Learning Guide Unit 2

BUS 5116: OPERATIONS MANAGEMENT

Group Activity: Part 1

Instructions: By the end of this unit as a group, your group must provide a detailed answer and justification to each of the following questions:

1. Product or service: what product or service has the team has chosen?

iPhone SE 2020 – Smartphones product is designed and marketed by Apple Inc which was founded by Steve Jobs and Ronald Wayne in April 1976. All generations of the iPhone use Apple’s iOS mobile operating system software. The first-generation iPhone was released on June 29, 2007, and multiple new hardware iterations with new iOS releases have been released since.

2. Market and customer: what is the estimated size of the market/customer-base for your product/service market and what are the customer drivers (order winning and qualifying factors)?

The customer base is 100 million customers annually for the first year and about half of that in the second year. The total sale of the device is an estimated 200 million devices. The most important market driver for this product is the innovation of technology and the increased need for smart devices compatible with IoT.

3. Process Type: what type of manufacturing or service process do you consider most appropriate?

James (2011) defines Process types as a way of describing the approach taken within the design and managing process. Factors on which process types are defined are volume and variety of the products that Apple create for the market.

Hayes and Wheelwright (1984) explain that most processes operate in a continuum of a combination of low volume/high variety, through to a combination of high volume/low variety. For Apple, the combination of high volume and low variety means that the specific process type within the manufacturing process is ‘Mass’. Although there is variety in the range of phones, this factor does not represent a significant change in the materials or process of manufacture. Due to the high volumes of product, Apple sees it as cost effective to use specialised equipment in the manufacturing process.

4. Layout Type: what type of layout do you consider most appropriate?

Layout types are ways of describing the positioning of resources in processes (James). Because of its relative permanence, facility layout is one of the most crucial elements affecting efficiency. An efficient layout can reduce unnecessary material handling, help to keep costs low and maintain product flow through the facility. Apple subscribes to a Product layout, meaning repetitive assembly and process. These produce high-volume, highly standardised products that require highly standardised, repetitive processes. In a product layout, resources are arranged sequentially, based on the routing of the products (Finch, 2016).

Apple mostly drives its manufacturing with partnerships in China (Foxconn). Within this system Apple deploy a functional layout. A functional arrangement has the advantages of improved quality, less handling, less inventory, improved quality and more flexibility within the manufacturing process. ^{Source: Duhigg, Charles and Bradsher, Keith (2012).}

5. Facility Location: what location do you consider adequate for the facilities where the product or service is performed?

The production plant will be in China for the following reasons:

Distribution costs: Apple’s turnover in China went from $ 3 billion in 2010 to $ 13 billion in the current year, and now accounts for 16% of Apple’s entire revenue of around $ 4.5 billion. Felix. R (2020, Feb 18). And China is also the largest mobile phone market in the world with 940 million registered users according to official data from the Chinese Ministry of Industry and Technology. Team Counterpoint (2020, Feb 15)

Energy costs: The cost of electricity consumption is an important production factor for companies in the industrial sector. Currently, the average industrial power rate in China is around 0.084 USD / KwH somewhere in the middle compared to the rest of the world. Among the OECD member countries, the industrial power rate is the highest in Italy at 0.185 USD / KwH and the lowest in Sweden at 0.060 USD / KwH. Zoey. Y (April 23, 2019).

Labor costs and labor skills: Production will be in China but not only a matter of labor costs. Obviously, paying a Chinese worker is cheaper than a European or American worker, but the main difference is that Chinese companies offer a strategic advantage which in other countries would be impossible. The fact is that Chinese factories give guarantees to their customers practically all the technology in the world is produced in the factories of some Chinese companies. Even more relevant is the availability of skilled labor. For example, a company is able to bring together 3000 engineers in a matter of hours, while in the United States and Europe it would be impossible, several times, the western world cannot train enough staff in the disciplines that serve the technology sector. China and India “produce” thousands and thousands of engineers every year, even millions, thus creating a pool of potential workers impossible to beat. Vivek. W (n.d.).

