the data collected from the survey of members as following:
Total Peak Members = Peak Members x Peak Hours
Total Peak Members = 80 x 3
Total Peak Members = 240
Aerobic Room:
There are 35 members capacity in each class. As the members are complaining about the over crowding particularly n this area so we will calculate the number of members in peak time in one hour.
According to the data collected by the survey from members:
80 members enter in the club at peak time. Usually members remain in the club for 1 hour. 30% of the members use the aerobics room so 24 members usually use the aerobics room in the peak time.
Utilization of aerobics room = 24 x 100%
= 35
= 68%
This shows that the aerobics room has not reached its capacity. The cushion of the aerobics room is calculated as:
Capacity cushion of aerobics room = 100% - 68%
= 32%
Workout Room:
As there are 24 pieces of Nautilus equipment in the room so that it can be assumed that one equipment can be used by a 2 members in one hour. So the capacity of the nautilus equipment has the capacity of 48 members at one instant.
According to the data collected by the owner
80 members enter in the club at peak time. Usually member remains in the club for 1 hour. 25% of the members use the nautilus equipment in workout room so 20 members usually use the aerobics room in the peak time.
Utilization of aerobics room = 20 x 100%
=48
= 41.66%
This shows that the workout room has some capacity. The cushion of the workout room is calculated as:
Capacity cushion of workout room = 100% - 41.66%
= 58.34%
Large Workout Room:
As there are 29 pieces of Nautilus equipment in the room so that it can be assumed that one equipment can be used by a 2 members in one hour. So the capacity of the nautilus equipment has the capacity of 58 members at one instant.
According to the data collected by the owner80 members enter in the club at peak time. Usually member remains in the club for 1 hour. 40% of the members use the cardiovascular equipment in large workout room so 32 members usually use the aerobics room in the peak time.
Utilization of aerobics room = 32 x 100%
58
= 55.17%
This shows that the large workout room has 55.17% capacity. The cushion of the workout room is calculated as:
Capacity cushion of workout room = 100% -55.17%
= 44.83%
Free Weight Room:
There is not valid information provided about the free weight room. So we cannot calculate the capacity of the free weights room. But we can calculate the member flow in the peak time in the free weight room area.
According to the data collected by the owner, 80 members enter in the club at peak time. Usually member remains in the club for 1 hour. 20% of the members exercise in the free weight room. So 16 members usually utilize the free weight room in the peak time.
If the number of the equipments is known then the capacity of this area can be calculated. Moreover this area is not of so importance in capacity management because the members are not complaining about this area of the fitness plus.
Racquetball Courts:
There are 8 racquetball courts in the recreation centre of the fitness plus. Assuming if 2 members use one racquetball court at a time then the capacity of the courts will be 16 members in one hour.
According to the data collected by the survey:
80 members enter in the club at peak time. Usually members remain in the club for 1 hour. 15% of the members use the aerobics room so 12 members usually use the aerobics room in the peak time.
Utilization of aerobics room = 12 x 100%
=16
= 75%
This shows that the racquetball court capacity is 75%. The cushion of racquetball court is calculated as:
Capacity cushion of aerobics room = 100% - 75%
= 25%
Tennis courts:
There are 6 tennis courts in the recreation area of the fitness plus. If two members use 1 tennis court in a hour the capacity of the tennis court is 12.
According to the data collected by the owner:
80 members enter in the club at peak time. Usually members remain in the club for 1 hour. 10% of the members use the aerobics room so 8 members usually use the aerobics room in the peak time.
Utilization of aerobics room = 8 x 100%
=12
= 66.66%
This shows that the tennis court utilization is 66.66%. The cushion of the tennis court is calculated as:
Capacity cushion of aerobics room = 100% - 66.66%
= 33.33%
Outdoor Pool:
The member using the large pool area is not given. Moreover this area is not complaint by the members. So the capacity is not an issue for this area.
Whirlpool tubes:
This area is present in the locker rooms of the fitness plus. The data is unavailable and also customer is not concerned about this area so this area can be left.
As above discussed the capacities have been measured by the utilization tool. Neither of the areas has reached their capacities. Every facility has a suitable amount of cushion present in it.
Q.2: Which capacity strategy would be appropriate for fitness plus? Justify your answer.
