The The Paradigm Paradigm of of Mass Mass

The The Paradigm Paradigm of of Mass Mass

The The Paradigm Paradigm of of Mass Mass Customization Customization ME 546 - Designing Product Families - IE 546 Timothy W. Simpson Professor of Mechanical & Industrial Engineering and Engineering Design The Pennsylvania State University University Park, PA 16802 USA phone: (814) 863-7136 email: [email protected] http://www.mne.psu.edu/simpson/courses/me546 PENNSTAT E T. W. SIMPSON Overview Overview of of Lecture Lecture The Paradigm of Mass Customization Role of Production, R&D, Marketing, and Finance/Accounting in Mass Customization

Example: Cannondale Shifts from MP to MC PENNSTAT E T. W. SIMPSON Evolution Evolution of of Auto Auto Production Production Local craft shops designed In mass producing and handcrafted the earliest automobiles, Ford cars. Vehicles such as the sacrificed individualism 1911 Springfield were but was able to slash custom-made but prices. Consumers got exorbitantly priced. Reference: (Cox and Alm, 1998) Todays production methods give buyers

the best of both worldslow prices and custom design. identical models, but productivity soared. PENNSTAT E T. W. SIMPSON The The Paradigm Paradigm of of Mass Mass Customization Customization A new paradigm of management is emerging, one in which variety and customization supplant standardized products, heterogeneous and fragmented markets spring from once homogeneous markets, and product life cycles and development times spiral downward. (Pine, 1993) Stan Davis is created with coining the term MC in 1987 in his book Future Perfect where he wrote: The more a company can deliver customized goods on a mass basis, relative to their competition, the greater is their competitive advantage.

At its limit, mass customization is mass production of individually customized goods and services. PENNSTAT E T. W. SIMPSON Mass customization is best defined as a delivery process through which mass-market goods and services are individualized to satisfy a very specific customer need, at an affordable price. Based on the public's growing desire for product personalization, it serves as the ultimate combination of custom-made and mass production. And it is rapidly emerging as the organizing business principle of the 21st century. http://www.mass-customization.com PENNSTAT E T. W. SIMPSON It? It? :: How How Do Do They They Do Do Anything

Anythingthat thatcan can be bedigitized digitizedcan can be becustomized. customized. To understand how this is accomplished, we must first examine the role of production, R&D, marketing, and finance/accounting within MC organizations. PENNSTAT E T. W. SIMPSON Role Role of of Production Production in in MC MC Firms Firms Focus: Total process efficiency (not just those activities which are

operating on or transforming the product). This includes both productive and unproductive time, e.g., time materials spent in inventory or other non-operational activities such as handling, moving, inspecting, reworking, recording, batching, chasing, counting, and repacking. Interested in process throughput - ratio of the time a product is being transformed to the time it is in the production system. Positive Effects: Low Overhead and Bureaucracy Due to the holistic, systems perspective on production process. PENNSTAT E T. W. SIMPSON Positive Positive Effects Effects of of Production Production in in MC

MC (cont.) (cont.) Optimum quality In Japan, a defect is a treasure because its discovery uncovers a process of shortcomings that, when corrected, yields higher quality and less waste for all subsequent production runs. Elimination of waste Results from holistic, systems perspective of process production is viewed as a series of steps, each adding either value or cost to the product reduce and eliminate all steps that do not add value process efficiency soars. Continual process improvement Results from focus on total process and elimination of wastes. PENNSTAT E T. W. SIMPSON

Positive Positive Effects Effects of of Production Production in in MC MC (cont.) (cont.) Low inventory carrying costs Inventory is viewed as waste, adding costs and inefficiency Lowering inventory lowers inventory costs. High labor productivity Results from elimination of wastes in production process through JIT and Lean Production More opportunities are available for workers to learn about what they are doing and to improve the process as less and less inventory is used and less and less time is involved with the total process. Integration of thinking and doing Focus on total process efficiency results in joint management/ worker involvement in defining and improving the process and through the integration of thinking and doing.

