Investment in Facility Changeover Flexibility for Early Entry into High‐Tech Markets

A model is introduced to analyze the manufacturing‐marketing interface for a firm in a high‐tech industry that produces a series of high‐volume products with short product life cycles on a single facility. The one‐time strategic decision regarding the firm's investment in changeover flexibility establishes the link between market opportunities and manufacturing capabilities. Specifically, the optimal changeover flexibility decision is determined in the context of the firm's market entry strategy for successive product generations, the changeover cost between generations, and the production efficiency of the facility. Moreover, the dynamic pricing policy for each product generation is obtained as a function of the firm's market entry strategy and manufacturing efficiency. Our findings provide insights linking internal manufacturing capabilities with external market forces for the high‐tech and high‐volume manufacturer of products with short life cycles. We show the impact of manufacturing efficiency and a firm's ability to benefit from volume‐based learning on the dynamic pricing policy for each product generation. The results demonstrate the benefits realized by a firm that works with its manufacturing equipment suppliers to develop more efficient and flexible technology. In addition, we explore how opportunities afforded by pioneer advantage enable a firm operating a less efficient facility to realize long term competitive advantage by deploying an earlier market entry strategy.     

制造企业服务业务扩展及其认知因素研究

制造企业的竞争越来越激烈,几乎所有的企业都要面对快速反应多变市场和应对价格压力的要求,面对越来越小的产品利润空间和越来越复杂的客户需求,本文从对工业服务管理文献分析和制造企业的调查研究入手,揭示了制造企业从纯粹的产品生产者向客户支持方案提供者发展的转移趋势.通过对瑞士和德国30多家机器和设备制造企业进行的调查研究,说明了服务业务对制造企业在开发财务、营销和战略机会上的重要作用,并对转移过程中服务业务的扩展过程进行了总结.结合具体企业实践,本文对制约制造企业扩展服务业务中在管理动机上的认知因素进行了分析和研究.结合中国加入WTO后,中国制造企业将全面融入国际竞争的背景,本文期望对中国制造企业的发展和竞争地位的提高提供理论和实践上的指导.     

Intra-regional sales,product diversity,and the performance of merchandising multinationals

This study examines the relationship between intra-regional sales, product diversity, and performance of 45 merchandising firms using data from 1997 to 2003. The interaction effects between product diversity and intra-regional sales on performance are explored, using a curvilinear relationship. The analysis integrates three main theories, namely the resource-based view, transaction costs, and organization learning theory. The models measuring a firm's performance by return on assets (ROA) and return on sales (ROS) show that at high levels of intra-regional sales, small levels of product diversity can generate greater return to a firm but high levels of product diversity may hurt a firm's performance. Higher levels of intra-regional sales tend to improve a firm's performance and enhance the impact of product diversity on performance.     

社交网络情境下基于同侪影响的产品线规划研究

依托社交网络优化产品线是实现“匹配消费者需求带动产品设计-制造-营销全流程协调发展”的重要途径,尽管已经引起实业界的重点关注,相应的学术研究却十分匮乏。鉴于此,本文基于同侪影响理论与前景理论,结合社交网络情境下消费者的产品需求、偏好及决策,构建涵盖产品线营销层面和设计层面的双层规划模型;然后结合智能手机产品线实例,运用嵌套灰狼算法对该双层规划模型进行求解验证。本研究旨在提出社交网络与产品线规划之间耦合作用的联合优化框架,为面向社交网络的产品线规划提供理论依据。     

When to Offer Lower Quality or Remanufactured Versions of a Product

We investigate the profitability of adding a lower quality or remanufactured product to the product portfolio of a monopoly firm, both in single‐period and steady‐state settings. Consumer behavior is characterized by a deterministic utility function for the original product and a nonlinear relative utility function for the lower quality product. We find a threshold for the cost of the low‐quality product below which it is optimal to add it to the firm's portfolio, and show that while a cost advantage is necessary to make the lower quality offering profitable under linear or convex relative utility functions, market segmentation alone can justify the addition of the lower quality product under concave relative utility functions. In particular, we characterize (i) the new product cost under which it is optimal to offer a lower quality version of the product even if it is as costly to produce as the original product; and (ii) the weighted average of new and remanufactured product costs in the steady state under which it becomes cost effective to offer new products under the remanufactured label. Finally, we also identify the maximum possible profits from customer segmentation and the form of the relative utility function that achieves them. We discuss the implications for the common marketing practices of branding and generics.     

