국제무역과 투자이론(5) Improving Operational Effectiveness

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1.Virtual corporation
A virtual corporation is a firm that outsources the majority of its functions. Typically, a small group of executives will contract out and then coordinate the designing, making, and selling of products or services.

In theory, this allows small groups of knowledgeable executives to find the lowest supplier for any given service, and to concentrate solely on the "big picture". In theory, it also allows firms to be nimble, rapidly ramping up production without having to slowly develop people and competencies. However, as the old saying goes, there's no such thing as a free lunch. In practice, virtual firms are scarce due to the difficulties in constructing elaborate contracts that specify the distributions of profits, and because the short-term profit-centered relationships implied by the virtual structure discourage co-operation among the parts of the organization. Moreover, the contracts often fail to effectively measure the ephemeral quality. As a result, there is a tendency for suppliers to defect (in prisoner's dilemma parlance) by providing products that are "up to specs", but that fall short of rigorous quality standards.

The term was a buzzword in the 1990s for several reasons. The concept became popular during the dot-com era, when demand was high for new kind of services that traditionally organized companies relied on outsourcing to perform. In the day of the dot-com related businesses it seemed like everyone was so busy that they had to outsource most of their jobs to someone else. The idea that you actually didn't need to have a large number of regular employees to be a major player caught on, and thus virtual corporation became one of the typical ways of describing this phenomenon. In fact it seemed like business in general was about to restructure into a web of temporary outsourcing deals. The existence of the internet helped facilitate communication and cooperation across this web of contracts.

The technology of the time was not up to the task though, now with the advent of web services new virtual corporation possibilities exist.

But the structure didn't just apply to trendy fast changing dot-com corporations. Other more traditional producers of consumer goods etc decided that they should sell their own production facilites and convert into making contracts on the fly with whoever could produce their type of product for the lowest price. Instead of managing a large structure of the entire value chain they could focus on marketing and branding their products. Companies like The Walt Disney Company, Nike Inc., and GAP became notorious for production of their goods in sweatshop conditions particularly in Asia.


Globewide Network Academy was one of the world's first virtual corporations ever incorporated in real, more than 10 years ago in Texas, Austin http://www.gnacademy.org/.


A virtual corporation, virtual organization or virtual enterprise is a manifestation of Collaborative Networks.

A large number of researchers in this area are organized around the non-profit SOCOLNET - Society of Collaborative Networks.

REVISED -

A virtual corporation is a company which exists in cyberspace and not in the real world. Instead of a physical address as registered offices, it has IP address. Instead of faxes they use email, and so on. With most documents being digital, there is no need for physical offices anymore.


2. Learning organization
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The concept of the learning organization is that the successful organisation must — and does — continually adapt and learn in order to respond to changes in environment and to grow. This raises a range of scholarly and theoretical questions relating to what it means for an organisation to learn, and practical questions around what organisations need to do in order to learn and adapt.



Peter Senge and the Learning Organization
In his book The Fifth Discipline: The Art and Practice of the Learning Organization, Peter Senge defined a learning organization as human beings cooperating in dynamical systems that are in a state of continuous adaptation and improvement. According to Senge:

Real learning gets to the heart of what it means to be human. Through learning we re-create ourselves. Through learning we become able to do something we never were able to do. Through learning we re-perceive the world and our relationship to it. Through learning we extend our capacity to create, to be part of the generative process of life. There is within each of us a deep hunger for this type of learning.

The reality each of us sees and understands depend on what we believe is there. By learning the principles of the five disciplines, teams begin to understand how they can think and inquire that reality, so that they can collaborate in discussions and in working together create the results that matter (to them)!

Often the practitioner has seen the work as a vital yet viable means of developing a cadre of high performance leaders able to mobilise peoples' commitment towards results and change in organizations with ease.

Feedback
Organizations that are adapted for maximum organizational learning that build feedback loops deliberately to maximize their own learning.
Taxonomy
A learning organization may create a specific enterprise taxonomy - a common and agreed upon understanding of terms, concepts, categories and key-words that apply within that organization.
Challenging assumptions
Once it has established what they are, learning organization must constantly challenge its processes, instructions, assumptions and even its basic structure. The true learning organization is redesigning itself constantly.

3. Change Management
Change management can take many forms and include many change environments. The most common usage to the term refers to organizational change management.

Organizational change management is the process of developing a planned approach to change in an organization. Typically the objective is to maximize the collective benefits for all people involved in the change and minimize the risk of failure of implementing the change. The discipline of change management deals primarily with the human aspect of change, and is therefore related to pure and industrial psychology.

Many technical disciplines (for example Information technology) have developed similar approaches to formally control the process of making changes to environments.

