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Imaad Isaacs

Examination Preparation

MBL912L - Operations Management

Case study questions for MBL912L


JANUARY/FEBRUARY 2016 - Global operations / supply chain strategy: Globalcast (25)
JANUARY/FEBRUARY 2015 - Quality: The Steve Handson Conferencing Company (60)
OCTOBER/NOVEMBER 2015 - Quality: Handles & Hinges (25)

Imaad Isaacs

Examination Preparation

MBL912L - Operations Management

JANUARY/FEBRUARY 2016 - Global operations / supply chain strategy: Globalcast


(25)
Using the information from the case answer the following questions:

[25 marks]

1. Evaluate the company's relationship with its large global customer What does this
imply about Globalcast potential to support its customer's requirements in intensely
price-sensitive global markets? (10)
2. Would you describe Globalcast strategic supply chain management decision as more
proactive or reactive, and why? (6)
3. Are there other ways in which the company could organise itself to meet the
challenges and market trends described in this case? (9)
Case study: Globalcast
Globalcast was one of the world's largest manufacturers of metal and plastic moulded
components to almost every industry, including automotive, consumer durables,
telecommunications, computers, power tools, etc With over 100 manufacturing facilities, it
operated on every continent, usually in areas of established or emerging industrialization in
Europe there were large factories in the UK, Germany, France, Spain and Italy, and smaller
ones in Scandinavia, Austria, Turkey and Israel Every factory was considered to be a
semi-autonomous profit centre and was headed up by a general manager Each reported to a
regional manager of one of the divisions (for example, Plastic Division) New business was
generated both by national marketing and by word-of-mouth recommendations from existing
customers, but most orders were for regular repeat business or for new designs from
existing customers The role of the small technical sales team at each factory was to follow
up enquiries with technical advice visits to the customer, followed by the preparation of
quotations In many cases, Globalcast provided design assistance to the customers It was
the role of the advisor to suggest ways of simplifying the overall design which would be
cheaper for the customer, whilst being fast, easy and profitable to produce in the factory
Mould costs were calculated and quoted too, and in most cases the customer would pay for
the moulds from the outset, retaining ownership Globalcast organized the purchase of the
moulds, costing up to 50 000 each, and could make a small profit on this activity
In the late 1990s, the market started to change rapidly First, major customers such as
Hewlett Packard, Dell, Ford, GM and Black and Decker started building new factories in
developing countries These were being established both to exploit the benefits of lower
wages and overheads and as market-entry points for these rapidly developing economies In
most cases, however, large proportions of their output would serve existing markets
throughout the world Because Globalcast was one of the most important suppliers (only
about five competitors had worldwide coverage), it was often encouraged by its customers to
established supply factories in the same regions, ideally on adjacent sites Customers
explained that business was, I part, being transferred to their new sites, and since
Globalcast had been selected as a preferred supplier, it had the opportunity to benefit from
ongoing business development and growth Attractive forecasts were provided, but not

Imaad Isaacs

Examination Preparation

MBL912L - Operations Management

guaranteed `Partnership' would be established where Global cast had the benefit of
sole-supplier status to the customer's local plant
The second change was the trend for customers' products to be of globally standard
designs. This allowed buyers to purchase components for their many factories around the
world, from virtually any approved supplier anywhere Therefore they were in a powerful
position to restrict the number of suppliers, as well as demanding a single global, low price
For Globalcast this provided a new set of problems, its costs had vaned widely around the
world, depending mainly on local labour and overhead costs Selling prices had varied
according to costs and local commercial conditions, but detailed costs of production had
never been disclosed to customers However, customers would now be able to 'shop around'
and find the lowest Globalcast price for themselves At the same time, each Globalcast
general manager had tried to defend his or her business, even if that involved buying in the
components from other company sites and adding a profit before selling to the customer
This was now becoming too obvious to large customers The third significant market trend
was that customers increasingly wanted suppliers to do more assembly (`value-added') work
At its simplest, this could involve simply snapping together two parts Alternatively, it could
require complex purchasing, assembly and testing of major sub-assemblies To do this,
Globalcast would need to invest in assembly lines, testing equipment, storage, component
and finished goods inventory, and systems to support purchasing and logistics Specific
approved suppliers were usually dictated by customers Lead times from these global
suppliers could be up to 12 weeks Customers' initial delivery schedules were often stable
and close to forecast levels, but could vary wildly as competitive forces affected customers'
sales But, overall, this type of work did appear commercially attractive, typically bringing in
up to 10 times the revenue of a simple moulded part The opportunity to become a 'first-tier
supplier to some of the world's leading manufacturers was hard to resist Indeed, supplying
global customers was the mainstay of the strategic plan for the new decade

