SMR Test Yourself

A mission statement provides a broad statement regarding what business the firm is in. The broad statement provides great latitude regarding the company’s business

The four major types of strategies are: financial strategy, product development strategy, operations strategy, marketing strategy. The quality strategy would be in support of several major strategies

Environmental scanning is used to identify external forces which can be threatening to the company or provide opportunities for the company. Strengths and weaknesses are an internal assessment and would not be part of environmental scanning.

A firm which pursues the lead capacity strategy adds capacity before it is needed. This ensures that extra capacity will be available. While this will add additional cost to the operation, it also adds flexibility and delivery speed. This is especially important during growth periods when the firm can take market share.

Infrastructure decisions are centered around three major categories: workforce involvement: number and types of people, skill set, level of empowerment, organizational design: number of levels, centralized or decentralized, matrix or not, major organizational systems: quality, information and manufacturing planning and control systems

In a horizontal organization, decision making is spread out to the local operating units. As such, operating decisions are made at the local level. In this type of organization, fast decisions and flexibility are necessary in order to remain competitive. In this type of organization, senior managers must focus on removing the obstacles which impede decision making and ensure that decisions are made with the speed and flexibility required.

A corporate mission or philosophy is able to define what the corporation’s mission or operating philosophy is. It is intentionally vague (e.g. “safe” products, respect for employees, community involvement) to allow senior managers the ability to adjust plans within the definition of the corporate strategy. The corporate mission also defines for employees the framework by which the company will operate. Unfortunately, in many companies these strategies are not explicitly defined.

Businesses that are vertically integrated generally own a portion or all of the supply chain. They may also own the value chain up to the customer. They tend to believe that the vertical integration provides them with a competitive edge over competitors who must source their raw materials from suppliers. A good example of vertical integration would be an automotive manufacturer that owns an electronic assembly plan, a battery maker and several dealerships.

Horizontal diversification is the affiliation of the business with unrelated products/services. This would be commonly known as the corporate conglomerate. An example of this would be General Electric which has seemingly disparate businesses such as power transformers, medical equipment, jet engines, television network and finance.

The business strategy of a firm is the sum of the individual strategies of its component functions. For an organization to be aligned, all operational strategies, including the manufacturing strategy, must be derived from the business plan

The drivers for a manufacturing strategy are cost, quality, performance, delivery, flexibility, innovativeness, and channels. Different drivers will be necessary for the different products or channels

Manufacturing companies of the future must be highly focused, have a shared vision of the future, be flatter, build around the adage “plan for change and manage for stability” and be highly integrated

Global Logistics Systems address the strategic and tactical issues of availability and lowest total cost while meeting customers operational expectations for timely and accurate delivery of defect free goods

In setting a strategic decision, companies should focus on these operations and functions which are core to their product or service. Core competencies are those functions which the customer is willing to pay the company for. While an operation may not be competitive, it does not mean that it should be outsourced. It may mean that the company must find ways to be more competitive. If it finds that it can’t, it may require that the function be outsourced.

Strategic importance is a measure of a customers’ product’s or services’s long-term contribution to the business, which includes but also supersedes the financial meaning of the term. Asking the question “What does the organization do best?” and getting a clear answer to that question is the beginning of the renewal process.

The two biggest problems facing the implementation of any improvement strategy are:

1. Conflicting interpretations of the business goals as they relate to various functional groups. We might even disagree on whether we need to change anything
2. Uncoordinated choosing and implementation of specific changes

The “flat” organization will have a reduced number of management layers and will place responsibility at the lower levels of the organization. Decision making will be quicker, as will customer response.

In a plant of “high-tech” equipment, labor could have little direct contribution to production. Determining overhead on this basis would be irrelevant. Overproduction can provide transient profits by inflating ending inventory and “absorbing” cost incorrectly

New work teams will work on seemingly frivolous projects to learn the process. These projects are important to the team and management may not be in touch with the business. As the process develops, the team will be more comfortable with bigger projects.

Generally, having excess production capacity would produce extra costs not necessary to compete. Having greater capacity does not mean greater flexibility to compete, which would be an advantage

Technological leaders tend to try to advance technology, thus causing current technology to be obsolete, providing them with an advantage

The measure of flexibility is directly related to the number of different jobs employees can perform. This allows the company to do more with the existing workforce

Under ABC costing, costs are accumulated based on the activities performed and then it uses cost drivers to allocate the overhead to products, customers, markets, etc. Activity-Based Costing really tries to allocate overhead based on something more realistic than labor or machine hours

Providing long-term contracts to suppliers, especially if they are single sourced, will provide the suppliers with confidence in the company’s commitment to them. This will make them more responsive to the needs of the company. While EDI, MRP reports, and improved relations will help, nothing compares to the commitment of a long term contract

In order for SPC to be successful, the operators need to understand what to do when variations from the norm begin to appear. They do not need to know the mathematics behind the chart, as software can be used

The volume-variety matrix shows the relationship between the variety of products and the volume of products. Companies which have a low variety and a high volume would have a continuous manufacturing process. Companies which have this type of manufacturing would be oil refiners or chemical processors. These companies operate a continuous process around the clock.

Reducing queue times is an element in the Just-in-Time approach. This improves cycle times and reduces inventory levels as product is not sitting in a queue. Reduction in inventory levels is a result, not an element of the JIT approach. A Total Quality Management approach would include reducing defects and quality costs.

The total cost of ownership of the supply system is the total of all the costs associated with every activity of the supply stream. The acquisition costs tend to be a small portion of the total cost. Some of the indirect costs include inspection, handling, warehousing, insurance, etc.

If the alliance is to be successful, it has to be beneficial for both companies. Both companies should except their performance to improve be helping each other

During a development project, many activities can be done by overlapping the activities. This eliminates the need to wait until one sequence of steps are done before moving to the next sequence of steps. This cuts the waiting time. Cross functional teams can sometimes move faster than traditional projects; however, the consensus process of teams usually will take longer to make decisions.