The Positivity of Absolute Value

The relevant chapter that we are covering in class is on process selection and facility layout. The first article that I will be referencing is on Intel and its decision to invest $3.5 billion in start up companies. The second article I will be referencing will have to do with the casket making industry and the challenges they are facing during the current economic times.

Thinking about the first article I am making the assumption that Intel, along with 24 other venture capitalist firms, will be investing in start-ups that at least to a certain percentage, will operate along similar lines as Intel itself. If that is indeed the case then at some point the company will need to consider process selection and facility layout.

To be more specific, the company has said that it also intends to hire more college graduates over the next couple of years, so in reality it will likely be the decisions of men and women who have just recently learned how to manage plants and select processes, under the supervision of experienced employees. They will be charged with the task of deciding whether they will operate under job shop, batch, repetitive, or continuous conditions. They will need to take into consideration things like how much automation will be necessary to operate, and how they can optimize their processes concerning sustainability issues. Will they have product layouts or process layouts? Will they have fixed position layouts or combination layouts? Or will it be the more likely situation of a cellular layout given they will probably be technology companies that operate in a highly group structured environment?

Moving from here to the casket production industry, I would like to talk about the opposite side of the coin. Most notable in this article is the decision by Hillenbrand Inc., the largest casket maker in the country, to buy a company named K-Tron, which specializes in “size reduction.” This means that they produce machines that crush and reduce the impact of excess raw materials, and in manufacturing machines that efficiently allocate raw materials on the job site.

The reason that this is so interesting is because it is indicative of a firm that is trying to shrink its facilities layout and making decisions to shift the paradigm of decision making concerning what type of process to use when making caskets.

Essentially they are facing the opposite situation that Intel has currently involved itself in. These casket makers are recognizing that not only have people stopped spending exorbitant amounts of money on something that will go in the ground and never be seen again, but also that when the economy turns around, consumers may not make the decision to start purchasing those gaudy coffins again.

These are two polarized cases of what it means to have to make process selection and facility layout decisions for two very different types of firms. What should be taken away from this lesson is that although these two markets may seem dichotomized at first glance, they both have to follow the same fundamental rules of managing operations.

# posted by Josh : 8:14 PM  0 comments

In this paper we are concerned with the issue of capacity. There are many facets of this topic to consider, including whether a firm has too much or too little, feasibility issues such as can the firm expand or contract if they find it necessary, and whether a firm should make or buy given certain operating decisions. I will be referencing two articles from the Journal; the first will be about Google Inc. and the second about Toyota.

In today’s issue of the Journal there is an article that talks about how in the near future Google will unveil its plan to build a fiber-optic grid that would include a new kind of high speed broadband, and would be available to consumers in cities ranging from 50 to 100 thousand in population. The real breakthrough here is the cutting edge technology Google will bring to the table. If all goes as planned they will be offering speeds of up to 100 gigabits per second. This number is exponentially higher than most consumers are used to.

What about capacity issues? I don’t know the details but I do know that Google will have thought about whether the benefit to extend capacity at such a level outweighs its costs. Or did Google, being the ever-prolific technological innovator know about this move some time ago and already have plans in place to make this decision? One thing I would be willing to guess is that there will be little to no outsourcing involved with this project. The company seems to be very generous to its customers, but ironclad proprietary when it comes to competition. Considering also that this is going to be such a new technology, something tells me that they will keep everything under lock and key.

The second article was on the current issues at Toyota. I don’t mean to beat a dead horse with this article, but I feel that it’s one of the most current hot button issues and would like to consider it through the lens of each of the topics we are studying.

Right at the beginning of this article you are told that Toyota is fixing recalled vehicles at a rate of 50,000 per day. Immediately I have to wonder what this is doing to their capacity. Recalling from The Goal how even after Alex and his colleagues figured out the theory of constraints and began to maximize throughput, they still were not without an occasional crisis. Toyota is one of the largest operations in the world, and a pioneer in their field, innovating ideas like lean production. But even with such an arsenal of technology and capacity behind them, I imagine they are straining under the weight of so many recalled vehicles.

Another thing to be pointed out here is the risk that a firm takes when deciding to outsource is very apparent in the case of Toyota. For many years the firm has decided to buy as opposed to make many of its products. And for many years this has been a winning strategy for them. However, regardless of the standards you hold your vendors to, all it takes is one. One vendor, one product, and your reputation is ruined, presumably for a very long time.

# posted by Josh : 7:45 PM  0 comments