Change management can be either 'reactive', in which case management is responding to changes in the macroenvironment (that is, the source of the change is external), or proactive, in which case management is initiating the change in order to achieve a desired goal (that is, the source of the change is internal). Change management can be conducted on a continuous basis, on a regular schedule (such as an annual review), or when deemed necessary on a program-by-program basis.

Change management can be approached from a number of angles and applied to numerous organizational processes. Its most common uses are in information technology management, strategic management, and process management. To be effective, change management should be multi-disciplinary, touching all aspects of the organization. However, at its core, implementing new procedures, technologies, and overcoming resistance to change are fundamentally human resource management issues.


4. WHAT IS TIME-BASED COMPETITION?
JIT was the first manifestation of time-based competition. Time-based competition is the extension of JIT into every facet of the product delivery cycle, from research and development through marketing and distribution of the final product. Even quality, while still critical to success, is not the competitive advantage it once was in many industries. Manufacturing firms then have three strategic options: seek coexistence, retreat in the face of competitors, or attack (directly or indirectly). It has been said that strategy is and always has been a moving target. For some firms who choose to attack, this target has moved to speed and time-based competition.

The term time-based competition came into use with its appearance in a 1988 Harvard Business Review article entitled "Time-The Next Source of Competitive Advantage" by George Stalk, Jr. It was further defined in a series of articles and books written by consultants from the Boston Consulting Group.

Time-based competition is a broad-based competitive strategy which emphasizes time as the major factor for achieving and maintaining a sustainable competitive advantage. It seeks to compress the time required to propose, develop, manufacture, market and deliver its products.

In order to do this, the firm must change its current processes and alter the decision structures used to design, produce and deliver to the customer.

Time-based competition appears in two different forms: fast to market and fast to produce. Firms that compete with to-market speed emphasize reductions in design lead-time. In other words, the firm has the ability to minimize the time it takes to develop new products or make rapid design changes. Products fifty percent over budget but introduced on time have been found to generate higher profit levels than products brought to market within budget but six months late. Also, this form allows firms to gain a market edge by being able to consistently introduce more new products or large numbers of product improvements/variations faster than its competitors, thereby dominating the market. Sun Microsystems achieved leadership in engineering workstations by reducing (by fifty percent compared to competitors) the time required to design and introduce new systems. Additionally, these firms

are now moving further along the learning curve than the competition. Both factors ultimately increase barriers to entry by competitors.

Fast-to-product firms emphasize speed in responding to customer demands for existing products. Wal-Mart has been able to dominate its industry by replenishing its stores twice as fast as its competitors. Firms competing in this area focus on lead-time reduction throughout the system, from the time the customer places an order until the customer ultimately receives the product. This includes the ability to reduce the time it takes to manufacture products (throughput time) as well as the ability to reduce the time between taking a customer's order and actually delivering the product (delivery speed). These reductions in lead-time are usually accompanied by significant reductions in inventory levels. As with JIT, there is less rework, fewer supervisors, lower carrying costs, less overhead, and so forth, as well as enhanced quality and on-time delivery performance. Some customers, known as impatient customers, place a great deal of value on reduced lead-time. These customers are willing to pay a premium to get their goods and services quickly. This combination of lower costs and higher revenues contributes significantly to an improved corporate performance.

While product development cycle time, new product introduction, production lead time, and delivery speed all contribute to improved business performance, not all contribute equally. A study by Shawnee Vickery, Cornelia Droge, James Yeomans, and Robert Markland found that the most consistent predictor of business performance was new product introduction. The second best predictor was product development cycle time. While production lead time and delivery speed were found to be related to business performance (respectively, in order of contribution), their relationship to business performance was not as significant as the other two factors.

The production cycle encompasses order entry through the completion of all paperwork, through finished goods all the way to distribution of the final product. JIT methods greatly reduce the amount of time consumption from initiation of the purchase order through the transformation process, but improvement in these other areas have much potential. Studies have shown that few companies have value-added time in excess of 10 percent of average order cycle times. In fact, 95 to 99 percent of the time a product or service is not receiving value, it is waiting. Hence, time can be removed from any part of the product cycle.

Some firms have traced the complete order entry process only to find that it took longer to complete the paperwork than it did to manufacture the product. One major manufacturer compressed its manufacturing processes but still took months to convert a customer order into an approved order for manufacture. Time reductions resulting from JIT success are worth much less when orders sit at the retailer for weeks, float in the mail for a week, sit at the distributor for a week, float in the mail for another week and then begin the now shortened transformation process at the factory.

