QSO 300 Operation Mgt Milestone 3

Running Head: FINAL PROJECT MILESTONE ONE 1

FINAL PROJECT MILESTONE ONE 8

QSO-300 Final Project Milestone One

Thomas Scalf

16 May 2021

Final Project Milestone One- Module Two

Introduction

BYD, ‘Build Your Dream” is a privately owned Chinese firm that was started by Wang Chuan-Fu in 1995 to make batteries. Wang started a battery company because of the poor Chinese batteries that were available and expensive high-quality batteries from Japan (Rarick, Firlej, K., & Angriawan, 2011). The main aim was to meet the people’s needs for high-quality and cost-effective batteries. In 2003, BYD penetrated the automobile manufacturing sector by purchasing a state-owned automobile manufacturer, a decision that positioned the company to compete internationally.
BYD gained a high reputation for its innovation, and production of environmentally friendly, high quality, and cost-effective products. BYD utilizes operations management to offer high value to its customers and gained a competitive advantage in the battery market. It aims to become the largest car company in the world. The paper discusses how BYD uses operations management to gain a competitive advantage in the market and generate value, in addition to OM theories and practices.
Generating value
A.
How BYD utilizes OM to generate value and provide goods for its customers

BYD utilizes operations management to generate value and provide goods to its customers by producing batteries of high quality, environmentally friendly, low cost, and of lightweight, saving more power than the rivals. Wang founded BYD after the analysis of the market to determine the customers’ preferences and needs (Rarick, Firlej & Angriawan, 2011). He realized that the market needed high-quality but cost-effective batteries, rather than the poor-quality batteries that were offered by the Chinese companies, and the expensive ones from Japan.
Besides, BYD uses the concept of operations management in its operational activities to help cut costs. It cut more operational costs by keeping its labor expenses low compared to the rivals by offering houses to its employees and covering their living expenses. BYD also thrives to remain environmentally conscious by being innovative and remaining cost-conscious. It uses ferrous lithium which is less expensive and lighter in designing its batteries. OM decisions result in the production of products that are environmentally friendly, high quality, cost-effective and lighter which increases customer value.
B.
How BYD attains competitive advantage using OM

According to Render and Heizer, three strategies are essential for operation managers to attain a competitive advantage over other rivals. These strategies include low-cost leadership, differentiation, and response (Heizer & Render, Munson, 2020). BYD attains its competitive advantage by offering products that are differentiated and unique from rivals. Through innovation, BYD develops EVs that are designed less expensively and safe for both customers and the environment. It offers high environmental products, lighter with high power saving. The differentiation has made BYD widen its customer base, giving it a competitive advantage.
BYD also gains competitiveness through a low-cost leadership strategy. This involves offering quality products at a low cost. BYD charges a low cost for its high products compared to its competitors which gives it an advantage. It satisfies the customers’ needs of low cost with high quality. The company charges low cost despite the quality because of reduced labor cost, low production cost, and production components.
C.
Contrasting and comparing manufacturing operations and service operations

Service and manufacturing operations are similar in BYD in that they both focus on attaining similar goals. Each department works towards producing effective and best batteries and meeting customers’ needs on quality, cost, and environmental friendliness. The service operations conduct research and identify the best resources to produce EV while attaining the objectives of low cost, power-saving, and environment-friendliness (Hickling, 2019). The manufacturing operations add value to the EV by analyzing the necessities for designing batteries like tools and equipment by meeting the above objectives.
These two operations also differ in different ways. Services are consumed at the same time as production while manufactured goods can be produced and stored for future usage. Services operations highly involve customers or end-users in the production process while manufacturing operations do not highly involve customers. Besides, services operations products cannot be resold while manufacturing operations products can be resold.
In BYD, the manufacturing operations produce goods like batteries and electric automobiles which can be resold, stored for future sale or use and are tangible, unlike the service operations which offers services like employee training, services relating to electric power, and promoting workplace respect which is intangible and cannot be stored.