Imaad Isaacs

Examination Preparation

MBL912L - Operations Management

JANUARY/FEBRUARY 2015 - Quality: The Steve Handson Conferencing Company (60)


1. Identify the various quality problems and use the fishbone (cause and effect) diagram
to identify the causes (10)
2. Describe how the leadership of quality can be improved within this organisation (15)
3. Provide a company wide assessment of quality for this organisation (15)
4. Describe at least six appropriate quality improvement techniques and indicate how
they can be used to address the various quality issues within this organisation (20)
TOTAL FOR SECTION B = [60]
The Steve Handson Conferencing Company
The Steve Handson Conferencing is an organisation comprising of a number of conference
venues throughout Africa These facilities are equipped with high quality conference facilities
and high quality dining facilities Steve Handson has marketed this chain of facilities as the
best in the industry and differentiates itself with excellent services The slogan used as part of
the vision is "you will always come back"
Many of Steve Handson's clients are corporate organisations who are leaders in their
respective industries and always willing to pay a premium for the high quality services and
facilities Despite a high rating from the Hospitality Certification Board, management want to
still comply with ISO Standards to attract international delegates
Recently there has been a few labour disputes which has resulted in a high staff turnover
Training has been limited to as ' necessary' and essential Management is under the
impression that implementing an ISO 9001 quality management system will improve and
eradicate all quality problems
The previous evening's conference and gala dinner for "International Society of Engineers*
had been a complete disaster, and Mr Zwane the general manager of the hotel was
perturbed at the senes of telephone conversations of that morning
First it was a call from the President of the society:
"I had hoped that by having our annual conference at your renowned hotel in Pretoria, we
would have enjoyed an even higher level of service than last year, when we were in Cape
Town, but we were deeply disappointed After all the problems you have caused us over the
last two days, from faulty video projectors to shortage of cups at tea breaks, I had hoped that
the gala dinner will run smoothly, but you let us down badly The cocktail reception was a
farce the choice of non-alcoholic drinks that we specially ordered did not arrive until the last
minute, and as our major sponsor's wife is teetotal, you can imagine the embarrassment that
was caused. A split fray of snacks was not cleared up quickly and several guests got food all
over their shoes and clothing The reception also dragged on too long "
"When we were finally asked into the dining room, it was distinctly seen that it was not totally
prepared Some of the tables, including mine were without flowers, which upset my