Product Launches and Buying Frenzies: A Dynamic Perspective

Buying frenzies caused by a firm's intentional undersupplying of a new product are frequently evident in several industries including electronics (cell phones, video games), luxury automobiles, and fashion goods. We develop a dynamic model of buying frenzies that incorporates the firm's manufacturing and sale of a product over time and characterizes the conditions under which inducing such frenzies is an optimal strategy. We find that buying frenzies occur when customers are sufficiently uncertain about their valuations of the product and when they discount the future sufficiently but not excessively. We propose measures of “customer desperation” and of the extent of scarcity to measure the depth and breadth of buying frenzies, respectively. We also demonstrate that such frenzies can have a significantly positive effect on firm profits and partially recover the loss due to non‐commitment to future prices. This study provides managerial insights on how firms can influence market response to a new product through production, pricing, and inventory decisions to induce profitable frenzies.     

基于个性化需求的产品竞争供应链结构选择

基于"制销分离"与"定制一体"两种结构选择,构建个性化产品供应链处于非竞争与竞争环境下的博弈模型,在引入一个实际案例的基础上,运用算例仿真比较分析两种运营模式下的供应链运作策略和盈利差异。结果显示：与制销分离结构相比,个性化产品供应链选择定制一体结构,有利于匹配产品个性化制造、提升产品个性化水平和市场需求、增加供应链的期望收益;个性化产品供应链选择制销分离结构时,适度的批发价格激励能够提升产品个性化水平、更好满足消费者个性化需求、改善供应链的运营绩效,分销商适度让利加大批发价格激励力度可显著促进产品个性化制造互动、提升产品个性化水平;竞争将消减个性化产品供应链的运营绩效,但选择定制一体结构可显著提升竞争力。     

Production and Sales Planning in Capacitated New Product Introductions

How should a firm with limited capacity introduce a new product? Should it introduce the product as soon as possible or delay introduction to build up inventory? How do the product and market characteristics affect the firm's decisions? To answer such questions, we analyze new product introductions under capacity restrictions using a two‐period model with diffusion‐type demand. Combining marketing and operations management decisions in a stylized model, we optimize the production and sales plans of the firm for a single product. We identify four different introduction policies and show that when the holding cost is low and the capacity is low to moderate, a (partial) build‐up policy is indeed optimal if consumers are sensitive to delay. Under such a policy, the firm (partially) delays the introduction of its product and incurs short‐term backlog costs to manage its future demand and total costs more effectively. However, as either the holding cost or the capacity increases, or consumer sensitivity to delay decreases, the build‐up policy starts to lose its appeal, and instead, the firm prefers an immediate product introduction. We extend our analysis by studying the optimal capacity decision of the firm and show that capacity shortages may be intentional.     

Mitigating the effect of risk conditions on supply disruptions: the role of manufacturing postponement enablers

While previous published studies have evaluated the drivers of supply disruptions, only a few have empirically investigated the role of manufacturing postponement enablers as mitigating practices. This work explores the complex interaction between supply disruptions (i.e. supplier failure, purchase unavailability), risk conditions (i.e. antecedents that positively influence the probability and severity of supply disruptions) and manufacturing postponement enablers (i.e. product and process modularity). Specifically, we aim at understanding ‘when’ manufacturing postponement enablers should be adopted the most and ‘if’ their adoption can fully mitigate the effect risk conditions exert on supply disruptions’ probability and severity. To achieve our objective, we developed a conceptual model, and we tested it using survey data from 54 Italian manufacturing companies. The results show that supply market difficulty and technological uncertainty imply a higher probability and severity of disruptions associated with supplier failure and purchase unavailability. Most importantly, we provide evidence of the role played by product and process modularity in fully mitigating the effect of technological uncertainty on supply disruptions.     

How market entry order mediates the influence of firm resources on new product performance

Building from the resource-based view of the firm and the first-mover advantage literature, this paper asserts that the entry order in a new product-market affects how the firm's resources and capabilities influence the product's performance. This proposition is tested on a sample of 136 product launches by Spanish manufacturing firms. The empirical analysis reveals that firms with superior managerial and R&D resources achieve superior new product performance when an early-entry strategy is adopted. Manufacturing resources also contribute positively to the success of new products, but this effect is weakened by the difficulties and inconveniences that firms with advantages in operations face when they attempt to pioneer a new market. The results regarding the influence of marketing resources on new product performance are not conclusive.     

