Linking long-term capacity management for manufacturing and service operations

For firms that combine manufacturing and service operations in one system, the task of managing capacity is not straightforward. New goods and services may not have the same set of competitive priorities, and the models and concepts available in the literature for service operations differ from those for manufacturing operations. We address this problem and review the concepts and models for capacity management in the long term in both streams of literature, i.e. manufacturing and services, to develop a unified framework for manufacturing and service operations. The framework creates transparency between new goods manufacturing and service operations, since the same long-term capacity management structure is used for both product types, as well as between capacity strategy and planning strategy, since new goods and services are treated simultaneously. In the framework, the concepts of chase and level strategies are redefined for service operations to allow for integration with manufacturing operations. A case study demonstrates the usefulness of the integrated approach for long-term capacity management.     

Operational Risk in Financial Services: A Review and New Research Opportunities

We present a framework to describe and analyze operational risk in financial services from an operations management perspective, focusing in particular on process design, process management, and human behavior aspects. The financial services industry differs from other service industries in ways that affect the nature of the operational risks it is subject to. In recent decades, many books and papers have focused on operational risk in financial services; however, this literature has focused mainly on the conceptual and statistical aspects of operational risk management and not on its operational aspects. Operational risk in financial services has not received much attention from the operations management community. The framework presented here is based on the premise that operational risk in financial services can reap significant benefits from research done in the theory and practice of operations management in manufacturing industries as well as in other services industries. The objective of this study is to propose particular challenges and questions raised in the practice of operational risk management that may stimulate future research in this particular area of operations management.     

A Framework for Examining the Interface between Operations and Information Systems: Implications for Research in the New Millennium*

Even though much research has been published in operations and information systems, both functional areas find their roots in other disciplines. While operations management evolved from operations research in the 1960s, the field of information systems is of more recent vintage and traces its original roots to computer science. Both disciplines now naturally have come closer together as information and process-technology-based changes force manufacturing firms to become more efficient and customer focused. Market and technology-driven e-commerce initiatives that are likely to dominate business strategies in the future cannot be successfully achieved without a successful integration of operations and information systems. In this paper, we present a unifying framework that can be used to better understand the management of the functional interface between operations and information systems. We also categorize and highlight the contributions of the articles that appear in this special research focus issue. Finally, research directions that emerge from our understanding of this interface are outlined in an effort to stimulate further thinking and research that can advance our knowledge of this interface area.     

John A. Buzacott and His Pioneering Contributions to Manufacturing and Service Systems

John A. Buzacott is a pioneering and premier contributor to the field of production and operations management. He has been a principal architect of the development of a unified framework and a rigorous engineering foundation for many of the major approaches currently used in the design, planning, and control of manufacturing and service systems. His innovative use of stochastic models to explain many phenomena occurring in manufacturing and service organizations has distinguished him not only as a great researcher but also as a great teacher. His contributions have inspired scholars throughout the world. We provide an overview of John's research works and accomplishments.     

The effects of human resource systems on operational performance in mass customisation manufacturing environments

This study empirically examines the impact of two human resource management (HRM) systems on operational performance in two distinct mass customisation manufacturing (MCM) environments. Using the survey data collected electronically from 148 mass customisation manufacturers in the USA, moderated hierarchical multiple regression was employed to test the research hypotheses. Results suggest that operational performance significantly increases when a bundle of complementary basic HRM practices are integrated in MCM contexts that emphasise module and process standardisation. This finding indicates that these types of mass customisation manufacturers are capitalising on the opportunity to improve operational performance by strategically combining several different, but supportive, traditional HRM practices with a finite MCM system.     

Introduction to Innovation WITHIN and ACROSS Borders: A Review and Future Directions

Innovation is an integral part of every firm's ongoing operations. While new product and service creation is an essential task to ensure a firm's immediate success in the marketplace, process and supply chain innovations can also create a unique source of competitive advantage for the future. Encouraging innovative thinking, developing new innovations, and managing the processes by which those innovations are developed are critical aspects of today's firm. Consequently, research which aids in the creation and maintenance of innovative firms is an important topic of inquiry for research communities on innovation management, including the operations management and information systems communities. We review the literature in this important area and offer suggestions for future research on the following topics: innovation within a firm and across the supply chain, technology management, and new product and service development.     