Paperwork is subject to the same delays. When paperwork moves in batches (similar to manufacturing), several days of delay can develop while the order sits in a stack awaiting enough volume for the batch to move on to the next stage in processing. Time-based competitors begin by eliminating all unnecessary paperwork. Incoming mail is categorized as fast or slow track, allowing the fast track orders to be handled immediately. Also, some firms structure the paperwork process so that transactions are handled one at a time, eliminating the delay caused from batch movement. A door manufacturer managed to refine its process to the point that it could price and schedule 95 percent of incoming orders during the initial customer call.

Frequently, when delays occur, the delay time is made up at the end of the product cycle. Obviously, the last place to make up for lost time is at the distribution and transportation stage (similar to the way a delayed airline flight might make up for delayed take-offs and manage to still land on time). If time can be reduced in these emergency situations, why not reduce it permanently and reap the benefits of time-based competition?

5. Business Process Reengineering
Business process reengineering is a management approach that examines aspects of a business and its interactions, and attempts to improve the efficiency of the underlying processes. It is a fundamental and radical approach to improving business processes by either modifying or eliminating non-value adding activities. The key steps involved in a BPR are: 1. Defining the purpose and goal of the BPR project; 2. Defining the scope of the project so as to include (or exclude) activities; A flow-chart of the activities can assist to define the scope of the project; 3. Identifying the requirements that will meet the needs of the clients; 4. Assess the environment - the position of competitors, prospective changes in technology, legislation or socio-economic factors; 5. Redesign the business processes and activities in light of the above; 6. Implement the redesigned processes; 7. Monitor the success/ failure of the redesign.

Business process reengineering is also known as BPR, Business Process Redesign, Business Transformation, Process Change Management .


6. Total Quality Management

Total Quality Management (TQM) is a management strategy aimed at embedding awareness of quality in all organizational processes. TQM has been widely used in manufacturing, education, government, and service industries, as well as NASA space and science programs.


Total Quality provides an umbrella under which everyone in the organization can strive and create customer satisfaction.
TQ is a people focused management system that aims at continual increase in customer satisfaction at continually lower real costs.

7. Lean Production
Lean manufacturing is a management philosophy focusing on reduction of the seven wastes

Over-production
Waiting time
Transportation
Processing
Inventory
Motion
Scrap in manufactured products or any type of business.
By eliminating waste (muda), quality is improved, production time and cost are reduced.

To solve the problem of waste, Lean Manufacturing has several "tools" at its disposal. These include constant process analysis (kaizen), "pull" production (by means of kanban) and mistake-proofing (poka-yoke).

Most experts now agree, however, that Lean Manufacturing is not just a toolset. Rather it is a holistic, comprehensive, enterprise-wide program designed to be integrated into the organization's core strategy. In addition, experts in this field believe that philosophy-based Lean Manufacturing strategy is the most effective way to launch and sustain lean activities. The so called "Toyota Way," popularized by Dr. Jeffrey Liker's book of the same name, emphasizes the creation of the right kind of environment in which to grow and support Lean Thinking.

Key lean manufacturing principles include:

Pull processing: products are pulled from the consumer end, not pushed from the production end
Perfect first-time quality - quest for zero defects, revealing & solving problems at the source
Waste minimization – eliminating all activities that do not add value & safety nets, maximize use of scarce resources (capital, people and land)
Continuous improvement – reducing costs, improving quality, increasing productivity and information sharing
Flexibility – producing different mixes or greater diversity of products quickly, without sacrificing efficiency at lower volumes of production
Building and maintaining a long term relationship with suppliers through collaborative risk sharing, cost sharing and information sharing arrangements.
Lean is basically all about getting the right things, to the right place, at the right time, in the right quantity while minimizing waste and being flexible and open to change.

Lean thinking got its name from a 1990’s best seller called "The Machine That Changed the World : The Story of Lean Production". The book chronicles the transitions of automobile manufacturing from craft production to mass production to lean production.

The seminal book "Lean Thinking" by Womack and Jones, introduced five core concepts:

Specify value in the eyes of the customer
Identify the value stream and eliminate waste
Make value flow at the pull of the customer
Involve and empower employees
Continuously improve in the pursuit of perfection.



Finally, there is an understanding that Toyota's mentoring process (loosely called Senpai and Kohai relationship) so strongly supported in Japan is one of the ways to foster Lean Thinking up and down the organizational structure. The closest equivalent to Toyota's mentoring process is the concept of Lean Sensei, which encourages companies, organizations, and teams to seek out outside, third-party "Sensei" that can provide unbiased advice and coaching, as indicated in Jim Womack's Lean Thinking book.

8. Benchmarking
Benchmarking (also "best practice benchmarking" or "process benchmarking") is a process used in management and particularly strategic management, in which organizations eval‎uate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organizations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices.

A process similar to benchmarking is also used in technical product testing and in land surveying. See the article benchmark for these applications.