PENNSTAT E T. W. SIMPSON Positive Positive Effects Effects of of Production Production in in MC MC (cont.) (cont.) High utilization of and investment in worker skills Continual improvement provides opportunities for education and training, including cross-training in multiple skill areas. High utilization of and investment in worker skills reinforces the positive aspects of the entire system. Sense of community This results from improved management and worker relations,

extending outward to suppliers, distributors, and other companies involved in the production chain. MC firms realize that everyone involved in the supply chain is responsible for customer satisfaction, which occurs only by working together as a community. PENNSTAT E T. W. SIMPSON Positive Positive Effects Effects of of Production Production in in MC MC (cont.) (cont.) Low total costs Results from reduced overhead and bureaucracy, improvements in quality, elimination of wastes, reduced inventory costs, and increased worker productivity.

High production flexibility Results from effective use of machinery and automation to enhance worker skills rather than replace them (borrowed from craft producers). Greater variety at lower costs The final result of all of the positive effects of focus on total process efficiency. PENNSTAT E T. W. SIMPSON Detrimental Detrimental Effect Effect of of Production Production in in MC MC Detrimental Effect: Demanding, stressful environment?

Lean production and JIT techniques eliminates all waste and buffers, leaving little margin for error. Workers may encounter more stress with increased responsibilities and decreased idle time (no longer are they bored with repetition of mass production assembly lines). Production processes must be strictly adhered to and quickly performed. PENNSTAT E T. W. SIMPSON Role Role of of R&D R&D in in MC MC Firms Firms Focus: Continual incremental innovations in both product and process

with much more emphasis on the Development side of R&D (~90% of R&D in Japan). Positive Effects: Continual improvements, eventual technological superiority During 1950s and 1960s when Japan was rebuilding from WWII, U.S. and European corporations thought nothing of selling and licensing their technologies to Japan which was not considered to be a competitive threat. Mass producers paid little attention to process improvements and as a result, lost technological superiority over time due to lack of continual improvements. PENNSTAT E T. W. SIMPSON Positive Positive Effects Effects of of R&D R&D in in MC MC (cont.) (cont.) Integration of innovation and production

Incremental improvements are best achieved through integration of developers directly with production so that they learn and know what the problems are. Frequent process innovations Yields technological superiority in manufacturing and development processes. Low costs and short cycle times Results from focus on continual innovation and improvement. Much more frequent product innovations and introductions can be made at much lower development costs, especially true if the technology has already been developed and proven elsewhere lower risk of product failure as well. PENNSTAT E T. W. SIMPSON Positive Positive Effects Effects of

of R&D R&D in in MC MC (cont.) (cont.) Mutually beneficial relationships with other firms Focus on incremental innovations and improvements encourages using technology from wherever it can be found and adoption of whatever innovations will bring products to market faster, focusing the supply chain on meeting customer wants and needs better and more quickly. E.g., in Japan suppliers share 30% of the engineering effort with automobile producers; in U.S., only 6% share. Better fulfillment of customer wants and needs Continual and incremental improvement provides the basis for better fulfillment of customer wants and needs. Time-consuming breakthrough innovations are extremely prone to miss the mark while companies making incremental innovations can more quickly follow the moving target. Companies can also lead the market and move it into areas that anticipate customers latent wants and needs. PENNSTAT E T. W. SIMPSON

Detrimental Detrimental Effect Effect of of R&D R&D in in MC MC Detrimental Effect: Lack of breakthrough innovations? Companies can get mired in the myriad of incremental innovations and improvements and never make breakthrough innovations. However, an accumulation of a number of incremental innovations can yield the equivalent of a single breakthrough. PENNSTAT E T. W. SIMPSON Role Role of

of Marketing Marketing in in MC MC Firms Firms Focus: Gaining market share by fulfilling customer wants and needs first domestically, then in export markets. Positive Effects: Filling the niches Begin to gain market share by filling the niches. Ability to respond quickly to changing customer needs Companies may not be sure what niche a new product may fill. But because marketing is so good at capturing customer feedback and development is so good at incremental innovation, they will put out a product just to see what happens, listen to the voice of the customer, and make incremental improvements to introduce improved products. PENNSTAT E T. W. SIMPSON

Positive Positive Effects Effects of of Marketing Marketing in in MC MC (cont.) (cont.) Market takeover As niches are filled, they expand and create new ones, fragmenting the large, homogeneous market as more customers find their true desires are being met. Four stage strategy: 1. Market Opportunity Identification identify market segments which are being inadequately served. 2. Development of Market-Entry Strategies devise entry strategy into market niche based on distinctive advantages that can be demonstrated in marketplace. 3. Market-Takeover Strategies devise and modify strategy over time to expand market niches and capture more of the market. 4. Market-Share Maintenance Strategies create strategies geared to further market share success by continuous monitoring of changing customer desires. PENNSTAT

