MN1001 Business Environment

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MN1001Business Environment

• The Value-Chain in Manufacturing
• John Desmond

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The Value Chain
Firm Infrastructure
Human Resource Management
Technology Development
M a r g I n
Procurement
Inbound logistics
Operations
Outbound logistics
Marketing/ sales
Service
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Case Study

• The Morgan Motor Company

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Morgan Primary Processes

• Inbound logistics
• Parts supply back to 1950 - large stock
• Manual control
• Morgan small
• Doubling production will double problems
• Operations
• Labour cost high - 35
• Current target move from 9 to 10 units pw.
• Cars pushed uphill for each additional step
• No power tools
• Everything handcrafted Start back from the
  tree
• High WIP - 14 weeks

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Morgan Primary Processes (contd.)

• Outbound logistics
• Marketing
• Earliest models aimed at mass market. Current
  niche
• low relative price- some buyers sell for
  additional fee!
• rationing rather than sales (six year leadtime)
• Enthusiasts love the cars
• Rarity enhances value
• Service
• Supporting Morgan clubs

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Morgan Support Activities

• Infrastructure
• manual quality/ inspection/ reward systems
• No planning office shops control production
  flow
• Production layout inefficient
• HRM
• Foremen responsible for bonus system
• Paternalistic approach
• 4 years to train skilled workers
• MD lack of management knowledge
• change management programme?

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Morgan Support Activities (contd.)

• Technology
• manual technology in admin and in all primary
  operations

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Morgan Enhancing Value

• Reducing Costs
• Move to unit/batch production
• reduce WIP
• save time
• Introduce new technology
• monitoring inbound logistics
• monitoring stocks etc.
• Into operations
• HRM/ training

• Increasing Price
• Dont alienate enthusiasts
• Make efficiencies but dont destroy the magic.