個案總覽

This is an MIT Sloan Management Review article. Companies tend to assume that little can be done to reduce product costs once a design is set. This belief has shaped many cost management programs across diverse products' life cycles. Because of it, firms often focus on cost reduction during the design phase and cost containment during manufacturing. But are much of a product's costs truly locked in during design? Recent research suggests otherwise. In an extensive field study at the consumer products division of Olympus Optical Co. Ltd., the authors found that the company is able to obtain significant cost reductions in manufacturing. Indeed, the research demonstrated that costs can be aggressively managed throughout the product life cycle. Furthermore, the authors found that Olympus Optical applies various cost management techniques in an integrated manner, with the outputs of some techniques acting as inputs to others, thereby increasing the program's overall effectiveness. The observations suggest that companies competing aggressively on cost might consider adopting some form of an integrated cost management program that spans the entire product life cycle.

This is an MIT Sloan Management Review article. Natural disasters, labor disputes, terrorism, and more mundane risks can seriously disrupt or delay the flow of material, information, and cash through an organization's supply chain. The authors assert that how well a company fares against such threats depends on its level of preparedness and the type of disruption. Each supply chain risk--forecasts, information systems, intellectual property, procurement, inventory, and capacity--has its own drivers and effective mitigation strategies. To avoid lost sales, increased costs, or both, managers need to tailor proven risk-reduction strategies to their organizations. Managing supply chain risk is difficult, however. Dell, Toyota, Motorola, and other leading manufacturers excel at identifying and neutralizing supply chain risks through a delicate balancing act: keeping inventory, capacity, and related elements at appropriate levels across the entire supply chain in a rapidly changing environment. Organizations can prepare for or avoid delays by "smart sizing" their capacity and inventory. The manager serves as a kind of financial portfolio manager, seeking to achieve the highest achievable profits (reward) for varying levels of supply chain risk. The authors recommend a powerful "What if?" team exercise called "stress testing" to identify potentially weak links in the supply chain. Armed with this shared understanding, companies can then select the best mitigation strategy.

Solid-state is the first new lighting technology in 100 years. Soon it may drastically reduce your costs.

The Bacardi Southampton case series (A - D) follows the transition from a push-based supply chain to an agile, pull-based system. The (B) case demonstrates the paradox in operational thinking and delineates the unique relationship a company has with one of its suppliers and its customer for European exports. Students can see that this agile program cannot exist in isolation from important stakeholders. Discussion about an opposite point of view is enriched by facts in this (B) case.

In January 2003, West Marine (the nation's largest boating supply retailer) was on the verge of acquiring its biggest competitor, BoatU.S. Several years earlier, the company had acquired E&B Marine, another boating supply company of a similar size. However, that transaction proved to be too much for the organization to bear. Having nearly doubled its number of stores overnight, West Marine's systems and processes, as well as the experience level of its management team, could not withstand the rapid growth. West Marine's supply chain was especially hard-hit: The company was unable to keep all 72 West Marine and 63 E&B Marine stores amply stocked during the critical peak season. Following the E&B Marine transaction, the company charted a new course, bringing in a deeply experienced management team, initiating a significant cultural change, and repairing systems and processes across the company. On the eve of another major acquisition, West Marine was proud of all that the company had accomplished through its collaborative planning, forecasting, and replenishment program, particularly in the supply chain arena. As the company prepared to ramp up its growth engine again on its way to becoming a $1 billion business, West Marine's executive team wondered what "soft spots" might be discovered within its new and improved infrastructure.

The purchasing manager was wondering how many bottles he should purchase in the coming year. Last year, the market had levelled off and sales predictions were difficult. On the one hand he wanted to be sure sufficient bottles were available to supply this year's sales levels, yet he also wanted to minimize year-end inventories as covered storage space for empty bottles was tight and a bottle change-over seemed possible in the next two years.

The purchasing manager was wondering how many bottles he should purchase in the coming year. Last year, the market had levelled off and sales predictions were difficult. On the one hand he wanted to be sure sufficient bottles were available to supply this year's sales levels, yet he also wanted to minimize year-end inventories as covered storage space for empty bottles was tight and a bottle change-over seemed possible in the next two years.

In the face of fierce global competition and soaring customer expectations, many companies have turned to supply chain management (SCM) to leverage the resources and know-how of suppliers and customers. To obtain an accurate view of what this requires, 52 in-depth interviews were carried out with supply chain leaders to answer the question, "What are the principles that drive successful supply chain design and collaboration?" The findings are summarized as the 10 guiding principles of high-impact SCM. Mapping these guiding principles to a maturity framework reveals that there is much work awaiting managers who embark on the arduous journey toward supply chain collaboration.

