Question: Founded more than 20 years ago, supplies4medics.
Founded more than 20 years ago, supplies4medics.com has become one of Europe’s most successful direct-mail suppliers of medical hardware and consumables to hospitals, doctors’ and dentists’ surgeries, clinics, nursing homes and other medical-related organizations. Its physical and online catalogues list just over 4,000 items, categorized by broad applications such as ‘hygiene consumables’ and ‘surgeons’ instruments’. Quoting their website:
‘We are the pan-European distributors of wholesale medical and safety supplies ... We aim to carry everything you might ever need; from nurses’ scrubs to medical kits, consumables for operations, first-aid kits, safety products, chemicals, fire-fighting equipment, nurse andphysicians’ supplies, etc. Everything is at affordable prices – and backed by our very superior customer service and support – supplies4medics is your ideal source for all medical supplies. Orders are normally dispatched same-day, via our European distribution partner, the Brussels hub of DHL. You should therefore receive your complete order within one week, but you can request next-day delivery if required, for a small extra charge. You can order our printed catalogue through the link at the bottom of this page, or shop on our easy-to-use online store.’
Last year turnover grew by over 25 per cent to about €120 million, a cause for considerable satisfaction in the company. However, profit growth was less spectacular; and market research suggested that customer satisfaction, although generally good, was slowly declining. Most worryingly, inventory levels had grown faster than sales revenue, in percentage terms. This was putting a strain on cash now, requiring the company to borrow more cash to fund the rapid growth planned for the next year. Inventory holding was estimated to be costing around 15 per cent per annum, taking account of the cost of borrowing, insurance and all warehousing overheads.Pierre Lamarche, the Head of Operations, summarized the situation faced by his department:
‘As a matter of urgency, we are reviewing our purchasing and inventory management systems! Most of our existing reorder levels (ROL) and reorder quantities (ROQ) were set several years ago, and have never been recalculated. Our focus has been on rapid growth through the introduction of new product lines. For more recently introduced items, the ROQs were based only on forecast sales, which can actually be quite misleading. We estimate that it costs us, on average, €50 to
place and administer every purchase order, since most suppliers are still not able to take orders over the internet or by EDI. In the meantime, sales of some products have grown fast, while others have declined. Our average inventory (stock) cover is about 10 weeks, but, amazingly, we still run out of critical items! In fact, on average, we are currently out of stock of about 500 SKUs (stock keeping units) at any time. As you can imagine, our service level is not always satisfactory with this situation. We really need help to conduct a review of our system, so have employed a mature intern from the local business school. He has first asked my team to provide information on a random, representative sample of 20 items from the full catalogue range, which is copied below.’ (See Table 9.10)
Questions
1. Prepare a spreadsheet-based ABC analysis of usage value.
2. Calculate the inventory weeks for each item, for each classification, and for all the items in total. Does this suggest that the Head of Operations’ estimate of inventory weeks is correct? If so, what is your estimate of the overall inventory at the end of the base year, and how much might that have increased during the year?
3. Based on the sample, analyses the underlying causes of the availability problem described in the text.
4. Calculate the EOQs for the A items.
5. What recommendations would you make to the company?
> Define leader and leadership.
> Discuss current issues in motivating employees.
> Compare and contrast contemporary theories of motivation.
> Compare and contrast early theories of motivation.
> Define and explain motivation.
> Discuss contemporary issues in OB.
> How Can I Show My Professionalism?
> Discuss learning theories and their relevance in shaping behavior.
> Describe perception and the factors that influence it.
> Describe different personality theories.
> Explain the role that attitudes play in job performance.
> Identify the focus and goals of organizational behavior (OB).
> Discuss contemporary issues in managing teams.
> Discuss how groups are turned into effective teams.
> Describe the major concepts of group behavior.
> Define group and describe the stages of group development.
> Explain what workforce diversity and inclusion are and how they affect the HRM process.
> What is a Decision Trees?
> Discuss contemporary issues in managing human resources.
> Describe strategies for retaining competent, high-performing employees.
> Explain how employees are provided with needed skills and knowledge.
> Discuss the tasks associated with identifying and selecting competent employees.
> Describe the key components of the human resource management process and the important influences on that process.
> Discuss the design challenges faced by today’s organizations.
> Compare and contrast traditional and contemporary organizational designs.
> Identify the contingency factors that favor either the mechanistic model or the organic model of organizational design.
> Describe six key elements in organizational design.
> Explain how entrepreneurs control organizations for growth, downturns, and exiting the venture.
