EXPERT Insight

Seven Myths to Beat Before They Beat You Premium

Flexible Operations

Simchi-Levi, David

Date: First Quarter 2011

Tags: operations, supply chain, cost, flexibility, IT

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Many traditional operations strategies – such as just-in-time, lean manufacturing and offshoring – may not suffice in today’s trickier global economy, marked by rising labor costs in developing countries, and huge volatility in oil and other commodity prices. Sticking to received wisdom risks doing more harm than good by imperiling a firm’s control over its supply chain. In this article based on his book, Operations Rules: Delivering Customer Value Through Flexible Operations, the author tackles seven myths that companies often struggle with in their operations. Recognizing these myths, he says, can help an organization avoid potential problems. Unfortunately, some of these pitfalls are disguised as quite reasonable strategic goals. But when they are followed, an organization is almost guaranteed to fail or miss opportunities. Considering issues such as cost cutting, product characteristics and information technology, the author stresses that flexibility is the key for companies to innovate their operations and supply-chain strategies, and compete successfully in turbulent times.

Tools and Frameworks:
> “How IT Links With Business Processes” highlights the fact that when it comes to operational and financial performance, solid business processes make all the difference. Implementing IT without them can be a waste of money.

Examples Cited:
Philips, Nokia, Ericsson, Toyota, BP, Mattel, Sharp, Steiff, Gap, Limited Brands, HP, Mercedes-Benz, Chrysler, Zara, Nike, Pepsi, Coca-Cola, Amazon, Walmart

Research Basis:
Based on research contained in the author's book, Operations Rules: Delivering Customer Value Through Flexible Operations (Cambridge: The MIT Press, 2010).

About the Author:
David Simchi-Levi is professor of engineering systems at the Massachusetts Institute of Technology.

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