There are two types of capacity strategies:
Long term strategy
Short term strategy
For present situation Short term strategy would be appropriate for the Fitness plus because they want to expand their business but not have much space and time and neither have much financial resources and long term strategy wants more time and financial resources. We can implement short term strategy by doing market research, taking ideas from employees, by making time table and scheduling and by providing improved equipments.
Administration of Fitness plus should make higher contact with the members of the club and make sure to provide best services to their customers. They have to collect the feedback from their members that what thing is missing in their services it will made high contact with the customers. By taking in mind the strategies of the competitors Fitness Plus can provide better services.
On the topic of constraint Krajewski et al.( 2010,p.284) states:
“Any factor that limits the performance of a system and restrict its output.”
Constraints can occur up or down the supply chain with the firm suppliers or by customers. Bottleneck is a special type of a constraint that relates to the capacity shortage of a process.
On the topic of bottleneck Krajewski et al.(2010,p.284)states:
“A capacity constraint resource (CCR) whose available capacity limits the organization’s ability to meet the product volume, product mix, or demand fluctuation required by the marketplace.”
It is the duty of the employees of the Fitness Plus to understand how to identify and manage bottlenecks in all types of processes and how to provide firms best services by the information determine from the capacity and performance measures.
Fitness Plus has waiting problem for its customers which leads to bottleneck. Members are waiting for their number to get service which creates chaos among them. Members who come first should be served first. The employees should need to increase their efficiency level. This procedure may increase the space, equipment, and peak capacity of some areas, and can reduce or even eliminate them. The owners need to make benchmark so that they can know in which way they are going and can compete with their competitors.
On the topic of benchmarking Krajewski et al. (2010, p.159) states:
“A systematic procedure that measures a firm’s processes, services, and products against those of industry leaders.”
With the help of the benchmarking Fitness Plus come to know about its strength and weaknesses and where they lie in the market.
For future perspectives, they need to work on long term strategy as the growths of their members are increasing. Long term capacity plans deal with investments in new facilities and equipments at the organizational level because they are not easily reversed. These plans cover at least two years into the future but construction lead times can sometimes take longer and result in longer planning time period. In future they have to buy new building to expand the area and determine the economies of scale.
On the topic of economies of scale Krajewski et al. (2010, p.241) states:
“A concept that states that the average unit cost of a service or good can be reduced by its output rate.”
There are two strategies for expanding capacity:
expansionist strategy
wait-and-see strategy
We can adopt expansionist strategy as it stays ahead of demand and fear of insufficient capacity will finish.
On the topic of expansionist strategy Krajewski et al.(2010,p.243) states:
“The expansionist strategy which involves large, infrequent jumps in capacity.”
They have to expand their business in such a way that the members will not effect from it and reduce their construction cost and spread their fixed cost.
Q.3: How would you link the capacity decision being made by Fitness plus to other types of operating decisions?
For the expansion of Fitness Plus two capacity decisions takes place short term strategy and long term strategy. As the members of Fitness plus are growing the members are going to complaint about overcrowding and unavailability of equipments so owners have taken capacity decisions to expand their business. Capacity decisions are closely interrelated with the processes throughout the organization. When owners of Fitness Plus make decisions about the new facilities and about flexibility of their resources they must consider its impact on capacity cushions.
On the topic of capacity cushion Krajewski et al. (2010, p.243) states:
“The amount of reserve capacity a process uses to handle sudden increases in demand or temporary losses of production capacity; it measures the amount by which the average utilization (in terms of total capacity) falls below 100 percent.”
The owners have to consider about the other operating decisions that are linked with the process. First we discuss about the short term planning, by using short term strategy we come to find a solution that was scheduling and process of first come first served, and effective management. Administration of Fitness plus have to keep in mind that it will not affect the other operating activities otherwise it will be in more trouble than before. They have to keep in mind about the competitive priorities like if they want to expand the club they have to make sure that it will not effect the time scheduling of the members and they have to keep the quality maintain.
On the topic of quality Krajewski et al. (2010, p.198) states:
“A term used by customers to describe their general satisfaction with a service or product.”
For instance, the company has to carry the House of Quality even they wanted to expand their club. The house of quality is a kind of conceptual map that provides the means for interfunctional planning and communications. By economies of scale, we can reduce our cost but keep in mind about the quality assurance as it plays vital role.
The whole process should be design in a way that it will not effect the other operating decisions.
