In class, we discussed that key elements of operations strategy are:
Aligning Operations Strategy with Business Strategy
Determining the Portfolio of Buffers at a Strategic Level
Assessment of Utilization
Finding the Bottleneck
Using a WIPCAP
Reviewing opportunities to optimize inventory including “Common Components for Assemble to Order”
Setting Lead-times using the Concept of Due Date Quoting
Please discuss why each of these is important to analyze an operation and how it could be used in an analysis of the following medical device manufacturing business:
A Multi-Billion Dollar Medical Devices Company produces devices which are assemblies. Given the critical nature of delivery of devices to hospital and doctors, medical device companies do not want to stock out. This medical device company in this case was plagued by long lead-times (2 months) and poor service (50%) from its internal plants to its distribution centers. The distribution centers compensated for the poor performance by holding a large inventory (order of magnitude in hundreds of millions) buffer of Finished Goods inventory in its warehouses. This tied up valuable cash that could be used for R&D to fuel future growth. Below is a picture of a Demand-Stock-Flow diagram for the current process:
