What I call the “Saflex case” is in fact the presentation Roger Bloemen did for us during the last course of Operations Management. I already mentioned that it was very good. I wanted to know more about the case that can be summarized as: “how to use operations to save and put back to profitability a company under chapter 11“.
You can find some sweet videos of the 80’s on Youtube:
(No animal were hurt during the shooting of this movie)
More interesting is the infomercial video made by Metascreen in which heads of Saflex were interviewed (Roger Bloemen did not appear). The emphasis on Saflex people is also there, in the end …
But when you dig further it is not that easy to find something about the Saflex case, even if you choose other names for this case. Because, if I’m right, there is no Saflex case per se. “Just” some academic papers on a MIT professor Yossi Sheffi’s website. You will find these papers by looking for Roberto Perez-Franco in Sheffi’s page about publications (ok, direct links here and here – they might break if Sheffi is changing his webpage). These paper deal with the evaluation of the supply chain strategy of companies. Already if companies had a supply chain strategy, it would be nice (and not the one you think of just in the middle of a crisis – the one you design and nurture for some time when times are good, forecasting maybe when times will be bad).
In fact Sheffi’s other publications are well worth reading (and could have been the source of inspiration for a group presentation if discovered earlier – a hint for next year students? ;-)).
Son – Papa! What are you doing the whole evening at your desk? Can you play with me and Lightning McQueen? Dad – I’m studying, son! Like you I go to school and as you’ll know soon enough, there are exams … Son – What are exams, papa? Dad – That’s when your teacher ask you questions to see if you understood correctly. Son – Oh, like when Madame Danielle is asking if we read our book? Dad – Mmmmm, kind of … Son – And what are you reading? Dad – Operations Management and supply chain Son – And what is Operation supply chain? Dad – Well, son, you see …
Damn, how to explain what you are studying to your 4-years-old son? Operations management? That’s when one try to optimise the delivery of goods to the supermarket where the family goes shopping on Saturday? Huh? Well, I tried and it doesn’t work. However as Saint-Nicholas came on December 6th, it was a good opportunity to explain how the real world works …
Saint-Nicholas or Santa Claus are facing approximately the same issues in terms of operations, supply chains and logistics. However Saint-Nicholas chose to restrict his market focus to mainly the Benelux only. This made things easier for him. For instance he did not need to find a large warehouse (or at least not at large as Santa Claus’) as he only has to deliver to fewer children. This choice was very clever because such large warehouse would have immediately attracted attention in such crowded countries like Belgium. Another important difference is that nobody really knows who is working for Saint-Nicholas. For Santa Claus, it’s easy: elves are working for him. But maybe Saint-Nicholas choose to have a Triple A supply chain where he operates only the last segment (the warehouse) (or not even the warehouse!). There would then be nobody working for Saint-Nicholas – everything is outsourced! So let’s focus on Santa Claus (most of the discussion below also applies to Saint-Nicholas however).
There are two main features about Santa Claus: The Goal and inventory.
Santa Claus did indeed read Eliyahu Goldratt’s “The Goal” (you know, son: one of the thick books on papa’s desk). He must also have followed Prof. Boute‘s class as everybody can clearly see that his strategic position is on Time and Variety/Flexibility. He’s not really interested in price (neither his customers btw): he’s giving what children request to him (after all, he’s not the richest man on earth for nothing). And quality is not necessarily a major criteria for Father Christmas’ gifts: children (and people in general) are mostly happy because they receive something (it probably has something to do with the fact it prooves the world they were kind during the last 12 months). This allowed him to send gifts manufactured in China (althought I think now all toys are manufactured in China nowadays).
And despite this Santa Claus still has a major issue regarding operations. He indeed still have a myopic view on value creation. As we will see below, he is only focusing on resource utilisation while he most probably completely forgets about sales growth and margin. There we come back to an element already mentioned: no financial incentive. Hence no real financial measures possible. How can you improve then? (another question is: does Santa Claus really need to improve his operations as kids receive their gifts on time and usually / sometimes what they requested so why bother?)