As, for long term strategy we have to plan in such a way that it will not effect on competitive priorities, quality and process design. As we use expansionist strategy which involves large and infrequent jumps and which removes insufficient capacity members are using aerobic room, nautilus and cardiovascular more than others but to keep in mind the expansion in aerobic, nautilus and cardio vascular room we have also keep in mind about the capacity cushion in racquetball, tennis, yoga rooms and outdoor pool that as capacity of members are increasing we also keep in mind the capacity of these rooms which not cause any problem in future regarding capacity. We are also concerned with the relocation of new building which can also cause some problems and effect other operating decisions. We have to plan our process design in such away that the capacity would expand in such manner that addition to aerobic room, nautilus room and cardiovascular room the capacity of other rooms also increase so that in future if
membership grows in the same way then there should be no problem regarding capacity expansion.
CONCLUSION:
Fitness Plus needs to work on short term strategy as they can overcome the present situation and they can face their competitors in market by without expanding their area and use of their financial resources and can maintain their memberships in January by using scheduling method and with effective employees. Owners must take feedback from their customer once in a month so that they can work on their weaknesses and come to know about their strengths and opportunities which they can use against their competitors and serve their members in utmost manner. They need to provide improved equipments so that the customers who are making complaints can be satisfied. By this they can create competitive edge from their competitors. With the help of continued market research they can control their capacity requirements. By having more profits and as they stable financially they can expand their area in future they can adopt long term decisions by constructing a new building this will increase their capacity and can build their more name in market. From this more customers can attract towards them and the customers who are dissatisfied with them can also return back and satisfied with them. This will lead Fitness Plus into the light of success and they can achieve their goals.
FORD VS DELL
FORD VS DELL
Part 1: Executive Summary
After carefully analyzing Ford’s existing supply chain I immediately became aware of its highly complex nature. This high level of complexity combined with other internal and external factors have pushed Ford to search for solutions in order to overcome the costly supply chain challenges that they are facing and may continue to face in the future. Ford’s major difficulty in their present system is: the inefficient control of their large data base and complex network of suppliers, the existence of independent distributors and their inability to communicate and serve their customers directly.
Realizing an urgent need to modify their supply chain in order to make it more cost effective and more profitable, and after careful analysis of the whole situation, I have recommended the partial implementation and execution of the virtual integration direct business model that has been used by Dell. Through this model, Ford will use the emerging information technologies and internet as well as new ideas from high tech industries in order to interact and transact with their suppliers and end users. Furthermore, Ford can boost its sales by providing better customer service and by having faster communication between suppliers, manufacturers, and customers in the value chain.
This proposed system will have to run concurrently with the existing supply chain so that Ford will cover both market segments at the same time. Since Dell and Ford are two different types of industries, one is in computer manufacturing and the other is in auto industry, it does not seem right for Ford to implement exactly the same "virtual integration model" as Dell. In fact, if Ford implements the full direct business model alone and abolished its existing supply chain then Ford will certainly run into a high risk of losing their business to competitors due to the fact that customers want to test and feel the car before they buy it for a large amount of money. On the other hand, when customers buy computers on line they don’t have to worry about touching and testing the computer, all they require is a better price than the retail shops and the product’s specs are according to their needs.
Ford should set up a special department in order to handle this new business process. Investment in new high tech equipments is required as well as training should be provided before the new project’s kick off date. Suppliers’ computers should be linked to Ford’s master computer network and customers should be made aware of this new shopping experience for buying an automobile.
To measure the performance of this model, Ford should schedule periodical review and evaluation meetings. Recommendations for improvements should be noted along the way in order to be evaluated. The improvement of customer service and shareholder value should be the main aim of the whole project. At this time it’s hard to anticipate its success or failure, but by investing time and effort into it I will be confident of its success if not in the short term it will definitely in the long run.
Part 2: ISSUES
Part 2.1: Fundamental Issue
The fundamental issue for Ford is the management and control of their large data base of their business partners, particularly suppliers and sub-suppliers. Unlike Dell which has only about 50suppliers, Ford has several thousand suppliers and operates in a more complex network of business relationships. To produce a single product, Dell needs less than hundred parts where as Ford needs several thousands. In addition to such large data base of suppliers, Ford also has a large number of dealership networks who are widely spread in large geographical areas around the world. Managing both suppliers and customers in a single efficient supply chain had always been a challenge for Ford who is constantly looking for new ways to better control and manage their supply chain operations in a more productive and cost effective way.