Emerging Market Penetration,Inventory Supply,and Financial Performance

Realizing potential benefits from emerging market penetration requires firms to address inherent supply chain challenges. A major challenge is for firms to manage costly inventories to address demand and supply risks in emerging markets. However, emerging market penetration may offer opportunities for firms to lower inventory levels, reduce costs, and improve operating performance. Using data for 482 manufacturing firms over the 5‐year period, 2003–2007, obtained from the COMPUSTAT Industrial and Segment Databases, this article examines the relationships between emerging market penetration, inventory supply, and financial performance. Our results show that a multinational firm's sales penetration into emerging markets is associated with fewer days of inventory supply and improved financial performance. As emerging market penetration may allow firms to operate with lower inventory supply, the positive effect from emerging market penetration, such as labor cost reductions, may be enhanced due to inventory cost savings.     

Exploring the impact of sustainable value proposition on firm performance

Considering the immense potential of sustainable business models in tackling the broader challenge of corporate sustainability, this paper integrates the literature streams on sustainability practices and organizational business models to analyze the performance implications of a firm's sustainable value proposition. Based on the analysis of a large panel dataset across different industries, consistent with the proposed theory, a sustainable value proposition has been found to have a positive impact on a firm's market-based financial performance (namely, Tobin's Q). Yet, this impact turns out to be highly context-dependent. In particular, the findings reveal that a firm's R&D capabilities improve the positive effect of a sustainable value proposition on a firm's financial performance. At the same time, the marketing communication capabilities and sustainable practices regarding employee relations reduce the sustainable value proposition's financial performance effect, arguably due to the costs associated with marketing and the loss in employee interest during the process of adopting the sustainable business model elements.     

The Economic Value of a Sustainable Supply Chain

The economic rationale to operate a global supply chain in a sustainable manner is developed. Arguments are made based on marketing, finance, and production theories that by engaging in socially responsible behavior the firm will increase sales, decrease costs, reduce financial risk, and increase profits, which will ultimately increase returns to the firm's shareholders. A model is developed of the mechanism by which modern production methods such as lean production and quality management result in sustainable corporate behavior that, in the long run, translates into higher stock valuations. The production effects cause marketing and financial risk effects that are complementary, and all three channels of influence synergistically result in higher stock values in the model. These effects also provide important benefits to other stakeholders of the firms including employees, customers, the environment, and the community. An important ethical issue in global supply chains is working conditions in foreign plants often leading to allegations of sweatshop labor conditions. This issue is used to illustrate how lean production practices can affectconsumers, employees, and financial risk. Conclusions from the sweatshop labor issue are shown to apply to other sustainability issues as well.     

Decision support flexible manufacturing systems

The justification of flexible manufacturing systems (FMS) is a topic that has gained a lot of attention due to the strategic effect it has on the competitive stature of industrial firms. The decision to convert to FMS should follow a pattern of feasibility assessments, cost/benefit analysis where consideration of issues such as increased quality, productivity and capability as well as tangible benefits takes place. Difficulties, however, arise in the modeling of the behavior of the proposed FMS. This paper introduces the design of a decision support framework that aids the strategic planner in simulating the performance of proposed FMS and in determining the parameters that affect the costs and benefits, tangible and intangible, of such a system. The decision support system (DSS) allows the user to use subjective evaluations of benefits accruing from intangible considerations of new product design, faster turnaround on design-to-market cycles and new marketing strategies in fragmented markets. The DSS enhances the examination of issues such as changing demand, varied tasks and routings, job and machine flexibility, etc. which affect costs and benefits. It performs these important functions by allowing for the development of scenarios that aid in the evaluation of the effect of the conversion from non-flexible to flexible manufacturing on the organization's financial position.     

THE IMPACT OF UNIONS ON OPERATIONS STRATEGY

This paper explores the effect that unions have on a firm's ability to reengineer manufacturing processes. We begin by exploring the various effects that a union may have in a manufacturing environment. Next, we briefly review how unions may affect managerial initiatives to reengineer processes and improve manufacturing performance. The third section analyzes an existing database to test for differences in cycle time and manufacturing performance between union and nonunion firms. Finally, we discuss the implications of the study for future operations strategy research and note how a different form of union‐management relationships is beginning to evolve.     