But a major divergence from the course is about inventory! In Anupindi’s book, the first sentence of the summary on inventory is: “Inventory accumulates whenever there is a mismatch between supply and demand”. And the chapter goes on on how to reduce this mismatch (as part of Prof. Vereecke‘s classes). But actually Santa Claus needs this mismatch. Just because he only needs to deliver his goods during the overnight of December 24. Not before, not after (especially not for Easter!). In my opinion Santa Claus needs to accumulate this inventory during the year in order to be ready to distribute everything in one night. Then you can debate if he has a ultra-secret, ultra-large, ultra-modern warehouse next to the North Pole (which is nice because you can reach most US and European countries easily) or if he has a cloud of flexible warehouses dispatched around the world. Given the number of Santa Claus that we start to see at each corner of a street, I would favor this last option – these little Santa being responsible for a small subset of the delivery chain. I guess their performance is measured in terms of seconds being in advance / late for delivery or the number of children they delivered on time (again I guess no P&L responsibilities).
The content of this stock as well as the way it is built also depart from any classical business. Indeed although the product range is quite wide (and also varies from country to country), there are some broad categories that you can classify in the different types of inventories. For instance, you can classically think of perishable goods as obsolete stock (however why bother since Santa Claus would certainly not poison children with goods perished since last year). But you can fill Santa Claus’ safety stock with classical toys like Lego, Playmobil, Fisher-Price, puppets, cars, etc. And Santa Claus’ cycle stock would consist of toys like Buzz lightyear, Lightning McQueen (and other toys for girls that I’m not aware of). The build up of these different stocks could be schematically represented as the following:
If now we look at the little information we have about operations inside Santa Claus headquarters (see movie below), we see that he is indeed the jolly man we know.
Althought the first seconds show you a highly enthousiastic, qualified and kind of “clonable” workforce (the elves), the first step of the operation is a nightmare. Santa Claus is indeed reading each and every letter. This is a happy confirmation for all the kids. But from an operation perspective, this creates a huge bottleneck and this is clearly visible with the amount of letters on the floor! After this step, the work is fortunately segregated between several lines of production where the specialisation of each elf is well put forward. On top of that it seems elves worked very well to reduce waiting times to nearly nothing between each station. Did they apply the lean methodology? It is hard to say: it might as well be the result of years of refinements.
Then we realise there is again another bottleneck at QC/QA, done by Santa Claus himself. However, althought it seems the throughput of production of the different toys is quite fast, only a few of them arrive at QC per minute. What happened with the other toys? Are there other lines of QC but not managed by Santa Claus himself (so they did not dare to show them)? Of is the defect rate quite high that only a few reach the final QC?
The inventory management seems also to be quite disorganised. Fortunately every toy seems also to be aware of its role and its own destination. So they finally end up in Santa Claus’s big bag!
Finally given the lack of order in the bag but also given most children will apparently receive what they asked (talk about customer focus! – except for Billy Brown who will receive a cake of soap), DHL, UPS and other (fast) postal services might have some lessons to take from Santa Claus in terms of speed and reliability ;-) But how exactly Santa Claus does that is still highly debated amongst scientists in the world (others also tried to put numbers e.g.):
Anyway, have a Merry Christmas (a few days in advance) and enjoy the holidays break!
For someone who refused to accept the “no time” excuse in the past for not writing a blog, I have to admit I’ll have to use it now :-( Lots of things happened since last time I wrote about classes.
For instance we submitted our Statistics paper and got the results. These results are still composed of a grade from A to F (and as I wrote I will not post the grade distribution of the class) and an appreciation from the professor. If this appreciation was considered subjective in the previous years (independently of Statistics – this was valid for all courses), Vlerick tried to establish a grid where several criteria can be met or not in order to put some objectivity in the grade. It seems this grid disappeared – or at least it was not used for Statistics (as usual: it is not a complain, it’s just an observation).
Operation management classes ended with a bang materialised by 5 Pecha-Kucha group presentations. Some topics were more controversial than others. I also take as a key message that one absolutely has to test the presentation in a real setting before presenting. I personally also appreciated very much the very dynamic presentation of Roger Bloemen about the global supply chain strategy for Saflex at Solutia. IMHO this is the kind of presentation after which you tell yourself: “Damn! Maybe I should have done supply chain instead of ****** *********”.
