Adoption of just-in-time based quality assurance and purchasing practices

Feasibility of transforming purchasing and quality control operations from conventional to just-in-time (JIT) practices is discussed. The study is confined to the dock-to-stores area of an engine manufacturing plant. Components used in the study are selected from a representative sample of inventory classes, commodity groups and agreement types with vendors. A time/cost analysis is carried out for the components selected so as to evaluate the cost effectiveness of the conventional purchasing and quality control. Findings on savings in terms of inventory-related costs and inventory turnover through the implementation of JIT practices are reported. A transformation framework is then developed to determine the suitability of individual components for JIT based practices. Cases are presented to demonstrate the functioning of the framework.     

THE PERILS OF EXCELLENCE: BARRIERS TO EFFECTIVE PROCESS IMPROVEMENT IN PRODUCT-DRIVEN FIRMS

Several authors have suggested that a focus on manufacturing capability and on continued process improvement may be a powerful source of competitive advantage, yet many firms appear to have encountered great difficulties in taking advantage of this insight. This paper reports on the results of five these conducted under the auspices of the MIT Leaders for Manufacturing program at the Microwave Technology Division of the Hewlett-Packard Company. We found considerable evidence that the marginal returns to process development within the division were probably considerably higher than the division's cost of capital, suggesting that process improvement probably was underfunded despite the fact that improving manufacturing capability had been identified as a key strategic priority. We found no evidence that this “underfunding” reflected either a failure to recognize the problem or an overly hierarchical or rigid organization. Rather it appeared to flow from the historical strengths of the division. A devotion to leading-edge technical solutions and to immediate customer service at almost any price had created barriers to the effective funding of process improvement that were deeply rooted in the organizational structures, information systems, and formal and informal incentive structures that had evolved to support the division's historical emphasis on excellence on product design. Our results highlight the problems that very successful product-driven companies may encounter in attempting to make continual process improvement central to their strategic mission.     

The application of filter theory to the study of supply chain dynamics

Recently, there has been a rebirth of interest in supply chain demand amplification, a trend accelerated by the availability of a wide range of simulation packages. However, although this approach provides some guidance on design improvements possible in a given situation, it rarely offers insight for the future. In the present paper the use of simple filter theory is proposed to help bridge this gap. The example chosen to illustrate the approach is a three-echelon system in which there are factory, distributor, and retailer activities. The results vividly confirm an optimal design previously obtained via a multi-attribute utility technique (MAUT) expert system. However, the knowledge gained via filter theory should improve yet further the effectiveness of the expert system. This is because the sequential steps to be followed when varying the echelon dynamics as part of the search procedure can be greatly improved. The paper concludes by showing how simulation results might be used to confirm the supply chain dynamic design which will minimize stockholdings in the presence of demand fluctuations. However, it should be noted that in common with the successful application of systems dynamics techniques in production-distribution systems generally, the solutions are most applicable to the medium-term operations horizon. The latter term may need re-definition for use in ‘lean’ supply chains. Our intuitive reaction is that a scientific definition may well turn out to be a multiple of the largest remaining process lead-time in the slimmed down supply chain rather than being the customary arbitrary choice of, for instance, a 12-month period.     

PEER EFFECTS IN HIGHER EDUCATION: DOES THE FIELD OF STUDY MATTER?

Does the peer effect vary with the field of study? Using data from a middle‐sized public university located in southern Italy and exploiting the random assignment of first‐year students to college accommodation, we find that roommate peer effects for freshmen enrolled in the hard sciences are positive and significantly larger than for freshmen enrolled in the humanities and social sciences. We present a simple theoretical model which suggests that the uncovered differences between fields in the size of the peer effect could plausibly be generated by between‐field variation in labor market returns, which affect optimal student effort. (JEL I21, Z13, J24)