> Define Payoff Matrices
> Define Early Management
> Tea and Sympathy is a British restaurant and café in the heart of New York’s West Village. It is tiny, with around a dozen tables packed into an area little bigger than the average British sitting room. Expatriate Brits, native New Yorkers and celebritie
> (a) As a group, identify a ‘high-visibility’ operation that you all are familiar with. This could be a type of quick-service restaurant, clothing store, public transport system, library, etc. (b) Once you have identified the broad class of operation, vis
> Consider this record of an ordinary flight. Breakfast was a little rushed but left the house at 6.15. Had to return a few minutes later, forgot my passport. Managed to find it and leave (again) by 6.30. Arrived at the airport 7.00, dropped Angela off wit
> Most countries have blood collection and distribution services that collect from donors, process the blood by either breaking the blood down into its constituent parts or keeping it whole, and transport the blood from collection centers to hospitals in r
> Pantone is the Italian Christmas cake, traditionally made in Milan. Then it became popular outside its traditional Italian markets. Now more than 40 million of them are consumed throughout Italy and all over the world during the holiday period. This boos
> Airline catering is a tough business. Meals must be of a quality that is appropriate for the class and type of flight, yet the airlines who are their customers are always looking to keep costs as low as possible, menus must change frequently and respond
> Grace Whelan, Managing Partner of McPherson Charles, welcomed the three solicitors into the meeting room. She outlined the agenda, essentially their thoughts and input into the rolling three-year plan. McPherson Charles, based in Bristol in the West of E
> Most of us are familiar with ‘drive-through’ fast-food operations. Think about (or better still, visit) a drive-through service and try mapping what you can see (or remember) of the process (plus what you can infer from what may be happening ‘behind the
> Just outside Rotterdam in the Netherlands, Francine Jansen, the Chief Operating Officer of Aarons Electronic (AE) was justifiably proud of what she described as ‘the most advanced machine of its type in the world, which will enable us to achieve new stan
> Anyone who has been involved with designing and constructing video games will tell you that game development never goes as planned. I sometimes think that it is a miracle that any game gets developed. Technical glitches, bottlenecks in production, confli
> For decades, IKEA has been one of the most successful retail operations in the world, with much of its success founded on how it organizes its design, supply and retail service operations. With over 400 giant stores in 49 countries, IKEA has managed to d
> Keaston-Trenton Service (KTS) was a domestic heating boiler maintenance company, based in the East of England. Founded in the 1960s by plumber Christopher Trenton, it had grown substantially and was now run jointly by Christopher’s two
> Well that’s the bad news!’, said Tao, the Managing Director of Kloud BV, a consulting and executive development firm headquartered in Amsterdam, specializing in operations and supply chain improvement. â€
> Slaveless Industrial Services (SIS) had become one of Europe’s most respected suppliers of die-cast zinc, aluminum and magnesium parts to hundreds of companies in many industries, especially automotive and defense. The company cast and engineered precisi
> There is no doubt that it was a disaster for the laboratory. It was the first time that a client had withdrawn from a contract so soon, and it was our fault entirely. It was also a disaster for Vincent. I feel sorry for him. I had known him for years. He
> Mario Romano, the owner and General Manager of Ferndale Sands Conference Centre, had just seen an article in The Conference Centre Journal, and he was furious. The excellent reputation that he had worked so hard to build up over the last ten years was be
> led to an understanding of all the processes that affected quality indicators. It was a shift to seeing the hospital as a whole set of processes that governed a set of flows – flows of patients through their treatment stages, flows of c
> It had been ten years since Dan Audial founded Audial Auto Servicing as an independent vehicle-servicing and repair business. Previously he had been the manager of the servicing department of a ‘premium’ car dealership
> Focus plastics (see the previous question) moved into what it called ‘design house partnerships’ – design collaboration between their internal designers and Italian design houses, creative product designers who rarely manufacture or distribute their own
> Carlos, are you ready to head out then?’, Antonia called across the office. ‘Too right! After the morning I’ve had, I could do with the break!’ Carlos laughed, as he grabbed his wall
> It was a warm afternoon as Stefano Moretto, Commercial Director of Hinkley Point C (HPC), and Eva Glens, Senior Supply Chain Engagement Manager, stood looking out of their office. Stefano, having recently joined EDF, had been tasked with establishing a
> Action Response is a London-based charity dedicated to providing fast responses to critical situations throughout the world. It was founded by Susan Nutini, its Chief Executive, to provide relatively short-term aid for small projects until they could obt
> Revisit the case example that examines legal and general’s modular housing venture. Does their use of a factory to ‘build’ houses invalidate the idea that volume and variety govern the nature of operations processes?
