You are a consultant for the ABC consulting group. Your firm has been contacted by a XYZ Venture Capital Group, which is seeking a consulting outfit to give advice on where (which companies) it might make a significant investment. XYZ has no preference for investing in the service or manufacturing sector but does believe that operational excellence can lead to permanent value creation and superior profit and ROE performance. Because other consulting firms are also bidding on this large consulting project, XYZ has asked your firm to pick any 2 for-profit firms from one of the industries listed below, and to analyze them from an operations management perspective. XYZ will then compare your consulting firm’s depth and quality of analysis with other consulting outfits to finalize the consulting group. It will then perform an actual investigation.
Select 1 of the following industries, and then choose 2 companies within the industry you selected:
- 1. Small package-delivery industry – FEDEX & UPS
- Give a brief description of the industry background (the industry itself, not any particular firm in it).
- Give a brief description of the history of each firm of the chosen pair, including the market share, sales levels, and profit for the last 5 years.
II. Operational objective
- Research each firm’s stated mission statement.
- Narrow that down yourself to an operational objective. For example, an operational objective for a large mass merchandiser may be “to establish and execute a global supply chain to minimize product cost and meet customers’ quality expectations.” (Note: This part is NOT a research question. It is asking you to simply state what the operational objective is.) Another example would be the operational objective of an auto racing track pit crew, which may be something like “accomplish any necessary adjustments/repairs in 16 seconds or less, while also filling the gas tank and changing four tires.”
III. The specific operational challenges of this industry
- List and discuss at least 3 challenges. As an example, an operational challenge for any U.S. electronic equipment retailer could be political turmoil in a foreign country where products are sourced, leading to unreliable supply. This then might require dual sourcing and/or excess inventories. Another example might be the apparent need for high levels of inventory to keep customer service levels high, which hurts the company’s financial metric of ROE.
IV. Metrics of the industry
- Research at least 5 operational metrics this industry uses. If you cannot find examples to use, describe 5 metrics they should be using. The text gives numerous examples of these. Also, use the text examples plus your own critical thinking here (i.e., exactly how you would gather the data to calculate these metrics).
V. How has each firm addressed these industry challenges?
- Identify how each firm has addressed each of the specific industry challenges described in section III. This section should be written in the language of operations management. It should relate what each firm did to specifics in the text, such as work cell design, lean manufacturing techniques, SPC, quick changeover improvement, line balancing, design for manufacturability, and supply chain optimization.
VI. Conclusions for this industry pair
- Identify which firm is performing better. Specifically, identify why, from an operational perspective, the cycle time is better. Also give specifics regarding the lead time, percentage of customer complaints, reduction in waste, whether the inventory turn is better, customer retention, and so on.
- Compare each firm’s actual financial performance using metrics such as ROE, sales growth rate, inventory turn, and ROA.
VII. Applicability elsewhere
- To demonstrate to XYZ V.C. Group how broad ABC’s understanding of operations management is, discuss either the applicability of other industries’ operations management techniques to either of these firms success, or explain how the operations management techniques of either of these firms could be applied in other industries. Examples here could include how all U.S. companies learned the benefits of concurrent product development or JIT systems from the Japanese auto industry. Another example is how buying books and music online has now been widely adopted by most brick-and-mortar retailers.
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