E T. W. SIMPSON Positive Positive Effects Effects of of Marketing Marketing in in MC MC (cont.) (cont.) High sales domestically and through exports Gaining market share in export markets takes time and may generate little to no profits for years; however, the domestic market provides the profits for these ventures. Technology-intensive products Natural tendency is to move toward or extend product technology through incremental innovation strategies. PENNSTAT E T. W. SIMPSON

Detrimental Detrimental Effect Effect of of Marketing Marketing in in MC MC Detrimental Effect: Too enamored with technology? Some companies may become to enamored with their technology and lose sight of their customers, e.g., Toto Ltd. makes high-tech toilets which have seat warmers, perform urinalysis, and are paperless. Matsushita makes washing machines which have optical sensors to determine load size and dirtiness from which micro-processors can determine which of 600 load cycles are optimum.

Nissan has 87 different steering wheels from which to chose for one of their vehicles. PENNSTAT E T. W. SIMPSON Focus: Role Role of of Finance/Accounting Finance/Accounting in in MC MC Firms Firms Information useful for managers and workers. E.g., if the goal is to reduce # of parts in a product, particularly non-standard parts that tend to increase indirect labor, then the company may allocate overhead based on the # of parts or add an overhead surcharge for any custom parts. Positive Effects:

Sound long- and short-term decisions Because information is useful to both workers and managers. Long-term investments in capital, people, and technology Realize that long-term investments are required in order to maintain strategic competitiveness. PENNSTAT E T. W. SIMPSON Positive Positive Effects Effects of of Finance/Accounting Finance/Accounting in in MC MC (cont.) (cont.) Low costs, high profits Instead of designing a product and then determining its cost, target costs are determined based on what the market can bear,

and these are allocated to each component of the product and to the departments or suppliers responsible for those components. Once target cost is met, focus shifts to reducing costs incurred to make product with each new product generation or as competitors improve their products and processes to lower their costs. The equation of importance is: Price cost = Profit and not Cost + Profit = Price as in financial accounting systems for mass production firms. PENNSTAT E T. W. SIMPSON Positive Positive Effects Effects of of Finance/Accounting Finance/Accounting in in MC MC (cont.) (cont.)

Attention to core competencies Usefulness of information allows managers and workers to focus on the task at hand, namely, improving process efficiency in production, meeting customer wants and needs in development, and gaining market share. Attention to their core competencies is what allows them to be successful. Long-term supplier interdependence Target costs are not thrown over the wall to suppliers any more than they are to internal departments. Companies work with their suppliers to achieve their target costs and reductions over time and are willing to support them with engineering help, process innovations, and even extra time if necessary. PENNSTAT E T. W. SIMPSON Detrimental Detrimental Effect Effect of

of Finance/Accounting Finance/Accounting in in MC MC Detrimental Effect: Stockholders ignored? Is this good or bad? Arent the company stakeholdersemployees, suppliers, customers, and stockholdersall going to benefit if the company does well? Yes, despite the fact that the focus is on long-term health of the company and not on short-term gains. PENNSTAT E T. W. SIMPSON Mass Mass Customization

Customization Shift to MC is affecting nearly everyone and everything: automobiles, IT companies, telecommunications, personal car, beverage, breakfast cereal, fast-food restaurants, insurance, and banking Mass customizers believe that a company will: have greater sales if it better satisfies its customers individual needs and wants, further fragment the market by offering even more variety and customization, and better satisfy customers needs and wants through further market fragmentation. At its limit, mass customization is mass production of individually customized goods and services. PENNSTAT E T. W. SIMPSON Comparison Comparison of of MP MP and and MC MC Paradigms Paradigms Focus

Goal Key Features PENNSTAT E Mass Production Mass Customization Efficiency through stability and control Variety and customization through flexibility and quick responsiveness Developing, producing, marketing, and delivering goods and services at prices low enough that nearly everyone can afford them Developing, producing, marketing, and delivering affordable goods and services with enough variety and customization

that nearly everyone finds what they want Stable demand Large, homogenous markets Low-cost, consistent quailty, standardized goods and services Long product development cycles Long product life cycles Fragmented demand Heterogeneous markets Low cost, high quality, customized goods and services Short product development cycles Short product life cycles T. W. SIMPSON Example: Example: Transformation Transformation at at Cannondale Cannondale Bicycles typically consist of: 11 tubes, 2 tips, 2 dropouts, bracket, a brake bridge, and up to 4 lugs.