> Visit a supermarket and observe people’s behavior. You may have to exercise some discretion when doing this; people generally don’t like to be stalked around the supermarket too obviously. (a) What layout type is a conventional supermarket and how does i
> The table below shows the planned time and budget for a legal consulting project being developed for a client in Copenhagen, Denmark. Complete an earned value analysis (EVA) for the project based at the end of month 4, given that only activities A, B and
> The table below shows the activities, their durations and predecessors for designing, writing and installing a bespoke computer database for a commercial bank headquartered in Singapore. Draw a network diagram (activity-on-node) for the project and calcu
> Revisit the Vasa project example in this chapter. (a) Who should be held responsible for this disaster? (b) What can be learnt from the Vasa story for the management of different kinds of modern-day projects?
> Four Seasons Hotels is a chain of very ‘upmarket’ hotels famed for its quality of service. From its inception the group has had the same guiding principle, to make the quality of our service our competitive advantage. The company has what it calls its Go
> Focus plastics originally made precision plastic components for the Aerospace sector, together with some basic (cheap) ‘homeware’ items such as buckets and dustpans. However, competition became intense in this market, so they decided to specialize in hom
> Consider a country operating under fixed exchange rates. The IS curve is given by equation (20.1) a. Explain the term (i* - πe). Why does the foreign nominal interest rate appear in the relation? b. Explain why when πe increases, t
> Human error is a significant source of quality problems. Think through the times that you have (with hindsight) made an error and answer the following questions. (a) How do you think that human error causes quality problems? (b) What could one do to mini
> Step 1 – As a group, identify a ‘high visibility’ operation that you all are familiar with. This could be a type of quick service restaurant, record stores, public transport systems, libraries, etc. Step 2 – Once you have identified the broad class of op
> A transport services company provides a whole range of services to railway operators. Its reputation for quality was a valuable asset in its increasingly competitive market. ‘We are continually looking for innovation in the way we deliver our services be
> For over 10 years, a hotel group, had been developing self-managed improvement groups within its hotels. At one hotel reception desk, staff were concerned about the amount of time the reception desk was left unattended. To investigate this, the staff beg
> Develop cause–effect diagrams for the following types of problem: • staff waiting too long for their calls to be answered at their IT helpdesk; • poor food in the company restaurant; • poor lecturing from teaching staff at a university; • customer compla
> Everything we do can be broken down into a process’ said Lucile, COO of an outsourcing business for the ‘back office’ functions of a range of companies. ‘It may be more straightforward in a manufacturing business, but the concept of process improvement i
> Sophie was sick of her daily commute. ‘Why’, she thought ‘should I have to spend so much time in a morning stuck in traffic listening to some babbling halfwit on the radio? We can work flexi- time after all. Perhaps I should leave the apartment at some o
> A production process is required to produce 980 of product X, 560 of product Y and 280 of product Z in a 4-week period. If the process works 7 hours per day and 5 days per week, devise a mixed model schedule per hour that would meet this demand.
> Examine the marking process of an assignment you are currently working on. What is the typical elapsed time between handing the assignment in and receiving it back with comments? How much of this elapsed time do you think is value added time?
> An insurance underwriting process consists of the following separate stages. What is the value-added percentage for the process? (Hint – use Little’s law to work out how long applications have to wait at each stage bef
> The health clinic described in the worked example earlier in the chapter has expanded by hiring one extra employee and now has six employees. It has also leased some new health monitoring equipment which allows patients to be processed faster. This means
> Consider this record of an ordinary flight. ‘Breakfast was a little rushed but left the house at 6.15. Had to return a few minutes later, forgot my passport. Managed to find it and leave (again) by 6.30. Arrived at the airport 7.00, dropped Angela off wi
> The Zucchero mail-order clothing company in Milan receives order forms, types in the customer details, checks the information provided from the customers and that the products are in stock, confirms payment and processes the order. During an average eigh
> What elements of lean are described in the Toyota Production System (TPS)?
> A lunch kiosk serves two meals every day: Veggie Fritters and Mushroom Stroganoff, the recipes for which are as follows. Veggie Fritters (serves 10) – Prepair the ‘veggie mix’ by grating 500 g of carrots, 500 g of courgettes (zucchini), and chopping 300
> Your company has developed a simple, but amazingly effective mango peeler. It is constructed from a blade and a supergrip handle that has a top piece and a bottom piece. The assembled mango peeler is packed in a simple recycled card pack. All the parts s
> Re-read the ‘Operations in practice’ example, ‘‘What a waste!’. Why did things go wrong with the relationship between SAP and Waste Management?
> Re-read the ‘Operations in practice’ example, ‘The life and times of a chicken salad sandwich Part 2’. Why do you think that integrating an ERP system with those of suppliers and customers is so difficult?