Part 3: Sub-Issues
1. Lack of up to date IT infrastructure:
The inability of Ford’s first and lower level tier suppliers to keep up to date with IT technology that is need by Ford to stay up to speed in managing their production operations as intended is a major bottleneck within the supply chain. The lack of proper IT technology could result in miscommunication and lack of coordination between the supply partners and the outcome could be a higher order lead times, higher cost and operational hassle.
2. Lack of direct control of end users:
Due to the use of independent dealership networks to sell their products, Ford lacked control on their product end users. Such lack of control combined with dealer markups had negatively impacted their ability to directly control their customer service experience.
Part 4: ENVIROMENTAL AND ROOT CAUSE ANALYSIS
Part 4.1 Quantitative and qualitative analysis
With over 370,000 employees worldwide and revenue of more than $144 billions, Ford Motor Company has been classified as the world’s second largest industrial corporation. Ford was established by a visionary Henry Ford in 1903 and it has been in business ever since. Ford’s core business is the production and distribution of cars and trucks. In addition to that, Ford earned substantial revenues and profits from its financial subsidiaries that operated mainly in North America with limited operations in Europe and everywhere else. In its 1997 financial statement, Ford reported close to $ 7 billion in net income and a 5 year average revenue growth rate of 6%.These positive financial statement figures were an indication of Ford’s strong market and financial positions. Its main competition till 1970’s was with General Motors and Chrysler. However with the entry of Japanese companies like Honda, Toyota and Nissan the firm faced stiffer competition with the auto market being over-capacitated. In order to take advantage of their global presence and deal with the increasing global competition, Ford along with General Motors and Chrysler saw an urgent need to consolidate their industry and started merging with other automakers around the globe. Such swift action had enabled these giant firms to achieve better quality products at a reduced cycle time and lower costs due to the economies of scale.
After merging with Daimler-Benz, Ford’s data base of suppliers has increased substantially in both home and abroad. Having this huge number of suppliers has made their supply chain more complex, expensive to run and difficult to manage. In order to deal with the supply chain issues and better manage their suppliers and improve their production processes and ultimately lowering their cost, Ford in 1995 initiated the Ford 2000 plan which aimed at restructuring many of their key processes like Order to Delivery (OTD) and Ford Production System (FPS). They wanted to reduce the OTD from 60 or more to 15 or less days. FPS was created to convert the supply chain from a push type to a pull type. Ford aimed at reducing the number of suppliers which had grown to several thousands of different suppliers over the years as the company grew. Rather than focusing on selecting suppliers based on costs they wanted to develop close long-term relations with the Tier 1 suppliers who in turn managed and handled Tier 2 and Tier 3suppliers. The aim was to create a more cost effective supply chain. Ford provided its suppliers with its expertise and techniques to help them better manage their operations. Another important initiative taken by ford was the Ford Retail Network (FRN) to reduce competition among its dealerships in the same locality by having only one unified dealer who provides the best possible level of customer experience. The director of supply chain system, Takai has to take an informed and well thought decision if they should implement the Dell’s integrated supply chain or not.
Part 5: ALTERNATIVES AND OPTIONS
Part 5.1: Alternative 1
Design a mixture of online and offline operations and form procedures to enable customization and ordering by customers over the internet but maintain physical dealerships as well.
Advantages:
a)Customization to customers, start a supply chain vertical integration business model.
b)Open new market segment and attract clients who like on line shopping.
c)Reduction in overhead and inventory carrying costs.
d)Direct control on customer service experience.
Disadvantages:
a)Costly, time consuming, requires internal and external changes which are not easy to handle and integrate with other operations.
b)Independent dealers will complain due to internal competition.
c)Suppliers’ inability to keep up to speed with Fords modern IT technology.
Part 5.2: Alternative 2
Create a virtually integrated supply chain based on Dell's model. Ford and all its suppliers would share information between their systems and the Internet to coordinate the flow of materials and production. All customer orders would be taken either via Ford's web site or by phone and then build. A pull system would be implemented completely.
Advantages:
a)Customization to clients, start of vertical integration in the supply chain.
b)Customers’ needs are met faster at higher profits due the elimination of reseller’s mark-ups.
c)Directly control customer service.
d)Minimal inventory carrying costs and higher order lead time.
e) The ability to forecast demand is significantly better.
f)Improved relationships with both customers and suppliers.