Imaad Isaacs

Examination Preparation

MBL912L - Operations Management

administrator who was deeply involved with the selection of the arrangements Even the
flowers that were on the other tables were of the wrong variety and appeared to be from
yesterday's function."
'The food was the worst that I have ever seen The correct word to use is 'awful ' The starter
was dried up and chewy, and the sweet desserts were flat and rubbery We were first served
with cutlets and potatoes, but the sauces, vegetables, salads and pickles did not appear until
I finished mine "
"And what happened to the microphone on the main table, The photographer did not turn up
either, which is a blessing in disguise, as the tables were not completely cleaned up after the
main meal and I am sure everyone would have looked in a bad mood after all the frustrations
and the mess-ups I can tell you straight we will not be paying all your exorbitant charges
for this dinner and I expect a written apology which will be placed on our website for all the
frustrations and anger we were caused Our sponsors must be thinking that I am a complete
idiot to have chosen this hotel, and I think they have a point "
Next with the manager of Zipozoe's electronics:
a . . I was told that the public address system had to be set up by 7.00 pm We often do jobs
of this type which require a 2-hour set up time. We were present from 4.30 pm but your staff
will not let us in due to the venue been used for another function which was completed at 6
00 pm As a result we were still setting up at 700 pm . "
Than with Mrs. Shell Buthelezi, the hotel services manager
a . it has been the practice to lay out the cutlery before we set out the flowers, and yesterday
we simply were not given enough time to see to all the tables As for the flowers, we were
never told that the client want pink and white arrangements I would have suggested other
colours anyway, as reds will look good against the decor of the dining room Unfortunately,
the electricians moved the floral arrangements against a heating outlet, so by the time we
got them, the flowers looked a bit beyond their best condition I suppose that's what you get if
contractors are allowed to interfere with our operations"
And with Joe Soap, the conference manager:
We were never told that the client wanted to use the video equipment, which was scheduled
for repairs Had I known, we could have hired in another projector, but never got the
conference check-list back from the client if we got that, it would have also indicated that
there were an extra ten delegates hem for the morning session and this would have required
some extra preparation These problems are also down to the client if they do not follow our
system, it is their fault if things go wrong "
From the head chef:
I always got a detailed scheduled from the head waiter I get the sauces, vegetables, salads
and pickles ready according to that schedule-if things run out as last night, then obviously
you could expect some problems Cooking is an art. Al! the chefs know how to prepare meals
to perfection every time, and if we cannot serve the food when ready, it will be messed up I

Imaad Isaacs

Examination Preparation

MBL912L - Operations Management

can tell you that if you think the customer was angry, you should have come into the kitchen
Some of the conference delegates were rude to the waiters, who came into the kitchen and
swore the chefs All the staff were upset and refused to give further service"
From the head waiter:
We were not told that the electricians and sound technicians will have to first set their
equipment before the tables could be arranged We were in the midst of setting up the tables
when the foreman told us that we have to clear the tables and wait for them to complete 1
think we did very well to have the tables arranged within thirty minutes"
Finally, Mr. Squeaky Moodley, the photographer.
" We were booked for 10 DOpm and the conference manager informed us that we will only
be needed for thirty minutes during the speeches When we arrived at 10 00 pm, the
delegates were still, engaged in the main meal I waited for a while and had to rush off for
another engagement set at 11 00 pm If we had known about delays earlier, I would have
organisation my partner to assist . "

Imaad Isaacs

Examination Preparation

MBL912L - Operations Management

OCTOBER/NOVEMBER 2015 - Quality: Handles & Hinges (25)


1. How does the company compete in its market place, and what is the role of 'quality in
its competitive strategy?
(7)
2. Do you think that the company's use of statistical quality control is sensible? Justify
your answer
(3)
3. Apply the gap model of quality diagnostics to the company

(15)

Handles and Hinges Ltd


Handles and Hinges Ltd (H&H) was established in Birmingham, England, by two young
entrepreneurs, Dave Philips and Chris Agnew, both experienced in the hardware trade The
business specialized in the 'designer' market for polished metal (brass or stainless steel)
door handles, cupboard knobs, furniture fittings (mostly used in shop/office furniture) and
hinges Their company was successful, was based on H&H's reputation for high-quality,
unique designs of both traditional and modern product, many of which were selected and
specified by architects for large and prestigious projects such as new office developments in
London's Docklands Dave, the Chief Executive Officer, with responsibility for sales, believed
that most orders from construction companies were placed with H&H because they assumed
they had no other choice once the H&H products had been specified Larger companies
would sometimes suggest to the architect that similar products were available at less than
half the price This advice was invariably ignored as the architect would be attracted by H&H
designs and quality, and would be reluctant to risk 'spoiling' multi-million pound projects for
the sake of saving a few thousand pounds Dave outlines the characteristics of the changing
market place
During a recession in the construction industry, particularly in office building, we expanded
our direct sales to large UK hardware retail companies, which now account for about 40 per
cent of our sales value, but only about 15 per cent of our gross profit This segment is much
more price-sensitive, so we must be able to manufacture good-quality, simple, standard
products at low costs comparable to those of our competitors Some of the reduced costs
have been achieved by using thinner and cheaper materials similar to those used in our
competitors' products We have Just received our first consignment of brass sheet from
Poland with a saving of over 10 per cent in this case We also had to re-organize to reduce
our processing costs Chris has done a great job of changing all production to modern batch
methods However, I am concerned that we are often late delivering to our UK retail
customers, and this makes it difficult to keep good relationships and to get repeat orders
Fast delivery of relatively small quantities is required in the "retail segment", whereas the
construction/contractors market allows very long production lead times Dependable delivery
is crucial to avoid completion delays, for which we have been held financially accountable on
some occasions!
`When customers complain about delivery or about faulty products, we try to compensate
them in some way to keep their business-for example, by credit notes or discounts on the
next order Our representatives each spend about one day a week dealing with the
consequences of late deliveries, but on the positive side, a meeting with a client is an