Decision model of customer order decoupling point on multiple customer demands in logistics service supply chain

The key factor in realising competitiveness of a logistics service supply chain (LSSC) is its ability to meet customised requirements with the cost of mass service. This paper introduces the concepts of mass customisation and customer order decoupling point (CODP) into the field of logistics service to solve the problem of CODP when a logistics service integrator (LSI) in an LSSC operates under mass customisation. Two models of CODP decision, respectively, on single and multiple customer demands, are developed. Both process constraints and lead time constraints from the customised logistics service orders are considered. Unlike CODP positioning models within the manufacturing supply chain, the objective of this paper is to exclusively consider the cost of order transferring and order waiting at CODP to minimise total cost of the LSI. The applications of the two models are also discussed by two real cases, and three major conclusions are drawn. First, introducing mass customisation into an LSSC and minimising total cost of order processing of the LSI by selecting an optimised CODP is feasible. Second, total cost will decrease monotonously along with the movement of CODP toward the last service procedure under the precondition of satisfying lead time constraints. Third, parameters about the customers’ logistics service orders will bring about great influence on the selection of CODP. For instance, the lead time of orders will influence the number of feasible CODPs and the position of optimal CODP. Also, decreasing cost of order transferring and order waiting will not cause the change of optimal CODP, while increasing cost of order transferring and order waiting will lead to the switch of optimal CODP.     

The Impact of Mass Customisation on Manufacturing Trade‐offs

Management literature has suggested that the advent of mass customisation marks the end for trade‐offs between customisation and other competitive priorities (Pine et al. 1993; Westbrook and Williamson 1993; Tu et al. 2001). However, evidence supporting this proposition is anecdotal. This paper examines the impact of product customisation on four competitive priorities, drawing upon the results of a recent survey of 102 U.K. manufacturing firms from eight industry sectors. The study indicates significant compatibility between customisation and quality, volume flexibility, delivery reliability and non‐manufacturing costs. On the other hand, trade‐offs remain between customisation and manufacturing costs and delivery lead times. The results contradict the initial proposition that customisation can be “free,” and have important implications for firms embarking upon a mass customisation strategy.     

Manufacturing cycle time reduction using balance control in the semiconductor fabrication line

In semiconductor manufacturing, wafer fabrication is the most complicated and important process, and is composed of several hundred process steps and involves several hundred machines. The productivity of the manufacturing process depends mainly on controlling the balance of WIP (work-inprogress) flow to achieve maximum throughput under short manufacturing cycle times. This paper discusses how to determine the proper WIP level for operations, against which balance status can be measured. Balance measurement can be applied in mathematical modelling for bottleneck scheduling and operations management of the fabrication line. Performances are evaluated through computational experiments to show that balance driven management leads to 15-33% more production in 21% shorter manufacturing cycle time than production driven management.     

Making integrated health care work

This article summarizes the authors' thinking on value added in health care, and offers examples of the major strategies being implemented by integrated systems across the United States to increase their value and improve their competitive positioning. The research results are based on a review of published literature on 150 health care organizations in various stages of integration, and 20 in-depth case studies of integrating systems.     

Exploiting the balanced scorecard in the Operations Department: the Ducati Motor Holding case

The literature has widely discussed how to measure manufacturing performance. However, even though several indicators have been proposed, manufacturing reporting systems still suffer from a number of problems, which according to recent contributions, can be solved through the adoption of integrated performance measurement systems (PMSs). This article aims at understanding whether such integrated PMSs–namely the balanced scorecard–can actually solve the problems, which usually affect the reporting system of the Operations Department. The article presents a case-study developed in Ducati Motor Holding and then outlines the main conclusions and managerial implications. The empirical analysis demonstrates that the key benefits brought about by the balanced scorecard concern a higher responsiveness of the decision-making process and more intense cooperation among all units related to operations management (namely, manufacturing, logistics, quality management, procurement, maintenance).     

Finding and Implementing Energy Efficiency Projects in Industrial Facilities

This study addresses the challenges of finding and implementing profitable energy efficiency (EE) projects, a critical foundation for sustainable operations. We focus on manufacturing enterprises, but many of our findings apply also to the back office of service operations. Our starting point is that, in nearly every industrial enterprise, there are many profitable EE projects that could be implemented but are not. An oft‐cited hindrance to implementation is the lack of an internal management framework in which to find, value, and execute these projects. Using a conceptual approach, we rely on proven sustainable operations tools to develop such a framework. We identify three major value drivers of EE projects: savings intensity, “green” image, and project complexity. We then describe a framework for understanding the context of EE projects in industry, with an underlying analytic foundation in optimal portfolio analysis. A case study of a large manufacturing site is used to illustrate emerging best practices—based on Kaizen management principles—for integrating EE project management with operations, engineering, and strategy.     