6. Process Technology: what process technologies do you consider adequate for your product/service?
7. Product / Service and Process Design: what elements of the design process do you think are more relevant given your product/service?

Design is the approach used by design thinkers to bring the focus back on track to the most essential element in anything you do, whether it’s a new product/service, a process improvement or solve more problems, (Yen, 2014).

According to Yen, (2014) the design process is the focus on features that matter most and have the biggest impact which end up becoming the epicenter of great brands, solutions, and organizations. Process design goal is to create an improved and optimized process that meets all of your expectations in relation to process performance and strategic business needs and below are relevant design processes for iPhone.

• Adding value to customers,identification of these activities will make the product or service more valuable to client eyes and must be the subjective of improvement studies.
• The hand off delay’s reduction,Employee termination process should be controlled during the exchange of responsibilities between workers to verify whether the existing employees don’t have the pending issues dealt properly before employee termination, this allows the process to continue in case of employee termination without the delay.
• Standardization of business process, this will facilitate the operation to represent simpler procedures that are easy to learn and memorize which will positively impact productivity and safety with fewer mistakes, higher quality products/service and reduced cost due to less staff time.
• Compliance, considering the standards of the market segment where company operates and verify the national standards which may differ country by country.
• Business process design validation,its vital for the people working in the process be part of every phase of the implementation. The best way to validate the process is by submitting a prototype for the evaluation of the people performing the execution process to avoid embarrassment for some people say that they never understood any element in the face of the unpleasant situation.
• Business process design simplicity,looking for the complete solution there might be a mistake of the complex solution and complex don’t bring any benefit to the design process. The complex process or operation may result into unnecessary expenses, errors, low productivity and delays unlike good design that result into something simple, containing only the essence necessary to make the process capable of achieving the expected performance.

8. Work and Job Design: what elements do you consider important to the design of the job and work required to manufacture your product or offer your service?

The most important elements required for the manufacture of the device is ingenuity and innovative solutions to encompass the best application experience in the petite, in-demand device. The innovation is particularly on the software development since the device needs to match the most recent apps and meet the demands of a smartphone in 2020. Integrating all these features, while maintaining the aspects of the device that makes it popular thus needs top notch innovation.

References 

Duhigg, Charles and Bradsher, Keith. (2012). How the U.S. Lost Out on IPhone Work, The         New York Times.

Felix Richter (2020, Feb 18). The Size of Apple’s China Business. Retrieved from:             https://www.statista.com/chart/13246/apple-china-revenue/

Finch, B, J. (2006) Operations Now: Profitability, Processes, Performance. 2nd ed.           Boston: McGraw-Hill/Irwin.

Hayes, R.H. and Wheelwright, S.C. (1984) Restoring our competitive edge, John Wiley &           Sons Ltd.

James, T. (2011). Operations Strategy. Bookboon. Chapter 10

Team Counterpoint (2020, Feb 15). China Smartphone Market Share. Retrieved    from:             https://www.counterpointresearch.com/china-smartphone-share/

Vivek Wadhwa, Gary Gereffi, Ben Rissing, Ryan Ong (n.d.). Where the Engineers Are.   Retrieved from: https://issues.org/wadhwa/

Wulandari, N., & Sari, R. K. (2016). Linking Experiential Value To Loyalty In Smartphone         Industry. Studies And Scientific Researches. Economics Edition, (24).

Yen, S. (2014). How Design Thinking Drives Competitive Advantage. Forbes. Retrieved Nov 24, 2018, from http://www.forbes.com/sites/sap/2014/08/11/how-design-thinking-drives-competitive-advantage/#7c1f8eaa7a53

Zoey Ye Zhang (2019, Apr 23). China Electricity Prices for Industrial Consumers.Retrieved from https://www.china-briefing.com/news/china-electricity-prices-industrial-consumers/