> Re-read the ‘Operations in practice’ example, ‘SAP and its partners’. If you were managing SAP’s strategic partner programme, how would you ensure their long-term collaboration?
> Rolls-Royce is one of the world’s largest manufacturers of gas turbines. They are exceptionally complex products, typically with around 25,000 parts, and hundreds of sub-assemblies, and their production is equally complex with over 600 external suppliers
> Re-read the ‘Operations in practice’ example on ‘An inventory of energy’. It mentions the potential of battery storage of energy, but stresses the cost of this method. What do you think would be the implications for energy distribution if batteries becom
> Xexon7 is a specialist artificial intelligence (AI) development firm that develops algorithms for various on-line services. As part of its client service it has a small (10-person) help-desk call centre to answer client queries. Clients could contact the
> Revisit the ‘Operations in practice’ example on the Blood and Transplant service at the beginning of the chapter. (a) What are the factors which constitute inventory holding costs, order costs, and stock-out costs in a National Blood Service? (b) What ma
> Our suppliers often offer better prices if we are willing to buy in larger quantities. This creates a pressure on us to hold higher levels of stock. Therefore, to find the best quantity to order we must compare the advantages of lower prices for purchase
> A fruit canning plant has a single line for three different fruit types. Demand for each type of tin is reasonably constant at 50,000 per month (a month has 160 production hours). The tinning process rate is 1,200 per hour, but it takes 2 hours to clean
> A local shop has a relatively stable demand for tins of sweetcorn throughout the year, with an annual total of 1400 tins. The cost of placing an order is estimated at £15 and the annual cost of holding inventory is estimated at 25 per cent of the product
> A supplier makes monthly shipments to ‘House & Garden Stores, in average lot sizes of 200 coffee tables. The average demand for these items is 50 tables per week, and the lead time from the supplier 3 weeks. ‘House & Garden Stores’ must pay for inventory
> Airline catering is a tough business. Meals must be of a quality that is appropriate for the class and type of flight, yet the Airlines who are their customers are always looking to keep costs as low as possible, menus must change frequently and respond
> Many companies devise a policy on ethical sourcing covering such things as workplace standards and business practices, Health and Safety conditions, human rights, legal systems, child labour, disciplinary practices, wages and benefits, etc. (a) What do y
> If you were the owner of a small local retail shop, what criteria would you use to select suppliers for the goods that you wish to stock in your shop? Visit two or three shops that are local to you and ask the owners how they select their suppliers. In w
> The example of the bull-whip effect shown in Table 12.2 shows how a simple 5 per cent reduction in demand at the end of supply chain causes fluctuations that increase in severity the further back an operations is placed in the chain. a) Using the same lo
> A chain of women’s apparel retailers had all their products made by Lopez Industries, a small but high-quality garment manufacturer. They worked on the basis of two seasons; Spring/Summer season and Autumn/Winter. ‘Sometimes we are left with surplus item
> The environmental services department of a city has two recycling services – newspaper collection (NC) and general recycling (GR). The NC service is a door-to-door collection service that, at a fixed time every week, collects old newspapers that househol
> Re-read the ‘Operations in practice’ example, ‘Extracts from Levi Strauss’ global sourcing policy’. (a) What do you think motivates a company like Levi Strauss to draw up a policy of this type? (b) What other issues would you include in such a supplier s
> A Pizza Company has a demand forecast for the next 12 months that is shown in the table below. The current workforce of 100 staff can produce 1,500 cases of pizzas per month. (a) Prepare a production plan that keeps the output level. How much warehouse s
> Seasonal demand is particularly important to the greetings card industry. Mother’s Day, Father’s Day Halloween, Valentine’s Day and other occasions have all been promoted as times to send (and buy) appropriately designed cards. Now, some card manufacture
> Revisit the example, ‘United breaks passengers’ operations. (a) How should the airline have handled the situation? (b) After the incident attracted so much negative publicity, United announced a new upper limit of $10,000 in compensation for passengers w
> In a typical 7-day period, the planning department of the pizza company programs its ‘Pizzamatic’ machine for 148 hours. It knows that changeovers and set-ups take 8 hours and breakdowns average 4 hours each week. Waiting for ingredients to be delivered
> A German car manufacturer defines ‘utilization’ as the ratio of actual output for a process to its design capacity, where design capacity is the capacity of a process as it is designed to operate. However, it knows tha
> In March, a law firm predicted April demand for 360 client consultations. Actual April demand was 410. Using a smoothing constant chosen by management of .20, what is forecast the May demand using the exponential smoothing model?