Some other classes ended like EU business law (also with group presentation) or Communication Skills (maybe the most artistic “paper” we had to hand in – maybe the most confusing directions on what to do too, especially for people with scientific and engineering backgrounds).
And some other courses started. Like Innovation Management, EU integration, … An feeling that I have is that Vlerick has very young and dynamic professors. When they grow a bit older, they are less dynamic but very knowledgable and try to transmit their passion with more maturity. A third category of professors are older and teach us courses with less direct application (or do I have this feeling because I put Economics and EU professors in this category?).
We are now in December and there are still some nice milestones for the near future: an open-book exam for Operations, a video for Communication Skills. And then Christmas Party (for those who will attend) and holidays!
Well, this one is called Christophe but whatever … (source)
As Colbert (another Jean … “Jean-Baptiste” this time) worked on the greatness of France (aaah, la France!) I will one more time illustrate the greatness of Vlerick Apollo!
It all started again last Friday afternoon with Prof. Louis Verbeke‘s European Business Law. I realized it is the first time I am writing about this course so let me explain some concepts … Contrary to what the title of the course may suggest we are not reviewing European Law articles nor discussing lawsuits where businesses are culprits or victims. The course is defined as “the unteachable” in the introduction. Prof. Verbeke likes to repeat that the only goal of his course is to avoid us ending in jail (as if other courses were leading us to jail, by the way …). But what is this course about then? I was tempted to write that it is “undescribable” but it wouldn’t be fair. We are looking at ethics, organisation of ownership and power, different sovereign models, governance, and the rule of law. Sacrified in honour of the new brand the Apollo group is quite small this year and the class is quiet – or is it because everyone is religiously listening to Prof. Verbeke’s extensive collection of personal experiences illustrating theoretical concepts? I am looking forward to the 10 hours of Business Law, next week! In the meantime I let you read Martin Wolf’s column in the FT on the end of unlimited growth.
The other course of the week is Operation Management (already mentioned previously). I don’t know exactly what happened but people apparently complained that it was too theoretical (or was it made up to introduce the subject of today?). The positive side of things is that we are most probably going to visit some delicious Operation-In-Action production facility – with some chocolate on top, please! ;-) The first part of the course was also a practical exercise, showing us that we have been speaking lean all our lives without knowing it (a bit like Monsieur Jourdain – honestly, France is everywhere!). I must admit I dozed a little bit during the second / last part of the class. But that was because the lean game in the first part was so exciting! Check the pictures below:
(let me reassure spouses, boy-/girl-friends staying at home entire evenings while we are following MBA classes: we are doing more serious stuff also – sometimes)
If you are interested to be part of such club in Leuven, just send an email to our beloved student reps! (By the way there is also a sale competition with a very interesting prize attached … :-))
We are already at the end of September, i.e. the first month of the second year of this Executive/Part-Time/LastEdition MBA at VBS (Vlerick Business School as we now have to call it). Time flew – Statistics course is already over, Business Law nearly and we started Operation Management this evening.
Another little element also made time fly faster: as many of my friends at the MBA a little boy arrived to delight our days (and shorten our nights). Thanks to everybody for the gifts – and to Vlerick staff for the teddy bear … with the new brand on it (pictures for this one will follow) !!!
As it should be the case for many MBA students since the 1980s, you can’t have a course on Operation Management withouth having the Benihanaof Tokyo case from HBR. Videos Prof. Robert Boute enlivened the otherwise quite quiet Leuven campus (where are all the Full-Time students? Yes we are missing half of the class). But they reminded me of a similar type of restaurant in Brussels: Kabuki (Kiekenmarkt, 32 – near the Grand Place). The video below shows a little bit what you can experience (well actually the video is more soporific than the real place – without matching the American ambiance however). Of course this is not real Japanese food. But it’s funny now to see how they adapted the Benihana-type of restaurant to Belgian traditions (yes you can spend more than 45 minutes).
Jep does Vlerick 