PENNSTAT E 2 stayends, a bottom T. W. SIMPSON Frame Frame Joining Joining Frame tubing can be joined in a variety of ways, depending on material type, desired properties, etc. PENNSTAT E T. W. SIMPSON MP MP at at Cannondale Cannondale Until 1988, Cannondale had a factory similar to most other bicycle manufacturers. Mitered tubes were machined, and numerous jigs were built for holding tubes during machining and welding operations. Tubes were ordered and inventoried in large lots to reduce unit

prices. New designs took a long time from inception to delivery, because tubing suppliers had to re-tool to make the specified tubes. Prototypes were built one at a time in the factory's machine shop, and once a new design was decided on, new jigs had to be built for each change in tubing or frame design. PENNSTAT E T. W. SIMPSON MP MP at at Cannondale Cannondale (cont.) (cont.) Large batches of identical tubes were mitered together to minimize the time required for setting up tooling for each operation; and jigging, tacking, welding and assembly operations were done in the same large batches to utilize the prepared tubes.

Forks had to be built or ordered from outside suppliers for every size of each type of frame. Heat-treating was done in a huge oven for four hours to allow the heat to "soak" into the tubes uniformly to the correct temperature. Frames were hoisted into the oven in a $14,000 stainless steel rack that held 100 frames at a time; and all 100 were plunged into the quenching bath together. The rack was so heavy that the oven and quenching bath were primarily heating and cooling it. PENNSTAT E T. W. SIMPSON MP MP at at Cannondale Cannondale (cont.)

(cont.) In between loading and unloading the rack, the oven was idle; it had to be fired up again to heat treat the next batch. After heat treating, every frame had to be re-aligned. To finish off the production process, the frames were painted automatically with a spinning paint-robot. Each color change required flushing and cleaning the entire paint system. The bottom line: bikes were only assembled in quantity. At any time, Cannondale had a large inventory of the bikes most recently produced, but a minimum inventory of bikes that were produced a few months before, according to how well they had anticipated demand. If any models sold out, Cannondale had to wait until other large batches moved through the system before they could replace them. PENNSTAT E T. W. SIMPSON Cannondale Cannondale Begins

Begins Conversion Conversion In 1988, Cannondale's managers decided they wanted the company to become a player in the worldwide bicycle industry. Instead of producing overseas, they thought they could economically produce high quantities of quality bikes in the U.S.although this would require significant changes in the company's production methods. Recognizing that they didn't have the kind of money to quintuple production by using traditional methods, Cannondale sought to re-think every operation the company performed. PENNSTAT E T. W. SIMPSON Cannondale Cannondale Implements Implements CLIPS CLIPS and and CPR CPR CLIPSCannondale Low Inventory Products System. The intent was to increase the flexibility of manufacturing operations by reducing or eliminating special tooling, reducing inventory, and shortening product cycles.

Cutting operations were completely overhauled, and a new computer-controlled materials-delivery system running on a ceiling track was installed. Batch sizes were reduced, and new systems for monitoring and tracking products were implemented. CLIPS followed by CPRCritical Product Replacement Under CPR, 90 percent of dealer orders were shipped complete with only six days of inventory. PENNSTAT E T. W. SIMPSON Problems Problems with with CPR CPR Problems with CPR: The pace and productivity that CPR created was far beyond anything Cannondale had seen in the past.

The technology and human culture weren't yet up to the task, though. For one thing, the innovations took far too much of the company's computer memory. Furthermore, the drastic change required more training for the workers. The result was that CPR was removed soon afterward as a successful experiment that was ahead of its time. PENNSTAT E T. W. SIMPSON Bicycle Bicycle Factory Factory Conversion Conversion Conversion of Cannondales bicycle factory began in 1990. In 1994, while only partially through the conversion,

Cannondale is building more than five times as many bicycleswhile maintaining less inventorythan it did in 1989. Productivity has increased 240 percent from 1988 to 1993. Lets take a virtual tour of Cannondales factory to see how they did it http://www.cannondale.com/factoryb/ PENNSTAT E T. W. SIMPSON Cannondale Cannondale Factory Factory Tour Tour -CAD CAD All of Cannondales bicycle frames are designed on high-tech CAD systems in the R&D department at the Bethel, Connecticut headquarters. New frame designs are then sent via modem to the Cannondale factory in Bedford, PA.

