Modern Postcard
Leveraging the Quality Process
Operations management is an important means of building any firm's competitive strength in the marketplace. You learned in Chapter 20 that quality concerns drive operations management. You also read that, to remain competitive, a firm should continually try to improve its productivity. At one time, productivity and quality were viewed as potentially conflicting. However, if a firm is able to consistently produce at a superior quality level, the company saves the high costs of scrap and rework. One expert says, "If you can consistently do your work faster, cheaper, and better than the other guy, then you get to wipe the floor with him-without any accounting tricks. Relentless operational innovation is the only way to establish a lasting advantage."
Our featured entrepreneur for this video segment combined his passion for high-quality work and his technical savvy to create an efficient organization that gave him a definite competitive advantage during an economic slump and beyond. Like many entrepreneurs, Steve Hoffman found a profitable niche market that allowed him to turn a passion into a business.
In 1976, he started offering his services as a photographer to realtors who wanted to showcase their high-end real estate properties in glossy, photo-filled brochures. Eventually, Hoffman purchased printing equipment to expand his business and develop entire brochures for his clients. Then, in 1993, a business downturn affected his core market. Demand for luxury real estate dropped, and real estate agents were less interested in spending money on glossy brochures to advertise their listed properties. Hoffman and his team had to reposition the company and its product to be more affordable. Being resourceful, Hoffman used his technological know-how to make a product that the rest of the team thought of as cheap-the postcard-into something affordable and beautiful. The resulting company, Modern Postcard, is now the industry leader in postcard products and mailing solutions. Hoffman was one of the first in his industry to embrace technology as the means to gain advantage over his competitors.
In 1993, before many companies had even implemented company-wide e-mail systems, Hoffman employed a completely digital work flow, using automated systems before anyone else in the industry. The resulting efficiencies allowed Hoffman to price his products much lower than those of competitors who still had not made the conversion to digital processes. By integrating technology throughout the organization and bringing in house functions that other companies were outsourcing, Modern Postcard grew faster and better than its competitors. Today, Modern Postcard prints more than 1 billion postcards per year and serves over 250,000 clients from 40 unique industries. But Hoffman is still not satisfied with his system. He is constantly planning ways to keep his processes efficient-as he says, to "serve better, faster, less expensively, [and] be able to pay out larger bonuses". Before answering the questions and working the activities, watch the video on Modern Postcard.
Question
1. What kind of manufacturing operation is Modern Postcard?
2. In the video, Hoffman mentions using a process called the theory of constraints (ToC). What is the theory of constraints, and how does it relate to total quality management (TQM), the managerial approach you learned about in Chapter 20? Do you agree with Hoffman that constraints are the "weakest link in a chain"? Explain.
3. When Hoffman decided to branch out into printing postcards, he found that the product quality was inconsistent. How did he solve the quality-control issue?
Activities
1. Total quality management (TQM) is based on having all members of an organization participate in the overall improvement of the processes, products, and services, as well as the culture in which they work. Methods for implementing TQM can be found in the teachings of Philip B. Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa, and Joseph M. Juran. Look on the Web or in the business section of the library to find works by these leaders in the field. In one paragraph or so, summarize the contribution that each man made to TQM.
Be certain to include, attribute, and explain the following terms or concepts in your written report: the "hidden" plant, "the vital few and the trivial many," the System of Profound Knowledge, DIRTFT, and quality circles.
2. a. Imagine that you are the purchasing manager for a company that buys postcards to announce additions to its product line. Your factories are in New England, Missouri, and Montana, and you have been a customer of Modern Postcard for years. Your boss recently talked to you about diversifying your supplier base for postcards. You, however, prefer to concentrate your purchases with one supplier.
Use the Internet to research at least three other postcard manufacturers and find out what they offer. Write a memo to your boss listing the reasons why you are against diversifying. Include specifics about the competition, where possible.
b. Imagine that you are now the boss in the scenario. Write a memo to your purchasing manager about why you think diversifying your supplier base is important. Compare Modern Postcard to at least two other companies.