Disadvantages:
a)Ford's traditional processes and production methods would have to be changed to take advantage of this new form of supply-chain management. Since it is a very costly and time consuming activity, the difference in the two industries makes it a risky option.
b)The loss of dealerships will mean a loss of business to competition.
c)Change management has to take effect which is costly and emotionally sensitive.
Part 6: R ECOMMENDATIONS AND IMPLEMENTATION
Part 6.1: Recommendation
Keeping the existing supply chain would continue to deliver the same dismal results and declining profits for the company. After careful examination and review of the alternatives, I came to conclude that the long term implication of the second alternative is the company going out of business, which eliminates option 2. This option seems illogical when we take into account the fact that Ford is an automobile manufacturing company and Dell assembles customized computers for its customers via the internet, eliminating dealerships all across and relying only on their website for its sales will put itat a great disadvantage with competitors. So I would recommend Ford to extend its Virtual-business strategy by partially implementing the Dell’s model of supply chain (Alternative 1). The part of the Dell’s model which does not fit with Ford need to be discarded. The dealers would still play a role in the distribution since the buying experience of a car from a dealer cannot be substituted by something virtual like a 3d model on a computer or images and description online.
Part 6.2: Implementation
In order for Ford to implement option 1, their IT systems should be centralized and shared with suppliers since its Tier 2 and Tier 3 suppliers might not be able to update their IT infrastructure as often as Ford. Suppliers can have access to central design database while Ford controls the access and functionality as per the operational requirements. The whole coordinated system would ensure a smooth flow of materials and reduced bottlenecks and enhance the efficiency of the supply chain giving a competitive edge to Ford. And lastly, I feel that dealerships can play a more involved role in forecasting customer demand and Ford should explore the option of outsourcing it to a firm which specializes in forecasting demand and can work with each dealer or network of dealers.
Part 7: MONITOR AND CONTROL
In order for the new system to function appropriately as intended, Ford must perform the following functions:
1. Appoint an IT specialist as a liaison to coordinate all IT activities with all suppliers in order to insure a smooth flow of information among the supply chain partners and immediately resolve issues as they arise.
2. Monitor customers’ online orders by reviewing all order lead times. The time from the customer order initiation to delivery must not exceed a standard period of time which has been set by the company.
3. Initiate an online customer satisfaction program in which customers will evaluate and rate their customer experience with Ford.
4. After every 6-8 month, review the performance and make recommendations on improvements to the appropriate authority.
5. Annual executive meetings should be held to review the progress of the business model. As well, review the shareholder value to check whether it’s increasing or decreasing.
Part 8: CONCLUSION
By making such major decision to combine virtual integration business model to their existing supply chain, Ford can look forward to a much more efficient and profitable future as a result of implementing the recommendations concerning the online business model: their overhead and inventory carrying costs will decrease, and Ford will be in a better position to have a direct interaction with their customers. Furthermore, the overall success of this business model will depend mainly on the performance of their shareholder value.
Part 1: Executive Summary
After carefully analyzing Ford’s existing supply chain I immediately became aware of its highly complex nature. This high level of complexity combined with other internal and external factors have pushed Ford to search for solutions in order to overcome the costly supply chain challenges that they are facing and may continue to face in the future. Ford’s major difficulty in their present system is: the inefficient control of their large data base and complex network of suppliers, the existence of independent distributors and their inability to communicate and serve their customers directly.
Realizing an urgent need to modify their supply chain in order to make it more cost effective and more profitable, and after careful analysis of the whole situation, I have recommended the partial implementation and execution of the virtual integration direct business model that has been used by Dell. Through this model, Ford will use the emerging information technologies and internet as well as new ideas from high tech industries in order to interact and transact with their suppliers and end users. Furthermore, Ford can boost its sales by providing better customer service and by having faster communication between suppliers, manufacturers, and customers in the value chain.
This proposed system will have to run concurrently with the existing supply chain so that Ford will cover both market segments at the same time. Since Dell and Ford are two different types of industries, one is in computer manufacturing and the other is in auto industry, it does not seem right for Ford to implement exactly the same "virtual integration model" as Dell. In fact, if Ford implements the full direct business model alone and abolished its existing supply chain then Ford will certainly run into a high risk of losing their business to competitors due to the fact that customers want to test and feel the car before they buy it for a large amount of money. On the other hand, when customers buy computers on line they don’t have to worry about touching and testing the computer, all they require is a better price than the retail shops and the product’s specs are according to their needs.
Ford should set up a special department in order to handle this new business process. Investment in new high tech equipments is required as well as training should be provided before the new project’s kick off date. Suppliers’ computers should be linked to Ford’s master computer network and customers should be made aware of this new shopping experience for buying an automobile.
To measure the performance of this model, Ford should schedule periodical review and evaluation meetings. Recommendations for improvements should be noted along the way in order to be evaluated. The improvement of customer service and shareholder value should be the main aim of the whole project. At this time it’s hard to anticipate its success or failure, but by investing time and effort into it I will be confident of its success if not in the short term it will definitely in the long run.
Part 2: ISSUES
Part 2.1: Fundamental Issue
The fundamental issue for Ford is the management and control of their large data base of their business partners, particularly suppliers and sub-suppliers. Unlike Dell which has only about 50suppliers, Ford has several thousand suppliers and operates in a more complex network of business relationships. To produce a single product, Dell needs less than hundred parts where as Ford needs several thousands. In addition to such large data base of suppliers, Ford also has a large number of dealership networks who are widely spread in large geographical areas around the world. Managing both suppliers and customers in a single efficient supply chain had always been a challenge for Ford who is constantly looking for new ways to better control and manage their supply chain operations in a more productive and cost effective way.
Part 3: Sub-Issues
1. Lack of up to date IT infrastructure:
The inability of Ford’s first and lower level tier suppliers to keep up to date with IT technology that is need by Ford to stay up to speed in managing their production operations as intended is a major bottleneck within the supply chain. The lack of proper IT technology could result in miscommunication and lack of coordination between the supply partners and the outcome could be a higher order lead times, higher cost and operational hassle.
2. Lack of direct control of end users:
Due to the use of independent dealership networks to sell their products, Ford lacked control on their product end users. Such lack of control combined with dealer markups had negatively impacted their ability to directly control their customer service experience.
Part 4: ENVIROMENTAL AND ROOT CAUSE ANALYSIS
Part 4.1 Quantitative and qualitative analysis
With over 370,000 employees worldwide and revenue of more than $144 billions, Ford Motor Company has been classified as the world’s second largest industrial corporation. Ford was established by a visionary Henry Ford in 1903 and it has been in business ever since. Ford’s core business is the production and distribution of cars and trucks. In addition to that, Ford earned substantial revenues and profits from its financial subsidiaries that operated mainly in North America with limited operations in Europe and everywhere else. In its 1997 financial statement, Ford reported close to $ 7 billion in net income and a 5 year average revenue growth rate of 6%.These positive financial statement figures were an indication of Ford’s strong market and financial positions. Its main competition till 1970’s was with General Motors and Chrysler. However with the entry of Japanese companies like Honda, Toyota and Nissan the firm faced stiffer competition with the auto market being over-capacitated. In order to take advantage of their global presence and deal with the increasing global competition, Ford along with General Motors and Chrysler saw an urgent need to consolidate their industry and started merging with other automakers around the globe. Such swift action had enabled these giant firms to achieve better quality products at a reduced cycle time and lower costs due to the economies of scale.
After merging with Daimler-Benz, Ford’s data base of suppliers has increased substantially in both home and abroad. Having this huge number of suppliers has made their supply chain more complex, expensive to run and difficult to manage. In order to deal with the supply chain issues and better manage their suppliers and improve their production processes and ultimately lowering their cost, Ford in 1995 initiated the Ford 2000 plan which aimed at restructuring many of their key processes like Order to Delivery (OTD) and Ford Production System (FPS). They wanted to reduce the OTD from 60 or more to 15 or less days. FPS was created to convert the supply chain from a push type to a pull type. Ford aimed at reducing the number of suppliers which had grown to several thousands of different suppliers over the years as the company grew. Rather than focusing on selecting suppliers based on costs they wanted to develop close long-term relations with the Tier 1 suppliers who in turn managed and handled Tier 2 and Tier 3suppliers. The aim was to create a more cost effective supply chain. Ford provided its suppliers with its expertise and techniques to help them better manage their operations. Another important initiative taken by ford was the Ford Retail Network (FRN) to reduce competition among its dealerships in the same locality by having only one unified dealer who provides the best possible level of customer experience. The director of supply chain system, Takai has to take an informed and well thought decision if they should implement the Dell’s integrated supply chain or not.
