1. Do you think that the factors which attract high-tech companies to these developing nation locations are going to be as important in ten years’ time?
Inevitably, there is an economic ‘correction’ over time that will erode some of the advantages of these high-tech locations. The main issue is cost. At the moment the cost of developing high- tech products and software in these new locations is substantially lower than the cost in most western economies. As prosperity increases in developing nation locations due to the influx of new businesses, wages will tend to rise and costs increase. This will erode their advantage.
However, this process could take many years (longer than 10). More importantly in the long term, other advantages may emerge that compensate for any marginal cost increase in the new locations. These advantages are likely to be things such as an increasingly experienced labour force, improving infrastructure and economies of scale as more and more industries relocate.
2. What advantage do Silicon Valley locations still have over their challengers in developing nations?
They still have scale and experience advantages. Silicon Valley is still the largest cluster of high-tech businesses and it has developed a whole range of infrastructural support that may take years to develop in newer locations. Furthermore, they have many years of cumulative experience that, although it may become less important as developing nations gain their own experience, is still a distinct advantage when tackling new high-tech projects. Maybe just as significantly, the headquarters of the companies are largely located in the United States of America, so Silicon Valley locations are usually more intimately concerned with the day-to-day activities of the company generally.
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C H A P T E R 7
Layout and flow Teaching guide
Introduction
This chapter is a mixture of concepts and techniques. As usual the concepts are more important than the techniques. However, in this topic particularly, the techniques of layout can be used to reinforce some of the underlying principles behind the concepts. The main concept is that there are specific ‘pure’ types of layout, which relate to process types. The distinction between process types on the one hand and layout types on the other can sometimes be confusing to students. The main point to get across is that process types indicate the overall approach to organizing an operation. Process is a broader concept than layout. However, layout is what you physically see when you go into an operation. Process is more of a conceptual issue. It is also worth stressing that the relation between process and layout is not totally deterministic. This point is made in Table 7.1 in the chapter but is worth stressing.
Key teaching objectives
• To introduce the two concepts of process type and layout type and the relation between them.
• To describe the basic layout types in terms of the nature of the flow of transformed resources through the process.
• To stress that most real layouts are hybrids of the pure types.
• To identify some of the simple approaches that can be used to determine the exact nature of a layout.
Exercises/discussion points
• Teaching tip – We find it useful to encourage students to identify operations with which they are familiar (libraries, shops, restaurants, etc.) and try to classify them as being close to one of the pure layout types. Discussions can then centre on how the layout of the operation could be changed to make it flow more or less continuously. The most commonly cited example is a restaurant or eating area within the college or university. Discussions here could involve how to make it more assembly-line like, or more fixed-position like.
• Teaching tip – Try discussing with the students how their layout might change for a simple task such as making a sandwich, as volume and variety change. For example, ask the question, 'If you were making a sandwich for a friend how would you do it?' Discussion
would then centre around the kind of sandwich they want (limited only by the availability of ingredients in the kitchen), when they wanted it (it could be made to order), and how much it could be customized (more salt and pepper?). Then ask, 'If you were making sandwiches for a whole group of friends who were due to arrive in an hour’s time, how would your process change?' (You would butter all the bread together, standardize the products to some extent, and so on). Then ask, 'If you were making 5,000 sandwiches a day for a supermarket, how would you wish to organize the production system?' (Assembly line process, etc.).
• Teaching tip – The idea of combinatorial complexity is an important one to get across when dealing with process layouts. Many students do not understand how this works. A good demonstration is to find someone in the class with a (floating point) calculator, get them to punch in factorial 30 (30!). Then say, 'Supposing that a computer could evaluate and store the details of (say) 10,000 alternative layouts per second. Divide the number, factorial 30, by 10,000 for the number of seconds it would take, divide that by 60 for the number of minutes it would take, divide that by 60 for the number of hours, etc. .' The resulting figure will still be very large. This is why generally good sub-optimal solutions are sought rather than purely optimal ones.
• Exercise – Get students to analyze the simple process of boiling an egg or making a cup of tea in their kitchen area. Ask them to lay out the kitchen to make this process more efficient.
Get them to discuss the disadvantages as well as the advantages of this.
• Exercise – The case study at the end of this chapter ‘Weldon Hand Tools’ we have found to be particularly useful. To make it more interesting, purchase some planes (we have found the Stanley Handyman plane to be the best) and some screwdrivers and let student groups take the planes apart. See if they can assemble them in 1.6 minutes (the figure in the case).
Case study teaching notes
Weldon Hand Tools
This case deals with the design of a manufacturing process to produce a relatively simple hand tool. Details of the product, together with time for each element, which constitutes the assembly task, and sales forecasts for the product are all given in the case exercise. The product itself is a new design, which is intended to sell at the lower end of the market in relatively high volume.
The case exercise makes an excellent 'hands-on' experience for students. It has been designed around a product that is readily available in most do-it-yourself stores. Each syndicate group of students can be given a product (we have found the Stanley Handyman plane both economical and useful!) together with a screwdriver. They usually find the product very easy to disassemble and can go through the various elements of the assembly task outlined in the case themselves when reassembling the product. It is usually unnecessary to point out to them that they are taking considerably longer than the 1.6 standard minutes specified in the case.
Although in any class different groups of students will come up with different process designs, there is usually a tendency to go for what Slack et al. call 'long-thin' systems. That is, relatively long assembly-line type systems. They do this in the mistaken belief that any efficiency gains which derive from this process are in line with the company's performance objectives. In fact
Nigel Slack, Stuart Chambers & Robert Johnston, Operations Management, fifth edition, Instructor’s Manual
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after discussing with students the relative merits of long-thin and short-fat systems it is useful to examine the economics of a product such as this, as outlined in the teaching notes. Students are sometimes surprised to find that saving small amounts of labour cost is relatively unimportant compared to keeping down inventory and maintaining flexibility.
Some notes on the Weldon Hand Tools case exercise