The following are excerpts from http://www.cannondale.com/factoryb/f2.html PENNSTAT E T. W. SIMPSON Cannondale Cannondale Factory Factory Tour Tour -- Raw Raw Tubing Tubing With the exception of carbon fiber/aluminum Raven models, all Cannondale bicycles are built from lightweight 6000 series aluminum tubes with different diameters, shapes, and wall thicknesses. 6000 series aluminum is used because it can be shaped and machined much easier than 7000 series aluminum or metal matrix aluminum compounds. PENNSTAT E

T. W. SIMPSON Cannondale Cannondale Factory Factory Tour Tour -- Laser Laser Cutting Cutting Computer guided lasers are used to precisely cut aluminum frame tubes to the proper length. Selected tubes are also mitered to wrap around adjoining tubes. The lasers provide a cleaner cut than traditional cutting methods and ensure incredibly tight tolerances for greater weld integrity and a stronger frame. PENNSTAT E T. W. SIMPSON Cannondale

Cannondale Factory Factory Tour Tour -- Tabs Tabs & & Slots Slots The tubes on Cannondale frames feature a unique, patented tab-andcorresponding-slot design that aligns the tubes for welding. By eliminating the need to build numerous production fixtures for each size and every new frame style, this tab-and-slot system dramatically reduces pre-production engineering chores and allows Cannondale to bring innovative new models to market with amazing speed. PENNSTAT E T. W. SIMPSON Cannondale Cannondale Factory Factory Tour Tour -- TIG

TIG Welding Welding The 6000 series aluminum frames are then TIG welded together by hand. Welding the thin-walled 6000 series aluminum tubing used in cuttingedge bicycle frames is a surprisingly difficult art to master. PENNSTAT E T. W. SIMPSON Cannondale Cannondale Factory Factory Tour Tour -- Heat Heat Treating Treating Cannondale then heat-treats their frames to restore the tubes to their original strength

after welding. A frustratingly difficult (and expensive) process to perfect, heat-treating allows Cannondale to actually use less material to achieve the necessary levels of strength. Many other manufacturers use thicker-walled tubing or reinforcing gussets, both of which add weight. PENNSTAT E T. W. SIMPSON Cannondale Cannondale Factory Factory Tour Tour -Sanding Sanding Beyond the obvious aesthetic benefit, smooth, sanded welds help prevent stress-risers which can occur at the outer edge of an unfinished weld, where the weld abruptly ends and the tube wall is suddenly thinner and more prone to accumulated stresses.

The gradually tapering walls created by properly finished welds, however, disperse stresses over a wider area, allowing Cannondale to use thinner walled tubes for a lighter frame. PENNSTAT E T. W. SIMPSON Cannondale Cannondale Factory Factory Tour Tour -Painting Painting For the most even, most consistent coverage possible, Cannondale paints their frames electrostatically whereby the frame carries a small electronic charge that actually attracts individual paint particles. After painting, each frame has its decals applied and is clear-coated with a durable, protective finish. PENNSTAT

E T. W. SIMPSON Cannondale Cannondale Factory Factory Tour Tour -Testing Testing Cannondale has invested over a million dollars in their Q-Lab, an in-house testing facility for bicycle frames and components. A new frame design typically spends more than two months undergoing five different batteries of tests: PENNSTAT E 1. fatigue testing, 2. impact testing, 3. finite element analysis testing, 4. computerized field testing, and 5. brittle-coat testing. T. W. SIMPSON