Part 5: ALTERNATIVES AND OPTIONS
Part 5.1: Alternative 1
Design a mixture of online and offline operations and form procedures to enable customization and ordering by customers over the internet but maintain physical dealerships as well.
Advantages:
a)Customization to customers, start a supply chain vertical integration business model.
b)Open new market segment and attract clients who like on line shopping.
c)Reduction in overhead and inventory carrying costs.
d)Direct control on customer service experience.
Disadvantages:
a)Costly, time consuming, requires internal and external changes which are not easy to handle and integrate with other operations.
b)Independent dealers will complain due to internal competition.
c)Suppliers’ inability to keep up to speed with Fords modern IT technology.
Part 5.2: Alternative 2
Create a virtually integrated supply chain based on Dell's model. Ford and all its suppliers would share information between their systems and the Internet to coordinate the flow of materials and production. All customer orders would be taken either via Ford's web site or by phone and then build. A pull system would be implemented completely.
Advantages:
a)Customization to clients, start of vertical integration in the supply chain.
b)Customers’ needs are met faster at higher profits due the elimination of reseller’s mark-ups.
c)Directly control customer service.
d)Minimal inventory carrying costs and higher order lead time.
e) The ability to forecast demand is significantly better.
f)Improved relationships with both customers and suppliers.
Disadvantages:
a)Ford's traditional processes and production methods would have to be changed to take advantage of this new form of supply-chain management. Since it is a very costly and time consuming activity, the difference in the two industries makes it a risky option.
b)The loss of dealerships will mean a loss of business to competition.
c)Change management has to take effect which is costly and emotionally sensitive.
Part 6: R ECOMMENDATIONS AND IMPLEMENTATION
Part 6.1: Recommendation
Keeping the existing supply chain would continue to deliver the same dismal results and declining profits for the company. After careful examination and review of the alternatives, I came to conclude that the long term implication of the second alternative is the company going out of business, which eliminates option 2. This option seems illogical when we take into account the fact that Ford is an automobile manufacturing company and Dell assembles customized computers for its customers via the internet, eliminating dealerships all across and relying only on their website for its sales will put itat a great disadvantage with competitors. So I would recommend Ford to extend its Virtual-business strategy by partially implementing the Dell’s model of supply chain (Alternative 1). The part of the Dell’s model which does not fit with Ford need to be discarded. The dealers would still play a role in the distribution since the buying experience of a car from a dealer cannot be substituted by something virtual like a 3d model on a computer or images and description online.
Part 6.2: Implementation
In order for Ford to implement option 1, their IT systems should be centralized and shared with suppliers since its Tier 2 and Tier 3 suppliers might not be able to update their IT infrastructure as often as Ford. Suppliers can have access to central design database while Ford controls the access and functionality as per the operational requirements. The whole coordinated system would ensure a smooth flow of materials and reduced bottlenecks and enhance the efficiency of the supply chain giving a competitive edge to Ford. And lastly, I feel that dealerships can play a more involved role in forecasting customer demand and Ford should explore the option of outsourcing it to a firm which specializes in forecasting demand and can work with each dealer or network of dealers.
Part 7: MONITOR AND CONTROL
In order for the new system to function appropriately as intended, Ford must perform the following functions:
1. Appoint an IT specialist as a liaison to coordinate all IT activities with all suppliers in order to insure a smooth flow of information among the supply chain partners and immediately resolve issues as they arise.
2. Monitor customers’ online orders by reviewing all order lead times. The time from the customer order initiation to delivery must not exceed a standard period of time which has been set by the company.
3. Initiate an online customer satisfaction program in which customers will evaluate and rate their customer experience with Ford.
4. After every 6-8 month, review the performance and make recommendations on improvements to the appropriate authority.
5. Annual executive meetings should be held to review the progress of the business model. As well, review the shareholder value to check whether it’s increasing or decreasing.
Part 8: CONCLUSION
By making such major decision to combine virtual integration business model to their existing supply chain, Ford can look forward to a much more efficient and profitable future as a result of implementing the recommendations concerning the online business model: their overhead and inventory carrying costs will decrease, and Ford will be in a better position to have a direct interaction with their customers. Furthermore, the overall success of this business model will depend mainly on the performance of their shareholder value.
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