Imaad Isaacs

Examination Preparation

MBL912L - Operations Management

opportunity to get the next order The hardware retail companies often require very quick
delivery, which is often only achieved by switching production to the item which is required
first.
Really, I am more concerned about reports of quality problems, an increasing number of
construction companies to us about dented or stretched handles, but our production
department assures us that they left the factory in good condition and must have been
damage on site, which is to be expected on a large construction site The Quality Control
Manager says, however, he cannot give an absolute guarantee that they were all OK,
because we only do sampling of final production, if more than a few in a sample are found at
final inspection to be sub-standard, the whole batch is rejected, re inspected, sorted and
reworked Using express courier transport and overtime in the factory, rework can usually be
done in about a week, but invariably the contractors complain to the architect, perhaps
because they dislike being told who to buy from This can lead to lots of correspondence and
meetings between H&H, the contractor and the architect, when we could be doing other
things This problem seems to have got worse in the last two years, often it's also difficult to
agree if the product is sub-standard It is frequently just a question of how shiny (or matt) the
polish and lacquer finish is, at other times there are scratches in area that really can't be
seen in use Often the customers are too fussy, anyway'
Chris (the Manufacturing Director) put a different perspective on the problem 'The sales
catalogue shows pictures of our products prepared for photography, special effects are used
to give a bright polished finish but we actually use a matt finish The samples used by sales
are specially made by experienced craftsmen to eliminate any scratching or minor faults, of
course, we cannot always repeat that standard with the modern batch production methods
We were aware that the reorganization of production methods could lead to qualify
problems, so I introduced statistical control, a subject I studied extensively in a quantitative
methods course at the local college Our inspectors now take random samples of batches of
components and measure important dimension such as the diameter or length of brass
handles, the thickness of the incoming materials, etc Batches which fail are either rejected or
reworked, and all material where we have identified any fault at all is returned to the supplier,
and our buyers routinely threaten to place orders elsewhere I instructed the supervisors to
inspect press tooling just before the start of each production batch to ensure that there are
no surface faults, so I think it is unlikely that the dents and blemishes are caused in
production I must make a point of checking that this is happening Anyway, our final
inspection sampling has been changed to give an acceptable quality level (AOL) of 2 per
cent whereas until recently it was only 5 per cent We have had to increase the number of
final inspectors by four at a cost of 15 000 each per annum but all the management team
agrees that with quality products we must be confident of the final quality before packing We
trained some of our best assemblers in SPC and made them full-time inspectors, the
combination of their technical and statistical skills ensures that we have the right people for
this job We could not rely on our operators to do any dimensional checks, hardly any of them
know how to measure using a metric rule, let alone a micrometer or gauge I t is best to keep
them concentrating on achieving correct output targets 1 believe that most quality problems
here must be caused by occasional operator carelessness

Imaad Isaacs

Examination Preparation

MBL912L - Operations Management

The batch method of production has given us much more control over operations No longer
do we have to rely on hard-to recruit craftsmen who did everything slowly and unpredictably
Now we make the most of economic batches at each stage, benefiting from the economies
of scale of longer runs and cheaper unskilled labour With incentive bonuses based on
effective performance against agreed standard times, all our people are working faster to
achieve the company's goal of higher productivity There is no doubt that our operations are
now more productive than they've ever been With high quality and low costs, we are now set
for a major assault on the competition We expect our profits to rise dramatically from the
currently inadequate 1 per cent return on sales'

Imaad Isaacs

Examination Preparation

MBL912L - Operations Management