Design of Operations

Location Strategies
Week-2
Ahmad Ammar

Location Strategy
The objective of location strategy is to maximize the benefit of location to the firm
Location Options: Expanding an existing facility instead of moving Maintaining current sites while adding another facility elsewhere Closing the existing facility and moving to another location

Design of Operations (2) The FedEx Way! Small package, hub based delivery Superhub at Memphis Regional hubs in Asia, EU, Latin and North America Decision at Mercedes A year long competition between 170 cities in 30 states and 2 countries Hard Rock Caf. 3 years of advance preparation of Russian food supply chain before opening in Moscow

Factors that affect Location Decisions (Manufacturing)

- Market economics - Ease of capital flow between countries

- Favorable labor climate

- Proximity to suppliers and resources

- Utilities, taxes and real estate costs

- Political risks

Factors that affect Location Decisions (Services)

- Proximity to customers - Proximity to markets/transportation

- Quality/Proximity of the competition - Physical qualities of facilities and neighboring businesses - Utilities, taxes and real estate costs
- Political risks

Methods of Evaluating Location Alternatives

1. The Factor Rating method

1. List of Critical Success Factors 2. Assign weights based on relative importance 3. Develop a scale for rating 4. Top management should score each location on this scale 5. Total factor score = Score x weight assigned 6. Total the score of each location

7. Make recommendation based on the maximum point score

Methods of Evaluating Location Alternatives

2. Locational Break-Even Analysis

1. Determine the fixed and variable costs for each location 2. Plot the costs for each location on vertical axis and annual volumes on horizontal

3. Select the location that has the lowest total cost for the expected
production volume

Methods of Evaluating Location Alternatives

x-coordinate of the centre of gravity = i dix Qi/I Qi

y-coordinate of the center of gravity = i diy Qi/I Qi where dix = x-coordinate of location i diy = y-coordinate of location i Qi = Quantity of goods moved to or from location i

LOGO

Rapid Response Manufacturing (RRM)

Transforming Astral-AS016 Hybrid Solar Lantern Into

Affordable, Available, Adaptive

Astral-A3

Presented at NUS, RRM Module Project Presentations Competition

Contents
1 Methodology

The Business Case

3 4 5

Astral AS016 Product and Process Highlights Business Process Reengineering (BPR) Astral A3 Calculations & Parameter Optimizations Astral A3 The New Outlook

Comparison

Our Methodology

(1). Investigating AS016

Knowing ins and outs of current model

(3). Redesign for Astral A3

The Transformation

(2). Business Process Reengineering (BPR)

Formulating strategy for change

The Business Case

Technology Perspective
The S-Curve of Product Technology Evolution Its Take-off time for SOLAR lanternscapture wider market with better features
Fig-source: http://smart-future.org/2009/10/wave-3-dilemma/

Market Perspective
1. Un-electrified households
1.5 billion people in Africa, Asia, Latin America In India 161,982,648 households

2. Outdoor recreational activities

Camping, hunting, trailing etc Only in retail sales and services (U.S), over $289 billion per annum (Outdoor Industry Foundation U.S.A)

No single competitor product for BOTH niches!

Objectives: 1. Cost 2. Globalization 3. Time 4. Quality

Astral AS016 - Nomenclature

Astral - Corporate Profile
Based in Qingdao, Shandong China Adequate manufacturing infrastructure Proximity to over 130 fortune500 companies local bases

Product Configuration
Shipping wt. = 2.75 Kg Bounding box = 18x18x28 cm

Detachable connector between PV and lantern

Optional accessories like mobile phone charger, adapters etc

Astral AS016 - Specifications

2.5W multi-crystalline silicon PV as separate module FR-4 PCB Laminate. No lead-free claims!

Specifications
PV
36 Bright white LEDs in circular configuration, each 5mm dia. and 2000 mcd

PCB

LEDs

AS016
Batteries Plastics
Sealed Lead-Acid Battery (6V, 4AH)

Polycarbonate for transparent casing, ABS for other parts

AS016 Business Model

Marketing through web portals

In-house Processes

Procurements
Lead-acid batteries PV modules PCBs LEDs

Injection Molding Assembly Testing Warehousing Logistics and Supply chain management

Shipped from China to the customer

AS016 - Costing

Costing done for lot size = 50000 units

Unit cost = 2923945/50000 = $58.4 US

AS016 Time-to-market
Time-to-market = Mfg. lead time + Delivery lead time = 62 Days

Business Process Reengineering (BPR)

Business Model

Design & Technology

New Markets Nearshoring + CE

Reduced Cost

New Lantern

Shorter Lead-Times Market Adaptive Quality

SC Reconfiguration

Business Process Reengineering (BPR)

Competitors Analysis
Best of Both Worlds ??

SolEnergy,
South Aftrica 15$ FOB. Poor quality, cant withstand harsh weather. Light output compromised

Lightcup for campers 17$ (FOB) but inadequate light and duty cycle

Solux 100, Germany 64$ FOB, 7.5h duty cycle, large size!

MightyLight, India 55$ CIF, good for spotlighting but area lighting?? Modular.

Glowstar GS7, UK 111$ FOB, 3.3 Kg, 42cm highcost!!!

QFD

(with Mock Interviews)

BPR Targets Outsource manufacturing closer to the market! Optimize Shipping A (Delivery Lead Time)
Light quality improvement (QFD)

C Target Attributes

Improve Use-case life scenario. Acid batteries, doublemodule, weight etc

Market Segregation driven features

Reduce process cycle times. Number of injection moldings, assembly time etc

Target Market -1(Americas): Outsource in Mexico Target Market -2 (Africa): Outsource in South Africa

Astral A3 Features Redesign

High Reliability FR4 Criterion Lead-Free!!

PCB
Criterion Design as per local INSOLATION values and market specific use expectancy 2W panel for African Market, 1W panel for US Market

PV-Optimization

Criterion Safer, Compact, Longer life, Reliable

NiCd for African Market, NiMH for US Market

Batteries
Criterion Use better lumens/watt light even if costly. 0.5 watts,multi-chip Piranha LEDs, 50-55K mcds (206 lumens!),View angle = 140o

Lighting-Optimization

Astral A3 The New Outlook

1
2 3

Distributed Manufacturing with Sustainable SC

On-shelf PDM/PLM

Fractel Factories (FF)

Bionomic Manufacturing Systems (BMS)

Multi-agent Systems

Holonomic Manufacturing Systems (HMS)

Prototyping
3D Laser scanning of competitor products with Geomagic modeling to capture Design Intents and share concepts with partners FDM or 3DP physical models for corporate decisions based on marketing and design feedback

Lifecycle Analysis (LCA) - Comparison

Astral AS016

Astral A3

AS016 Vs A3 - Comparison
Business Criteria
150

Product Attributes
LEDs (W) Weight (Kg) PV Module (W)
84

Output (100xlumens)
1.5 3 1.9

58.4

62 36.6 36

2 2.75

AS016

Astral A-Cube

2.5 1.2

Cost ($) Time-to-Market (W.Days) LCA (10xMJ)

AS016

Astral A-Cube

Marketing Astral A3
Cost from 58.47$ to 36.6$; Time-to-market from 62 days to 36 days, Globalization Astral A3 is adaptive to TWO markets Quality Compared to AS016 and most of the competitors, Astral A3 ranks higher with Much higher lighting output Design user-friendliness Minimal environmental impact Much better aesthetics

If its NOT Astral A3..SUN

is biased!

Fun Camping or A Slum, Astral A3 realizes your lantern imaginations at speedof-light

LOGO