Operations Management assignment
cfraz003
OperationsManagemen111.docx
Managing Operations
Milestone One
Christopher Frazier
Introduction
BYD Company engages research, development and manufacture and sale of rechargeable batteries. The company operates through four business segments; rechargeable batteries, mobile handset components, automobiles and corporate. BYD is the leading manufacturer of lithium batteries. BYD has attracted the attention of investors due to its ability to manufacture high quality batteries at a lower cost than its competitors. With the increasing demand for car batteries due to the high demand for hybrid and electric cars as well as the growing demand for smartphones, the market for lithium batteries continues to grow. Due to the fact that there lies a potential huge market for lithium batteries, investors are eying to have a stake in the company. For instance, Warren Buffet wanted to buy 25 percent of the shares for BYD but the company refused. BYD is aware of the potential growth that lies ahead. The company invested in research and was able to come up with an innovative and creative way of producing high quality products at a lower cost. This is a significant competitive edge for the company.
Generating Value
1. Evaluate how the company in the case study uses operations management functions to provide products and generate value for its customers.
Customer value is the level of satisfaction that customers get from using company products and services. One of the ways in which a company creates customer loyalty is through customer satisfaction. BYD has capitalized on customer satisfaction by offering high quality products at a cheaper price. One of the ways in which a company can generate value to its consumers is to provide products that meet the needs of the customer at a reasonably lower price. BYD has invested in research and has been able to come up with innovative and creative means to manufacture lithium batteries at a lower price than its competitors. BYD competitors are Japanese brands and American brands. Customer value is the perception of what a product is worth to the customers versus the possible available alternatives.
2. Assess how this company achieves a competitive advantage using operations management. Provide examples found in the case study or outside.
Competitive advantage is important for a company especially if the company operates in a competitive market. It makes a company stand out of the many competitors in the market. Companies strive to lower production and operational costs so that they can lower prices of their products and still maintain their revenues (Rarick, Firlej & Angriawan, 2020). In a market where a company is able to lower its prices than those of its competitors and still make profits has a positive impact on a company. Customers are more likely to go for a cheaper product provided it is of high quality and it meets their needs. As a result, the company would make more sales than its competitors. In the span of six years, BYD has become the world’s leading manufacturer of nickel cadmium batteries used in wireless phones. The company is number two in production of nickel hydride batteries and number three in lithium ion batteries. The founder of BYD reinvented the manufacturing process by replacing machinery with human labor wherever feasible to attain lower costs. Furthermore, BYD acquired more than 200 companies and suppliers to allow the company to focus on its internal strengths. BYD was successful when it manufactured a ferrous lithium ion battery safer and cost half of the one’s by its competitors (Rarick, Firlej & Angriawan, 2020).
3. Compare and contrast service operations and manufacturing operations at the company in the case study. How are they the same? How do they differ? How does each of these operations provide value for their customers ?
Service operations refer to the day to day activities by a company and the infrastructure put in place to ensure that a company delivers value to the business and its customers by controlling operational costs and enhancing customer satisfaction. On the other hand manufacturing operations refers to the processes and equipment that a company has put in place to ensure that it offers high quality products to its customers. Both service operations and manufacturing aim at cutting costs and improving customer satisfaction. BYD service operations include acquiring a failing state owned car manufacturer to leverage its battery competency by manufacturing electric cars. BYD provides housing and other social amenities to its employees so that they are motivated to be more productive (Rarick, Firlej & Angriawan, 2020). In addition, BYD has located its plants and offices strategically in different parts of the world where its major customers are to offer quick services to its customers.
Theories and techniques
1. Compare and contrast the critical path method (CPM) and the program evaluation and review technique (PERT). What types of projects at this company would favor PERT over CPM? Why? What types of projects at this company would favor CPM over PERT? Why?
Both Program Evaluation and Review Technique (PERT) and Critical Path Method (CPM) are approaches used by managers to schedule, monitor and control big and complex projects. The two techniques follow similar basic steps and achieve similar objectives. However, there is a significant difference between the two approaches. PERT is used to manage predictable project activities while CPM is applicable in management of predictable project activities (Heizer, Render & Munson, 2020). An example of a project by BYD that would fit PERT is the decision to raise capital through a public stock offering in the Chinese Stock Exchange, which would help BYD increase the size of its market. Projects that would fall under CPM is innovation of new electric car models.
2. Explain the steps used to develop a forecasting system. How would these steps be specifically utilized by this company? What do you predict would be the result of implementing a forecasting system for the top-selling product line at this company ?
Step 1: Determining why a forecast is needed. BYD would determine what aspect of their business they need to forecast.
Step 2: Selection of items to be forecasted: in this case, BYD would identify what to forecast. For example, BYD would want to forecast demand for electric cars in the next five years.
Step 3: Determine the time horizon of the forecast. In this step, BYD can determine how long it needs to take to introduce a new car model in the market.
Step 4: Selection of the forecasting method. For example, BYD can use a regression method to forecast its sales.
Step 5: Collection of data required to make the forecast. In this case, BYD would collect any relevant data related to the business aspect it wants to forecast.
Step 6: Making the forecast. After collecting the right and relevant data, BYD would use the forecasting software to make predictions.
Step 7: Validation and implementation of the results. After the completion of the forecast, BYD would work on implementing the results obtained from the forecast.
3. List the major categories of supply chain risk and associated risk reduction tactics. How could the company mitigate exposure to supply chain disruptions caused by natural disasters? For example, consider the 2011 earthquake and tsunami that devastated parts of Japan.
Risk of supplier failure to deliver. BYD can mitigate this by having multiple suppliers, subcontractors on retainers and heavy penalties on suppliers who fail to deliver. Another risk is distribution. BYD can avoid this through careful selection of its supply channels. The third risk is natural disasters. BYD can mitigate this risk by ensuring its business, cross country diversification and also alternate sourcing.
References
Heizer, J., Render, B., & Munson, C. (2020). Operations management: Sustainability and supply chain management. Upper Saddle River, NJ: Pearson
