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