The president and chief executive officer of Progistix-Solutions Inc. has asked an analyst to prepare an annual review of the Xerox Critical Parts Network for presentation to management in two weeks. The president expected the analyst to review the performance of the network and establish an improvement plan for the coming year, supported by specific goals and objectives. Although Xerox and Progistix were satisfied with their relationship, after five years, both parties were interested in exploring ways to improve the network, especially because competitors had adopted similar approaches. In preparation for the meeting, the analyst wanted to explore opportunities in three specific areas: First, identify opportunities to improve depot operations. Second, determine how and where Progistix could work together with Xerox on such an initiative making additional improvements in the area of inventory management. Third, improve systemwide inventory turn performance by re-examining the cut-off point for filling the technicians' trunks with inventory. This case

Spreadsheet supplement for case 605-015.

Illustrates the challenges associated with centralizing IT decisions at Cisco after a decade of decentralized planning and project funding. When Brad Boston became Cisco's new CIO in 2001, he found that managers were starting to get frustrated with the results of their latest IT initiatives. Boston believed that Cisco needed to focus on its global infrastructure before investing in more functional tools and applications. Under the leadership of Boston and an executive operating committee, Cisco selected three major enterprise projects that required an unprecedented level of process planning and cross-functional cooperation, a major change from Cisco's legacy of entrepreneurial drive. As these three projects started to wind down in 2004, Boston and the operating committee were thinking about what types of new projects the IT organization should support. Raises issues about change management, centralized planning, IT prioritization and resource allocation, enterprise cooperation, and project funding.

IBM Europe is trying to expand business-to-business (B2B) efforts with its large distributors of midrange systems. These efforts aim to automate many transactions and business processes, removing the need for human involvement. IBM has completed an initial project with the German company Magirus; this project automated the transmission of midrange system orders for Magirus' internal information systems to IBM's systems. The leaders of the IBM effort face two principal challenges: accelerating the pace of subsequent efforts and convincing more distributors to take part.

Edward Englehardt Giberson, the proprietor, is a skilled glassblower whose business is on the verge of bankruptcy. He works in his studio almost every day, and his products sell reasonably well. On average, he has at least a two-week backlog of orders. He realizes his prices are too low, yet the artistic nature of his products makes it difficult to set prices based on any systematic assessment of demand or comparison with similar products. In desperation, he turns to the consulting club of a nearby graduate business school for help in establishing both a pricing policy and a production policy that he hopes will lead to profitable operations and a positive cash flow. Clearly, continuing "business as usual" is not an option for Giberson.

The president of Daikin Industries Residential Air Conditioning Shiga Factory confronted the prospect of an unseasonably cold summer at a time when the Shiga Factory had large quantities of its products in inventory in anticipation of strong summer sales. The president was concerned not only about pending losses in the current year, but also about the factory's long-term survival. Unprofitability was unacceptable and Daikin was caught in a stagnant market in which it was increasingly difficult to build share by product differentiation. The Shiga Factory had been forced to use large inventories to cope with uncertain demand and a long and unwieldy supply chain. The president must decide whether to reduce the number of models, build a lower cost factory outside Japan, or exit the business. He must also determine whether there are any other options.

Liberty Mutual mines the 389,000 electronic legal invoices it receives each year for detailed data on law firm performance and shady billing practices. In eliminating the paper-based approach, it has also increased productivity and slashed costs.

MK Taxi Tokyo has developed a system to allow customers to use their mobile phones to find and contact the cab closest to them, bypassing the dispatch center. The system, called the Private Chauffeur Service (PCS), makes use of NTT's i-mode service, which essentially turns mobile phones into small Internet terminals. MK worked with NTT to develop an application that physically locates each PCS caller, determines the closest cab, and automatically connects the customer with the cab's driver for a voice call. At the time of the case, Maasaki Aoki, the head of MK Tokyo, wonders how best to expand and enhance the PCS service.

In 1628, the royal warship Vasa was launched. It was Sweden's most expensive naval vessel ever built, costing over 5% of GNP. On its maiden voyage, the ship sailed 1,400 yards in its own harbor, heeled over to the side, and then sank. One third of the 150 crew and officers were killed. An inquiry was convened to establish the cause of the disaster, with testimony taken from, among others, the ship's captain, its officers, the ship's designer, and those responsible for its construction. No one was found guilty of negligence. The question is "Why did the Vasa sink?" The answer lies in the state of knowledge about shipbuilding of the time, the continual changes requested by the king, who was fighting in the Baltic, and the resulting experimental nature of the design.

Google, a very popular Internet search engine firm, has just announced the launch of Gmail, a free, Web-based e-mail service that allows users up to one gigabyte of storage capacity, more than 100 times that offered by other free services from competitors. In return for free e-mail, Gmail would scan its users' e-mail with the goal of delivering targeted ads. Immediately, privacy groups denounced Google's plans.

Supplements the (A) case.

Two managers discuss the benefits, costs, opportunities, and headaches of corporate computing. Topics include security, training, the Internet and Web, collaboration, productivity, Moore's Law, computer crashes, upgrades, open source software, network effects, enterprise computing, and competitive differentiation via IT.