Vice president of operations’ strategies for development and relocation at Apple. Part 3

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Introduction

Current position of Apple companyBest strategies to put in place in an attempt to enable it meet it mission, vision and business strategy, operation strategy, total quality.

Efficient statistical analysis techniques, efficient quality management and control and forecasting method.

Relocation plans and project proposals for the company.

Discussion

In attempt to come up with this strategy, we shall illustrate the following areas:

1. Statistical techniques for the level of quality in the organization

• Data collection on the organization’s production and profits.

• Data analysis for these production and profit.• Identifying the problems faced.• Implementing preventive and corrective

actions.

Current state of the facility location

• It began in 1997 with the main basis as supply chain management.

• It manufactures electronic gargets eg. Laptops, phones, refrigerators.

• The key competitors are HP, Dell and IBM.• The company is located in the semi-rural parts

Texas state. • The market has not been very stable due to this

rural set up.

2. Key concepts in capacity planning and facility location for the new location.

1. Identify New Capacity Requirements

2. Develop Capacity Alternatives

3. Evaluate Alternatives

Identify New capacity Requirements

• Forecasting space and market:– Long-term capacity requirements based on

expected future demand– Forecasting future demand–At this level, forecasting relies on qualitative

forecasting models(i) Delphi method(ii) Executive opinion

– Forecast and capacity decision should include strategic implications

Identify New capacity Requirementscont.

• Location cushions –Plan to underutilize the capacity to provide

flexibility• Strategic Implications– The number of competitors in the new

capacity–Chances of overcapacity in industry that

could be hazardous

Develop and Evaluate Capacity Alternatives

• These could include:–What if the business remains constant –Consider the business expanding by a large

margin.–Consider the business expanding by a small

margin.• Use decision tree.

3. Three-step procedure for determination of the new location .

• Checking on the proximity to the source of supply:– Minimize the cost of transportation perishable and bulky

goods and raw materials

• Examine the proximity to customers:– Target highly populated areas and areas close to partners.

• Checking on the proximity to labor:– Local wage & salary rates, attitude of locals toward unions,

availability of unique skills

Additional Location factors

• Community’s viewpoints:– Local community’s attitude toward the facility.• Site considerations:– Local taxation and zoning, access to various utilities.• Issues related to quality-of-life:– Climatic conditions, cultural affiliations, commuting time• Other considerations:– future expansion options and local competition

Current work system design and the organization’s feasibility in the job design.

• We measure: (i) current available capacity -design capacity - effective capacity (ii) effectiveness/feasibility of capacity use (iii) capacity considerations

Current available capacity

• Design capacity:– Maximum amounts of output under ideal conditions– The company can make 100 laptops, 20 refrigerators and

300 mobile phones per day when pushed

• Effective capacity:– Maximum rate of output under normal (realistic)

conditions– On the average Apple can make 70 laptops, 14

refrigerators and 205 mobile phones per day

Effectiveness/feasibility of capacity use

• Measure of the quantity of available capacity in use:

Utilization = ×(100%)

– It’s the measures effectiveness– We use effective or design capacity in denominator

Computing Capacity Utilization:

• Apple design capacity is 430 items per day. Currently Apple is producing 300 items per day. The bakery’s capacity utilization relative to both design and effective capacity:

Utilization (effective)= ×(100%) = ×100% = 102.39%Utilization (design)= ×(100%) = ×100% = 69.77%

Explanation

• The current utilization is below the design capacity.

5. Defend the new change implementation process and the rationale for the change of method.

We analyze the implementation process– Factor rating method – Break-even analysis– Transportation method

Factor rating method

•

Break-even analysis

• This method calculates the amount of goods required to be sold to just cover the given costs

• It consists fixed and variable costs• It’s best used for location analysis especially

when the costs of each location are known.

Break-even analysis cont.

• It involves the following steps:

1. Determine the fixed and variable costs for each location,

2. Plot the total costs for each location on one graph

3. Identify ranges of output for which each location has the lowest total cost

4. Solve algebraically for the break-even points over the identified ranges

Break-even analysis cont.

These approaches put currently makes implementation process to be effective.

6. Program Evaluation and Review technique (PERT) diagram for the relocation program

• t= 3mo t=2 mo

t=7.7 mo t= 2.5 t= 2.5 mo t=2.5 mo

10

30

50

25 75

PERT cont

• According to PERT, the project will take 75 months.

Critical Path Method

20 mon 30 mon

10 mon 20 mon

15mon 22mon

0

0

20

20

50 50

15 35

10 30

CPM cont

• The CPM shows that the project will take 50 months.

References • Ansoff, I. (1988). The New Corporate Strategy, John Wiley & Sons, New York, USA. Retrieved

from:http://www.worldcat.org/title/new-corporate-strategy/oclc/474238658.

• Dale, H. (1989). The elements of successful organizational change.Industrial Management.Retrieved from:http://www.gbata.com/docs/jgbat/v2n1/v2n1p6.pdf

• Goldman, M (2012). “At $500 Billion, Apple is Worth More Than Poland Feb.29-19”. Retrieved from:http://money.cnn.com/2012/02/29/technology/apple_market_cap/index.htm

• Harper, C. (1998). Leading organizational change in the 21st century.Industrial Management.(40) retrieved from:http://highbeam.com/doc/1g1-20950471.html

• Michael E. Porter (1947). A man with a competitive advantage. The Journal of Business Strategy. Retrieved from:http://www.accessmylibrary.com/article-1G1-55878390 /mich ael-e-porter-b.html

• Reid, R. D., & Sanders, N. R. (2012). Operations management: an integrated approach (5th ed.). Hoboken, NJ: John Wiley & Sons.