QUESTION THREE
China’s Supply Chain
Trans
San Francisco’s Supply Chain
Besides manufacturing cost, Timbuk2 had other costs to consider when making the sourcing decision. Some of these include: low cost of labor, other manufacturing expenses such as insurance, equipment maintenance, and warranty, shipment of inventory to San Francisco and then to the customers, cost of materials, visits to China to visit suppliers, setting up a shop, as well as visits to maintain relationships and ensure high quality. The long lead time from China (using ocean shipments) would involve inventory. This would mean holding finished-goods inventory in anticipation of demand. This was against the lean manufacturing approach that Timbuk2 had incorporated in their manufacturing process. New forecasting skills needed to be incorporated to understand the inventory market so that markdowns and write-offs increased as customer preferences changed (Cachon, etc.). Timbuk2 dealt with issues regarding the operations in San Francisco and how to continue to be a domestic producer. This was important. After much research and analysis, Timbuk2 moved forward with sourcing in China in 2002.
UTILIZATION OF OPERATIONAL AND ANALYTICAL TOOLS
As the Operations Manager of Timbuk2, the management team has utilized and implemented many operational management processes and analysis tools. This has driven the company to financial success and has lead Timbuk2 to being a strong competitor internationally within the industry.
From the inception of the company, lean manufacturing and mass customization were key concepts incorporated into manufacturing of these customized bags. By streamlining product and information flows, improved quality and decreased waste became the outcome. We altered the layout and organization of the factory floor and reduced setups at each step of the manufacturing process. Information about each order, such as color and add-ons, was printed for each bag to accompany it through the manufacturing process. These raw materials were close by and readily accessible to the worker (Cachon, etc). This kept the inventory to minimal levels and “Just In Time” processes were in place.
Productivity measures, analyzing input and output data, assisted us in making the decision whether to outsource or not. We evaluated shipping costs using value density tools. Outsourcing was a positive decision as it has lead to increased revenue and business. Being an ethical company, we are proud of all of our products and where they are built. We have received rave reviews regarding our travel line, laptop bags, and packs. The additional business has allowed us to hire more people in all departments in our local headquarters of San Francisco. This has created more jobs locally ().
Bag recycling is an option that has built loyalty and trust with our customers. Our “eco-conscious” focus keeps us as an order winner which has increased our customer volume.
In May of this year, we incorporated PivotLink (Reuters). This was an upgrade to our then, present ERP system. Our system had a wealth of data, but there wasn’t a way to access, analyze or collaborate on data in a timely fashion. PivotLink, as our enterprise-wide business intelligence platform reduced our dependence on spreadsheets and IT backlog, (saving us 16 hours of worktime per week), has enabled all employees to perform their own analysis of current information, has secured a way of sharing data and collaborating with key stakeholders, is easier to forecast and fulfill customer demand, and provides real-time inventory accuracy which has increased customer satisfaction, repeat orders, and revenue. We have been able to track sales of special edition and off calendar product launches.
There are plenty of opportunities for financial growth. There have been discussions for significant expansion of sales through the wholesale channel, which would involve approaching companies such as CompUSA, Apple, and Dell to offer the possibility of bundling our laptop messenger bag with laptop computers and other computer accessories (Cachon, etc).
Other strategies that have been developed include the Cradle-to-Cradle Bag. This is a
design used as a strategy for business growth and prosperity that generates ecological, social,
and economic value. By designing industrial processes so they do not generate toxic pollution
and waste is a true change that we incorporated. Safe, healthy materials and products are used
that can be returned to soil or returned to the industry forever (McDonough, 2006).
I look forward to Timbuk2’s future.
REFERENCES
Cachon, G.,Cattani, K., &Netessine, S. (2009). Where in the World Is Timbuck2?
McDonough, W. (2006). The Cradle-To-Cradle Bag, TED
Timbuk2 Has Business Insights in the Bag With PivotLink,
May 12,2010
BUSN 6110-Week 9-Assignment: Shouldice Hospital
Donna Janega Webster University
October 15, 2010
HISTORY
Shouldice Hospital was established in 1945 by Dr. Edward Shouldice, inventor of the
Shouldice repair. This physician developed his innovative technique during World War II, to help young men who were unable to enlist in the military because of their hernias. His unique repair method improved surgical results and reduced recovery time, quickly restoring these men to physical fitness for military training. As news spread about Dr. Shouldice’s success, there was a growing demand for hernia surgery. Doctors and hospital space were scarce after the war, and surgery wait times were long, so Dr. Shouldice responded to the problem by founding his own hospital ( ).
Shouldice Hospital opened with one operating room and a waiting list of 300 patients. Working with a nurse, secretary, and cook, he repaired two hernias a day. Requests for his surgery grew, so the hospital expanded within a country estate located in Thornhill, Ontario.
His son, a surgeon, followed in his father’s footsteps, and his daughter, an active board member, developed Shouldice Hospital into a modern, 90 bed facility, with five operating suites, an expert team of hernia surgeons and nurses, and a dedicated staff of about 150 people, all working to meet the needs of patients with hernias ( ).
FOCUSED FACTORY
The hospital follows a focused factory approach. The focused factory concept was first introduced by Wickham Skinner (Encyclopedia of Management) in 1974. Skinner stated that to remain competitive in business, a company needed to focus on the manufacturing of one specific product or service only. This concept provides a way to compete effectively. Skinner went on to state that a common objective can produce synergistic effects and minimize power struggles
between departments. A factory focused on a narrow product mix for a particular market niche will perform better than a conventional plant with a broad mission.
