It’s not just the Wild West or space: business operations also need to push the envelope and find new “frontiers”, writes Dr Jane Davies, Senior Faculty in Management Practice and Director of the MBA programme at Cambridge Judge Business School.
From settling the Wild West, to finding the cure for a stubborn disease, to the wonders of space travel, people have always sought to reach new “frontiers” – to explore, expand knowledge and create rewarding new experiences.
The same goes for business operations.
As the traditional operations methods of differentiation (cost, quality, delivery and flexibility) increasingly become order qualifiers (getting on the shortlist) rather than order winners, organisations look for new ways to create value through their operations.
As quality products and customer service are now a necessity rather than a differentiator, and productivity gains are harder to find in today’s complex manufacturing and service environments, best-in-class organisations need to find novel ways to maintain their competitive advantage through superior operations.
My research into the value of operations reveals that the choices public corporations make regarding their operations get reflected in their stock market valuation (either positively or negatively) – operational choices matter.
But as firms push towards the performance frontier in their industry, what are the new operational choices they are making? From my work with organisations through the European Industrial Excellence Award and tracking innovation in operations, I have identified seven exemplar organisations who are taking a non-traditional or contrary approach to increasing their efficiency and effectiveness.
These seven organisations have expanded their operational excellence through various methods – which I have termed “Frontiers of Operations”.
These new techniques may not – in one dictionary definition of “frontier” – reach the “farthermost limits of knowledge or achievement in a particular subject”. But these companies have managed to take important and often relentless steps to improve ways of operating efficiently and effectively.
Here are my special seven:
Bentley cars, made in Crewe in North West England, last year won the European Industrial Excellence Awards, which I helped judge, in recognition of its continuous improvement culture. Bentley has reached new frontiers through a culture of quality, marrying craftsmanship with mass production, and engaging all employees in its strategy through a training process known as “Basecamp” – held in a venue like at a mountain camp – in which employees learn about the company through the customer experience.
The Chicago-based clothing company uses crowdsourcing through a weekly online vote to design t-shirts and other products in order to select only those designs that really do have popular support. The company has sold millions of t-shirts since its founding in 2000, and utilises crowdsourcing to increase forecast accuracy and operational efficiency through lack of customisation, production in batches and efficient inventory control.
What strikes anybody visiting a factory that builds Mini automobiles, owned by Germany’s BMW, is how the production line is designed with workers in mind. Auto assembly can be awkward, because a lot of work is done on the underside of the car, so BMW Mini turns cars at a sharp angle so workers can do their duties in ergonomic comfort. The company also cross-trains workers so they alternate duties, in order to stave off boredom and keep both mind and body fresh.
The company “reshored” some of its consumer lifestyle products, like shavers, from China back to the Netherlands. In so doing, Philips co-located production with research and development, building high-performing teams. These teams in turn developed product architecture that enabled automation, keeping costs in check.
Car park car washing
Although automatic car washes are technologically excellent, many lie idle because it’s too much trouble for motorists to make a separate trip to the car wash. So low-tech ingenuity filled the void: hand car washes in supermarket car parks at a reasonable cost, so car owners can “wash while they shop”. These services have spread rapidly through franchises and ambitious entrepreneurs who operate many in various locations.
Li & Fung
This global supply chain manager, based in Hong Kong, has brought innovation to a sector not usually known for its cutting edge. Through a system known as “Seven Pillars”, Li & Fung offers a competitive advantage in the supply chain through a customer-centric approach that focuses on core competencies, shortens production lead time and develops a collaborative relationship with business partners.
Hai Di Lao Hot Pot
Most people hate waiting for a restaurant table, so this China-based chain of hot pot restaurants has made it fun: customers can choose from a variety of games to play, get their nails painted for free, or surf the Internet while they wait. Employees are empowered with decision making in order to help customers feel great, and by changing customers’ expectations the company has reached a new frontier.
These individual examples demonstrate the creativity and novelty that organisations are taking to leverage their operations capability. Whether this focus on craftsmanship, crowdsourcing inputs and design, ergonomics, reshoring, manual production, orchestrating supply chain, and changing customer expectations leads to long-term success and are sustainable will be the subject of further research.
However, it does demonstrate the importance placed on having a supreme understanding of customers, that employees really matter, the need to leverage technology selectively and align operations with strategy, and how organisations are moving away from traditional methods of increasing efficiency and effectiveness in order to create value through their operations.
These seven companies have challenged traditional approaches for improving effectiveness and increasing operational efficiency. These new frontiers are not the headline-grabbing variety like “Man walks on the moon”, but they help create competitive advantages here on Earth.
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Dr Jane Davies, Senior Faculty in Management Practice at Cambridge Judge Business School and Director of the Cambridge MBA programme, spoke on "Frontiers of Operations" at a Cambridge Judge Business Briefing at the School on 14 April 2016. Learn more about the Business Briefings event series