Theories and Techniques

A.
Comparing and Contrasting CPM and PERT and the types of projects that will favor each.

Both PERT and CPM are techniques used for planning, scheduling, and controlling activities. They both have similar steps starting with project definition and ending with using the network for planning and controlling the project. There are various differences between PERT and CPM. First, PERT is a method of planning and time control while CPM is a technique for time and cost control. PERT is also set based on events and is deterministic while CPM is aligned towards operations and is probabilistic. Besides, PERT is also used in non-repetitive activities while CPM is used in repetitive operations.
PERT favors non-repetitive and highly uncertain projects while CPM favors repetitive and highly certain projects. (Heizer & Render, Munson, 2020). Therefore, BYD would consider PERT when looking to produce and design a new product like batteries. This because it helps in estimating the time needed for uncertain or new production. It can utilize CPM when producing a similar product that it had already produced. This because it allows time to be accurately estimated on repetitive operations.
B.
Steps in developing forecasting system and how would be utilized by BYD. The results for implementing the system for the top-selling product lines.

The following are the steps and their utilization (Heizer & Render, Munson, 2020).
1. Determining the use of forecast- BYD would use this to determine whether the market is exceptional for EV production. This because of the continuous change in oil supply and costs.
2. Selecting the item to be forecasted-Would be used to identify the necessity of a hybrid EV that utilizes gasoline vs. total EV.
3. Determining the forecast’s time horizon-it would be used to determine the best and appropriate time to launch the new EV.
4. The forecasting model section-it would be utilized to identify EV marketing operations.
5. Gathering data for the forecast-the company would research, analyze, and collect information and data to help in forecasting.
6. Making the forecast-BYD would use the data collected to make the forecast.
7. Validation and implementation of the results-BYD would utilize the step to transform EV into a product.
Implementing a forecasting system for the top-selling product line the BYD’s EV product line would promote better decision making by ensuring that the decisions are made based on data. This would eliminate risks as a result of poor decision-making. Forecasting systems promote better and responsible decision-making.
C.
Supply chain risks and reduction tactics

The table represents the risks and mitigation tactics BYD could employ.

Risks

Mitigation tactics BYD could employ

Information distortion and loss

Increasing IT security, data backup, regular employees training on IT security, authorization techniques

Economic risks

Hedging to control exchange rate fluctuations and risks, investing in insurance, economically responsible decision making to help keep with the objective of high quality with less cost

Political risks

Investing in insurance, diversity training, consulting the locals instead risks arise, considering diverse leadership in global expansion

Distribution risk

Monitoring distribution sites through auditing, and customer response, regular customer service training

Outsourcing

Limit outsourcing by producing in-house as before

Supplier quality failures

Screening suppliers to find the best and reliable ones, auditing potential suppliers’ management systems, setting quality expectations

Failure of the supplier to deliver

Setting contracts with suppliers including fines for late or no delivery, proper screening of suppliers, contracting with multiple reliable suppliers, keeping adequate stock

Delay or damage of logistics

Train logistics employees and educate them on alternative routes, proper and daily inspection of logistic vessels before an operation, having backup transportation vessels

Natural disasters

Taking insurance on most likely disasters, backup of company’s file and storing in an off-site location, creating emergency exit, distributing fire extinguishers throughout the organization

Conclusion

In conclusion, operations management and practices are important for the success and performance of an organization. The discussed OM practices and concepts help BYD attain success, gain a competitive advantage, satisfy and offer value to customers and produce the needed products.

References

Heizer, J., & Render, B., Munson C. (2020). Operations management. Sustainability and supply chain management. (13th ed). Upper Saddle River, NJ: Pearson.
Rarick, C. A., Firlej, K., & Angriawan, A. (2011). Byd of China: Electrifying the World’s Automotive Market. Journal of the International Academy for Case Studies, 17(2), 15.
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.476.8062&rep=rep1&type=pdf#page=25
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Hickling, R. (2019, March 28). BYD – Build Your Dreams. Retrieved November 07, 2020, from
https://en.byd.com/about/
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