As CEO of Shouldice, I incorporated the focus strategy. The market focus is on a narrow segment of potential patients who have a hernia, are predominantly male, older in age, essentially in good health, and where there is a high market potential (600,000 operations were done in the U.S. in 1979 alone). Shouldice Hospital concentrates on the internal focus, in that we have highly productive surgeons that perform about 150 operations per week. The hours a surgeon works are relatively regular hours and short for a surgeon. They share the expense of services provided by an anesthetist. They avoid the use of general anesthetics which allows for a wide range of involvement with patients, thereby, allowing patients to be active participants in the service delivery process. There are high opportunities for surgeons to observe and advise one another. This peer group pressure leads to higher levels of self-control of quality and strict adherence to Shouldice method. The elements in the service system is to support the service concept and to make Shouldice a “family” experience. Ensuring this service encounter is through recruiting doctors and nurses dedicated to quality, are people oriented, and assist patients. We hire staff that is flexible, team oriented, and trained to help and counsel patients. Shouldice provides communal dining for doctors, nurses, staff, and patients. This operating concept achieves outstanding results at a low price and at a high profit because everything done by the hospital is designed to maximize the difference between perceived quality and the value of the service provided patients and the cost of providing the service. Due to increased demands, the management team is thinking about expanding the hospital’s capacity to meet the high volume requests for more surgeries while maintaining control of service quality. Options under consideration are adding one more day of surgeries (Saturday), which would increase capacity by 20%, or adding another floor of rooms to the hospital, increasing capacity to 50%. These options are researched in the following questions.
QUESTION ONE
Question one asks how well the hospital is currently utilizing its beds. The current throughput of bed utilization demonstrates that maximum use of beds is only three out of seven days a week. Four of the seven days of the week have 30-60 beds used. Opportunities to increase to capacity are present.
QUESTION TWO
See the table below that demonstrates the effects of adding operations on Saturday. By adding 30 surgeries to Saturday, this increases and maximizes bed capacity five days a week. Performing surgeries on Saturday would increase bed utilization and this capacity is sufficient with the present availability of beds in the hospital.
Beds Required
Total 90 90 90 90 90 60 60
QUESTION THREE
Increasing beds by 50%, which means adding a new floor, would increase bed capacity to 135 beds. Shouldice Hospital currently performs 150 operations per week. Increasing this by 50% would allow Shouldice to perform 225 operations per week. Presently six surgeries are done in each of 5 operating rooms, 5 days a week. It takes about an hour per surgery. To reach bed capacity, 30 additional surgeries could be performed 5 days a week. This is unrealistic in that 12 surgeons operating in 5 OR rooms would be working very late (increase from 8 hours to 15hours). Increasing surgery volume by15 operations per day would not maximize bed capacity, but still would maximize the surgeons’ time and schedule. This would also increase the work load of the OR team, admissions, kitchen, laundry, and housekeeping personnel. Reviewing this data, proves this to be unrealistic with the current operations.
QUESTION FOUR
Shouldice Hospital provides the following financial data to justify the expansion, if deemed necessary. Construction of each additional bed would cost $100,000. This means the cost for the expansion would be $450,000. An average cost of surgery paid by the patient is $1300 and $600 is paid to the physician. This leaves $700 (without the costs of overhead removed) to the hospital. Increasing surgeries by 75 per week brings in an additional $52,500 of revenue. It would take 8.5 weeks to recover the cost of construction.
MEDICAL TOURISM
Medical tourists, Americans in particular, have a world of choice in healthcare and are taking advantage of this. The Medical Travel and Health Tourism Quality Alliance (MTQUA) helps patients, hospitals, and medical travel agents better understand the important factors that create an outstanding medical experience for a medical tourist. Shouldice Hospital is rated fourth in the top 10 World’s Best Hospitals for medical tourists. The seven criteria reviewed in making this decision include medical quality and outcomes, international patient throughput, international patient marketing, value for service, patient safety and security, transparency, and attention to the unique needs of the medical traveler. As the CEO of Shouldice, I take pride in our ability to remain competitive and exceed in these quality indicators. Utilizing many operational management tools, such as capacity planning, lean manufacturing, the learning curve, and incorporating quality standards through the use of various service processes such as the personal attention approach, Shouldice Hospital is on the leading edge of providing excellence in the care and service we provide to our clients.
REFERENCES
MTQUA Announces the Top 10 Worls’s Best Hospitals for Medical Tourists.
9/22/2010
The Centre of Excellence for Hernia Repair
Encyclopedia of Management. September 22, 2010
HOW SHOULDICE OPERATES DIFFERENTLY THAN U.S. COUNTERPARTS
Comparing both companies, it is easier to observe many similarities in their
manufacturing styles. Quality, volume, lean manufacturing, and capacity processes, are just a
few similarities noted. Shouldice Hospital is unique to many U.S. based hospitals in that the
focused factory approach was incorporated in their ability to provide a service that was high in
quality, focused on one service, and produced high amounts of revenue. Medical tourism
follows this focused factory concept which the U.S. does not follow. This was the biggest
difference noted in being a foreign-based company as compared to a domestic company.