PM DQ IV

CHAPTEN 7 PROCESS STRATEGY 29I

Ethica! Dilennma For the sake of efficiency and lower costs, Premium Standard Farms of Princeton, Missouri, has turned pig production into a standardized product-focused process. Slaughterhouses have done this for a hundred year-s-but after the animal was dead. Doing it while the animal is alive is a relatively recent innovation. Here is how it works.

lmpregnated female sows wait for 40 days in metal stalls so small that they cannot turn around. After an ultrasound test, they wait 67 days in a similar stall until they give birth. Two weeks after delivering 10 or 11 piglets, the sows are moved back to breeding rooms for another cycle. After 3 years, the sow is slaughtered. Animal-welfare advocates say such confinement drives pigs crazy. Premium Standard replies that its hogs are in fact comfortable, arguing that only 1% die before Premium Standard wants them to and that their system helps reduce the cost of pork products.

Discuss the productivity and ethical implications of this industry and these two divergent opinions.

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Discussion Questions

1. What is process strategy? 2. What type of process is used for making each of the following

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4. 5.

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products? (a) beer (b) wedding invitations (c) automobiles (d) paper (e) Big Macs (f) custom homes (g) motorcycles What is service blueprinting? What is process redesign? What are the techniques for improving service productivity? Name the four quadrants of the service process matrix. Discuss how the matrix is used to classify services into categories. Whatis CIM? What do we mean by a process-control system, and what are the typical elements in such systems?

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9. Identify manufacturing fnms that compete on each of the four processes shown in Figure 7.1.

10. Identify the competitive advantage of each of the four firms identified in Discussion Question 9.

11. Identify service frms that compete on each of the four pro- cesses shown in Figure 7.1.

12. Identify the competitive advantage of each of the four firms identified in Discussion Question 11.

13. What are numerically controlled machines? 14. Describe briefly what an automatic identification system

(AIS) is and how service organizations could use AIS to increase productivity and at the same time increase the variety of services offered.

15. Name some of the advances being made in technology that enhance production and productivity.

16. Explain what a flexible manufacturing system (FMS) is. 17. ln what ways do CAD and FMS connect?

SOLVED PROBLEM 7.1 Bagot Copy Shop has a volume of 125,000 black-and-white copies per month. Two salespeople have made presentations to Gordon Bagot for machines of equal quality and reliability. The Print Shop J has a cost of $2,000 per month and a variable cost of $.03. The other machine (a Speed Copy 100) will cost only $1,500 per month but the toner is more expensive, driving the cost per copy up to $.035. If cost and volume are the only con- siderations, which machine should Bagot purchase?

Because Bagot expects his volume to exceed 100,000 units, he should choose the Print Shop 5.

SOLUTION

2,000 + .03x : 2,000 - 1,500 :

500: 100,000 :

1,500 + .035X .035X * .03X .005x X