Capacity Strategy Quiz

Policy

• Laws and regulations can impact the evaluation of alternatives.
• It's important to consider various perspectives when evaluating options.

Economic Factors

• Assess economic feasibility.
• Determine cost, delivery time, operating and maintenance costs, useful life, compatibility with existing personnel and operations.

Non-Economic Factors

• Consider public opinion.

Cost-Volume Analysis

• Focuses on the relationship between cost, revenue, and production volume.
• Used to estimate an organization's income under different operational conditions.

Capacity Strategy

• Influences all areas of the organization.
• Determines the operational conditions.
• Flexibility allows organizations to be agile and reduce reliance on forecast accuracy.
• Capacity cushions are used to achieve flexibility.
• Bottleneck management optimizes effective capacity.
• Capacity expansion strategies include expand-early and wait-and-see approaches.
• Capacity contraction may be necessary, leading to capacity disposal strategies.

Product and Service Design

• Translates customer needs into requirements.
• Refines existing products and services.
• Develops new products and services.
• Defines quality goals and cost targets.
• Constructs and tests prototypes.
• Documents specifications.
• Translates product and service specifications into process specifications.

Key Questions in Product & Service Design

• Is there a demand? Assess potential market size and expected demand profile.
• Can we do it? Evaluate manufacturability (profit-making production capabilities) and serviceability (cost-effective service provision).
• Reverse Engineering: Analyse competitor's products to identify improvement opportunities.

Phases in Product Design and Development

• Feasibility Analysis: Includes market analysis, economic and technical analysis, and evaluation of alternatives.
• Product Specifications: Detailed descriptions of product requirements.
• Process Specifications: Specifications for the manufacturing process.
• Prototype Development: Building one or a few prototype units to test designs.
• Design Review: Evaluating designs and making necessary changes.
• Market Test: Assessing consumer acceptance of the product.
• Product Introduction: Launching the product to the market.
• Follow-up Evaluation: Monitoring product performance after launch.

Legal Considerations

• Product Liability: Manufacturers' responsibility for injuries caused by faulty products.
• Costs Associated with Product Liability: Litigation, legal and insurance costs, settlement costs, product recalls, and reputation damage.

Ethical Considerations

• Designers face pressure to speed up design processes and cut costs, leading to trade-off decisions.
• Examples include releasing software with bugs to avoid revenue loss or delaying release to improve quality and protect reputation.

Other Considerations

• Human Factors: Consider safety and liability in design.
• Cultural Factors: Account for color preferences, food preferences, and product labels.
• Global Design: Utilize design teams from different countries.

Modular Design

• Components are grouped into easily replaceable modules.
• Advantages: Facilitates diagnosis, repair, replacement, manufacturing, assembly, and training.
• Disadvantages: Limits product configuration options and restricts repair capabilities.

Robust Design

• Creates products and services resilient to varying conditions.
• Minimizes failure risk due to environmental changes.
• Applicable to both product and process design.

Degree of Newness

• Product or service design changes can range from modifications to existing products, expansions of existing product lines, clones of competitor products, or entirely new offerings.
• The degree of change influences the product's or service's novelty to the market and the organization.

Concurrent Engineering

• Integrates engineering, manufacturing, marketing, and purchasing personnel early in the design phase to ensure alignment with customer needs and manufacturing capabilities.
• Promotes cross-functional team collaboration and seeks input from suppliers and customers.

Manufacturability

• The ease of fabrication and assembly.
• Influences cost, productivity, and quality.
• Design for Manufacturing (DFM) and Design for Assembly (DFA) are applied to optimize production processes.

Component Commonality

• Using similar components across multiple products.
• Benefits: Reduces design time, standardizes training, enables bulk purchasing, and optimizes repair and inventory management.

Service Design

• Starts with defining the service strategy, determining the service focus and target market.
• Key Issues: Customer contact and involvement, variability in service requirements.

Differences between Service and Product Design

• Products are tangible; services are intangible.
• Services are created and delivered simultaneously.
• Services cannot be inventoried.
• Services are highly visible to consumers.
• Services have low barriers to entry and exit.
• Location is crucial for service design, with convenience as a major factor.
• Service systems range from no customer contact to high customer contact.
• Demand variability creates waiting lines or idle service resources.

Phases in Service Design Process

• Conceptualization: Generates ideas, assesses customer needs and demand potential.
• Identify Service Package Components: Determines necessary service elements.
• Determine Performance Specifications: Defines service performance standards.
• Translate Performance Specifications into Design Specifications: Converts performance standards into concrete design specifications.
• Translate Design Specifications into Delivery Specifications: Specifies how the service will be delivered.

Service Blueprint

• A visual tool for analyzing service processes.
• Depicts customer and service actions and interactions.
• Identifies potential failure points.
• Steps include: establishing boundaries, defining customer and service actions, developing time estimates, and identifying failure points.

Design Strategy

• Effective product and service design can achieve competitive advantage.
• Strategies include: packaging products and ancillary services, using multiple-use platforms, balancing high volume and product variety, implementing continuous improvement, and accelerating time-to-market.

Capacity Decisions

• Have a significant impact on an organization's ability to meet future demand.
• Influence operating costs, initial investment, long-term resource commitment, competitiveness, management ease, and global operations.
• Need to be planned in advance due to resource consumption.

Determinants of Effective Capacity

• Factors influencing effective capacity include: facilities, process factors, policy factors, supply chain factors, product and service factors, human factors, operational factors, and external factors.

Strategy Formulation

• Strategies typically rely on assumptions about: long-term demand patterns, technological changes, and competitor behavior.
• These assumptions address: demand growth rate and variability, building and operating costs, technological innovation, competitor behavior, and resource availability.

Forecasting Capacity Requirements

• Long-term considerations focus on overall capacity level, forecasting demand over a broad time horizon and converting it into capacity requirements.
• Short-term considerations address fluctuations in capacity requirements, emphasizing seasonal variations and other deviations from average demand.

Demand Management Strategies

• Minimize capacity limitations and align supply and demand.
• Strategies include: pricing, promotions, discounts, and demand shifting tactics to move demand from peak periods to slow periods.

In-House or Outsource?

• Organizations decide whether to produce goods or services internally or outsource.
• Factors influencing this decision include: available capacity, quality considerations, cost, expertise, demand characteristics, and risks.

Developing Capacity Alternatives

• Enhance capacity management by: designing flexibility into systems, considering the product lifecycle stage, adopting a holistic approach to capacity changes, managing capacity in manageable chunks, smoothing capacity requirements, identifying optimal operating levels, and choosing appropriate expansion strategies.

Bottleneck Operation

• An operation with lower capacity than others within a sequence, hindering overall production.

Constraint

• Anything limiting a process or system's performance in achieving goals.
• Categories: market (insufficient demand), resource (shortage of resources), material (material shortage), financial (insufficient funds), knowledge or competency (lack of required knowledge or skills).