HOW PROFESSORS OF OPERATIONS MANAGEMENT VIEW SERVICE OPERATIONS?

This study empirically tests assumptions that underlie operations management (OM) scholars' belief that service operations should be managed differently. Respondents were self-classified into manufacturing and service types. There is a significant statistical difference between the views held by each group with regard to statements such as “service Om should be taught as a separate course” and “service operations should be managed differently from manufacturing.” There was general consensus on the service research agenda with the exception of three research areas: time standards, technology, and productivity. The survey also revealed that customer influence has the greatest impact on service Om strategies and decisions.     

A modularised typology for flow design based on decoupling points – a holistic view on process industries and discrete manufacturing industries

Management of production activities covers a wide range of decisions. In this paper, a modularised approach is suggested that, through configuration, generates a case-specific flow design. The approach is based on identification of decision categories that are generic and fundamental in the flow design, covering both discrete manufacturing industries and process industries. Each decision category identifies a unique property of the flow which changes at a particular point: this is termed a ‘decoupling point’. A three-dimensional modularised typology is developed by combining three different decision categories. Cases from the steel industry and the tooling industry are used to illustrate how the typology can be applied. The modularised approach provides a typology for the application of both qualitative and quantitative methods for flow management, including planning, control and performance management.     

Global operations strategy: Coordinating manufacturing networks

This paper presents a concept that describes how companies can manage their international operations so as to facilitate the coordination of their manufacturing networks. The research presented originates from a model that was developed at the Swedish telecommunications company Ericsson in the mid-1990s, but has since then been further elaborated. More specifically, the purpose of this paper is to show how Ericsson Radio Systems incorporated the recent research on manufacturing networks found in literature in their global operations strategy, and to present the conceptual model that was the result of these efforts. The conceptual model described in this paper focuses on the blending of cost competitiveness, flexibility, and innovativeness; a combination termed the “transnational solution” in the literature. In addition to a literature review on manufacturing networks and global operations and the proposed conceptual model, the paper also contains a case illustration showing how Ericsson has implemented a version of the conceptual model so that their global operations strategy realizes the transnational solution.     

Manufacturing feature-based cost management system: a case study in Brazil

Feature costing is a topic of recent discussion related to cost management systems (CMSs) aimed at understanding how product features influence production process costs. It raises as a key issue in mass customisation environments where a single product model can present hundreds of menu options. In this study, we explore the concept of feature costing beyond the use of activity-based costing (ABC). We propose a CMS based on features and common elements as costing objects instead of products. In our model, we use the unit of production effort method to organise the direct manufacturing costs, ABC method to address the indirect cost and the standard methods to compute raw materials costs. We illustrate the method in the production of bus seats in a Brazilian manufacturing company. This study gives different perspectives to the international academic community on the use of a different CMS used by many Brazilian companies.     

Managing White‐Collar Work: An Operations‐Oriented Survey

Although white‐collar work is of vast importance to the economy, the operations management (OM) literature has focused largely on traditional blue‐collar work. In an effort to stimulate more OM research into the design, control, and management of white‐collar work systems, this paper provides a systematic review of disparate streams of research relevant to understanding white‐collar work from an operations perspective. Our review classifies research according to its relevance to white‐collar work at individual, team, and organizational levels. By examining the literature in the context of this framework, we identify gaps in our understanding of white‐collar work that suggest promising research directions.     

The Role of Operations Management Across the Entrepreneurial Value Chain

This special issue contains articles that exemplify the role of operations management across the entrepreneurial value chain. This value chain encompasses all stages of the entrepreneurial phenomenon, including technology commercialization, where discovery, commitment, organization, and growth must take place. We report on a literature search that identifies research questions categorized with respect to topics crucial to operations management scholars and classify these questions under each stage of this value chain. The search guides the development of an evolutionary path for the use of resources, routines, and reputation (3Rs), often lacking in this process, and enables us to propose modeling and topical gaps in the literature. We offer a framework to set up exemplars for operational tradeoffs uniquely associated with the entrepreneurial value chain. We also articulate how five contributed articles in this issue tackle some of these tradeoffs, prior to introducing four perspective pieces. We hope this discussion motivates follow‐on work and triggers a significant increase in the flow of articles that make it to both entrepreneurship and operations management top‐tier academic and practitioner publications.