http://www.cannondale.com/custbike/ c2.html PENNSTAT E T. W. SIMPSON Excerpts Excerpts from from Tour Tour de de Cannondale At the heart of the now patented production system is the goal of eliminating any need for changing tool set-ups. Cannondale Starting from the beginning, a bicycle is now designed on the CAD-CAM system, in which archetypal modular drawings of partial frame assemblies are made and changed on a computer screen. If a new type of tubing is required, the system designs and CNC-machines the steel swaging blocks required to shape stock tubing into the new tubes on an in-house swaging machine. The computer then instructs laser cutters and electric arc plasma cutters to miter each tube precisely based on the new designand to cut water-bottle-boss holes, vents, notches, and seat-lug slots at the same time. One unique feature of Cannondale's miters is the tabs cut into the bottom of each miter to fit into corresponding notches in adjacent tubes. These tube-cutting operations are done in tube sets for each individual frame, since the speed of the mitering is the same as in huge lots of, say, identical down tubes. The quick-tighten chucks that rotate the tubes under each laser or plasma cutter are universal and independent of tube size or shape. The frame front-triangle tacking jigs can hold any frame, regardless of geometry. The computer dictates the height of the bottom of the head tube relative to the bottom bracket, and dialing this height into the jig is all that's needed to change from one frame type or size to another. The tabs and notches hold the tubes in their proper locations relative to one another, and each joint is tack-welded together. Each frame-tacking center and rear-triangle assembly consists of two rows of certified welders who weld the tubes

together. A tracking system allows Cannondale to know who welded each frame that comes out of the factory. The huge heat-treating oven has been replaced by a new, patented design with three chambers, each holding eight frames at a time. Racks move each load of eight frames via a ceiling track. One passes into the oven's front chamber, where the temperature is brought up to that of the inner chamber, which stays constant. It then moves into the inner chamber as another batch behind it moves into the first chamber. After a few minutes, the first batch moves into a third chamber, which, like the first chamber, protects the inner chamber from temperature variations. Frames stay in each chamber for only a few minutes, since they just need to reach heat-treating temperature briefly. The old oven took four hours to accomplish the same thing, bringing the temperature up slowly so that in any frame among the 100 being treated, thin tubes weren't being overheated while thick ones were being under-heated. Now, thermometer probes are screwed into the thick and thin tubes of sample frames to monitor the heat treatment daily. The temperature of the quenching bath is also monitored constantly and cooled back down to the proper temperature after each rack of eight frames is plunged into it. This ensures that each frame gets a consistent quenching temperature. It no longer varies as it used tobased on where the frame was in the lattice of 99 other frames and how much the quench bath heated up when the huge steel rack carrying the frame was dropped into it. PENNSTAT E T. W. SIMPSON Excerpts Excerpts from from Tour Tour de de Cannondale Cannondale (cont.) Cannondale used to use a very expensive automated frame aligner that would check and correct the alignment of every (cont.) frame in the softened stage, immediately after heat-treating. After implementing the new heat-treating system, the company

found that the machine wasn't doing much, since the frames were coming out in much better alignment. Since their new tracking system tells the engineers everything that's happened to every frame, they continued to tweak various steps to improve the alignment further. They now find that a misaligned frame is very rare, so they took out the expensive automated aligner. Engineers still check the alignment of every frame, but if they find one that's off, it's discarded. Where forks used to be stocked with every length of steering tube required, Cannondale now only keeps very long, unthreaded ones on hand in each model. They have a machine that can cut and thread steering tubes after painting, and they only prepare forks to order now. Painting used to be done by an automated, rotary spray-robot. But the robot has been removed to provide more flexibility in color choices. It was also removed because the new paints required by the Environmental Protection Agency don't smooth out as well without the volatile organic components they used to have, and forcing them through the old rotary atomizers yielded less-consistent results. Removing the solvents in the paintaccording to the new regulationsalso requires the paint to be catalyzed to cure, which means it will harden up inside paint equipment. Spray gun makers, DuPont, the Environmental Protection Agency and Cannondale have worked together closely to come up with a new system. Frames are now hand-sprayed with guns that mix the paint and the catalyst together in the stream ahead of the nozzle. Since the paint won't harden in the guns, a painter can have numerous guns to spray many different colors. He or she simply paints frames in one style until a new instruction tag comes along the conveyor, then switches to the new color; there's no cleanup in between. In the future, Cannondale plans to oversee the entire operation with a computer program designed by University of Connecticut engineers. Each day, the jobs scheduled for that period will be put into the computer, which will come up with the most efficient flow pattern. If a machine breaks down, the computer will come up with the most efficient production routing without it. The computer will also alert managers to which stations will be idle at which times during the day. Using these stations during such time would result in no increase in output, so this "spare" time will be utilized for other workers to be trained on that station or for maintenance of the equipment. Monitoring the quality of the products is an extensive testing lab. It's very well equipped in terms of repetitive-fatiguetesting and impact-stimulating machines. Ongoing research in real-world conditions is conducted by wiring bicycles with strain gauges connected to portable computers. From: Lennard Zinns article Tour de Cannondale which appeared in VeloNews (1994). PENNSTAT E T. W. SIMPSON