Optimal Configuration of a Service Delivery Network: An Application to a Financial Services Provider

Driven by market pressures, financial service firms are increasingly partnering with independent vendors to create service networks that deliver greater profits while ensuring high service quality. In the management of call center networks, these partnerships are common and form an integral part of the customer care and marketing strategies in the financial services industry. For a financial services firm, configuring such a call center service network entails determining which partners to select and how to distribute service requests among vendors, while incorporating their capabilities, costs, and revenue‐generating abilities. Motivated by a problem facing a Fortune 500 financial services provider, we develop and apply a novel mixed integer programming model for the service network configuration problem. Our tactical decision support model effectively accounts for the firm's costs by capturing the impact of service requirements on vendor staffing levels and seat requirements, and permits imposing call routing preferences and auxiliary service costs. We implemented the model and applied it to data from an industry partner. Results suggest that our approach can generate considerable cost savings and substantial additional revenues, while ensuring high service quality. Results based on test instances demonstrate similar savings and outperform two rule‐based methods for vendor assignment.     

Multi‐Product Quality Competition: Impact of Resource Constraints

We study a multi‐product firm with limited capacity where the products are vertically (quality) differentiated and the customer base is heterogeneous in their valuation of quality. While the demand structure creates opportunities through proliferation, the firm should avoid cannibalization between its own products. Moreover, the oligopolistic market structure puts competitive pressure and limits the firm's market share. On the other hand, the firm has limited resources that cause a supply‐side fight for adequate and profitable production. We explicitly characterize the conditions where each force dominates. Our focus is on understanding how capacity constraints and competition affect a firm's product‐mix decisions. We find that considering capacity constraints could significantly change traditional insights (that ignore capacity) related to product‐line design and the role of competition therein. In particular, we show that when the resources are limited, the firm should offer only the product that has the highest margin per unit capacity. We find that this product could be the diametrically opposite product suggested by the existing literature. In addition, we show that for intermediate capacity levels, whereas the margin per unit capacity effect dominates in a less competitive market, proliferation and cannibalization effects dominate in a more competitive market.     

Product Portfolio Strategies: The Case of Multifunction Products

Motivated by the proliferation of multifunction products, we investigate product portfolio decisions of a single firm by analyzing the impact of three major factors. First, because multifunction products provide complete or partial functionalities of single‐function products, we incorporate substitution or cannibalization effects between the potential products. Second, we explicitly model the variable costs of manufacturing the single‐function and multifunction products. Third, we examine the firm's pricing decisions because of their impact on the degree of cannibalization between the multifunction product and one or more single‐function products. Using an economic model, we first characterize the firm's optimal product portfolio (through a quantity‐based decision), which in turn determines the market equilibrium prices for each product in its portfolio. Some of the unique insights stemming from our analysis are: (a) the optimal product portfolio choice is driven primarily by maximum profit margins for the single‐function products weighted by the demand substitution effects; and (b) from a product design perspective, the complete functionality of the base single‐function product is always included in the optimal product offering, but this is not necessarily the case with the complete functionality of the nonbase single‐function product.     

Marketing as an Investment in Shareholder Value

We present resource‐based and capability‐based arguments of marketing investment intensity to offer a strategic view of marketing as an investment in shareholder value. We find that marketing investment intensity has a U‐shaped quadratic effect on shareholder value creation (Tobin's q) that calls for marketing investment to be protected and increased, not surrendered. We show how marketing investments interact with investments in R&D, human capital and operations to reveal how strategic co‐investments can alter the shareholder value of marketing. Finally, we show how competitive intensity and failings in the firm's investment productivity (its ability to convert investment expenditure into sales) point to malaise in the firm's own strategic architecture as a fault for perceived poor returns from marketing investments. Our findings suggest that marketing investment should not be scapegoated when its contributions to shareholder value are not as expected. When invested in strategically and in combination with other investments, marketing can unlock exciting improvements in shareholder value.     

Robust Structural Equations for Designing and Monitoring Strategic International Facility Networks

Using predictive global sensitivity analysis, we develop a structural equations model to abstract from the details of a large‐scale mixed integer program (MIP) to capture essential design trade‐offs of global manufacturing and distribution networks. We provide a conceptual framework that describes a firm's network structure along three dimensions: market focus, plant focus, and network dispersion. Normalized dependent variables are specified that act as proxies for a company's placement into our conceptual network classification via the calculation of just a few key independent variables. We provide robust equation sets for eight cost structure clusters. Many different product types could be classified into one of these groups, which would allow managers to use the equations directly without needing to run the MIP for themselves. Our numerical tests suggest that the formulas representing the network structure drivers—economies of scale, complexity costs, transportation costs, and tariffs—may be sufficient for managers to design their strategic network structures, and perhaps more importantly, to monitor them over time to detect potential need for adjustment.