Press Press Release Release 2/1/99: 2/1/99: Cannondale Cannondale Custom Custom Frames Frames After four years of custom-building lightweight, high-performance bicycles for the racers on their pro cycling teams, bike-maker Cannondale is offering to custom-build lightweight road frames for the masses. With their new Custom Cannondale program, the Connecticut-based company is letting cyclists everywhere choose from more than 8 million possible frame and color variations of their super-light, super-fast CAAD4 aluminum road frame. Cannondale frame designer Chris Peck explained that custom frames aren't just for racers. "The Custom Cannondale program is for anyone who wants to maximize their comfort and performance on a bike," said Peck. "There's no question that the fit between frame and rider plays a critical role in performance and comfort - that's why virtually every pro road team rides custom frames. The same advantages provided by a custom frame would be appreciated by anyone who is serious about the time they spend on their bike. And of course," concluded Peck, "a custom frame is perfect for anyone too large or too small for conventional, off-the-rack frame sizes." According to Peck, women in particular often have difficulty finding frames to fit their dimensions. Here's how the program works: An interested customer visits a participating Cannondale dealer for a fitting session, where the dealer assists the customer in selecting from as many as 39 possible seat tube lengths (in halfcentimeter increments), 23 possible top tube lengths (half-centimeter increments), seven possible seat tube angles (half-degree increments), and two possible bottom bracket heights. The customer then chooses from 33 different color options, a matte or gloss frame finish, and eight decal options (plus the option of a personalized decal with the customer's name). The dealer takes a deposit from the customer and faxes the order to Cannondale. Using their patented, flexible manufacturing process, Cannondale then hand-crafts a CAAD4 aluminum frame to the customer's exact spec's. Within six weeks, the custom frame is on its way from Cannondale's Bedford, Pennsylvania, factory to the dealer. (The dealer can then either swap a customer's existing components over to the new frame, or assist the customer in selecting new parts to outfit the frame.) Suggested retail price on the custom frame is $1,399, and will include a lightweight Slice Carbon carbon fiber fork.

Customers interested in learning more about the Custom Cannondale program should visit Cannondale's web site at http://www.cannondale.com. The web site has considerable information about the program and the CAAD4 frame, including answers to frequently asked questions and an on-line frame building function that allows customers to create an on-screen, virtual custom frame. The application also automatically calculates nine other frame specifications (wheelbase, for example) that result from the four dimensions plugged in by the customer. Source - http://www.cannondale.com/bikepres/19990201.html PENNSTAT E T. W. SIMPSON PENNSTAT E T. W. SIMPSON Focus: Recall: Recall: Role Role of of Production Production in in MC MC Firm Firm Total process efficiency

Positive Effects: Low overhead and bureaucracy Optimum quality Elimination of waste Continual process improvement Low inventory carrying costs High labor productivity Detrimental Effects: Integration of thinking and doing High utilization of and investment in worker skills Sense of community Low total costs High production flexibility Greater variety at lower costs Demanding, stressful environment? PENNSTAT E

T. W. SIMPSON Recall: Recall: Role Role of of R&D R&D in in MC MC Firm Firm Focus: Continual, incremental improvements Positive Effects: Continual improvements, eventual technological superiority Integration of innovation and production Frequent process innovations Low costs and short cycle times Mutually beneficial relationships with other firms Better fulfillment of customer wants and needs Detrimental Effects: Lack of breakthrough innovations? PENNSTAT

E T. W. SIMPSON Focus: Recall: Recall: Role Role of of Marketing Marketing in in MC MC Firm Firm Gaining market share by fulfilling customer wants and needs first domestically, then in export markets Positive Effects: Filling the niches Ability to respond quickly to changing customer needs Market takeover High sales domestically and through exports Technology-intensive products Detrimental Effects:

Too enamored with technology? PENNSTAT E T. W. SIMPSON Recall: Recall: Role Role of of Finance/Accounting Finance/Accounting in in MC MC Firm Firm Focus: Information useful for managers and workers Primary Benefit: Sound long- and short-term decisions Long-term investments in capital, people, and technology Low costs, high profits Attention to core competencies Long-term supplier interdependence Detrimental Effects:

Stockholders ignored? PENNSTAT E T. W. SIMPSON

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