Knowledge that Transforms

Much recent attention in industrial practice has been centered on the question of which activities a manufacturing firm should complete for itself and for which it should rely on outside suppliers. This issue, generally labeled the “make‐buy” decision, has received substantial theoretical and empirical attention. In this paper, we broaden the scope of the make‐buy decision to include product design decisions, as well as production decisions. First, we examine independently the decisions of whether to internalize design and production, and then we consider how design and production organizational decisions are interdependent. The specific research questions we address are: (1) How can design and production sourcing decisions be described in richer terms than “make” and “buy”? (2) Do existing theories of vertical integration apply to product design activities as well as production decisions? (3) What is the relationship between the organization of design and the organization of production? (4) What organizational forms for design and production are seen in practice? After developing theoretical arguments and a conceptual framework, we explore these ideas empirically through an analysis of design and production sourcing decisions for bicycle frames in the U. S. mountain bicycle industry.

We present a retrospective look at the articles on New Product Development that appeared in the first 50 issues of Production and Operations Management (POM). We discuss some of the strengths and weaknesses of this POM literature stream. This article is not intended to be a literature review or an exhaustive review of the articles. Rather, we seek to identify new opportunities for rigorous and relevant research, research that has the potential of differentiating and enhancing POM within the Operations Management literature.

As much as 50% of effective capacity can be lost to setups in printed circuit board assembly. Shigeo Shingo showed that radical reductions in setup times are possible in metal fabrication using an approach he called “Single Minute Exchange of Dies” (SMED). We applied SMED to setups of high speed circuit board assembly tools. Its key concepts were valid in this very different industry, but while SMED typically emphasizes process simplification, we had to add modern information technology tools including wireless terminals, barcodes, and a relational database. These tools shield operators from the inherent complexity of managing thousands of unique parts and feeders. The economic value of setup reduction is rarely calculated. We estimate a reduction of key setup times by more than 80%, and direct benefits of $1.8 million per year. Total cost of the changes was approximately $350,000.

Many contributions have been made to the field of quality since the inaugural issue of Production and Operations Management in 1992. The first issue called for more research and teaching on TQM, which resulted in two special issues dedicated to TQM. Many other articles related to quality have also been published in the first fifty issues of the journal on topics ranging from technical methods to the Baldrige Award and ISO 9000. As we review these articles, we assess their contribution and the progression of the field of quality. Although past research has advanced our understanding of quality, there still exists many research opportunities in developing more theory, using additional research methodologies, and studying emerging topics in this field.

We review and discuss the evolution of interdisciplinary and interorganizational research in operations management and suggest directions for future investigations. The proposed operations management research focus is one that embraces a more holistic view of an “extended enterprise” which involves working with a new business model—the organization as a network. This methodology starts by treating the organization as a system that is enabled by information technology and is characterized by ubiquitous information sharing across traditional enterprise. Proper integration of technology, business processes and people factors needs to be developed to create higher value from networked enterprises. Operations management research future lies in establishing this science from an interdisciplinary perspective. We analyze this perspective in the context of papers published in the first 50 issues of Production and Operations Management and the related literature.

Recent empirical literature describes an industry's clockspeed as a measure of the evolutionary life cycle, which captures the dynamic nature of the industry. Among other factors, the rate of new product development is found to be associated with an industry's clockspeed. Yet the notion of an industry clockspeed and the essential factors driving suitable decision making in this area have remained relatively unexplored. We develop a simple definition and a corresponding analytic model which explains the interdependent relationship between a firm's own new product development activities and an industry clockspeed. Results from the single firm model show the conditions under which particular firms have an incentive to accelerate their new product development activities. Moreover, we link the single firm's NPD clockspeed decisions to the industry level by creating appropriate metrics which characterize different types of industries. Examples from high‐tech industries such as the personal computer and aerospace industries are included to illustrate our findings. Our intention is not only to offer analytical insights into factors driving the clockspeed for these industries, but also to establish a fundamental structured decision making approach, thereby stimulating future research on this important topic.

In this paper, we examine the operations strategy literature in the POMS journal to determine what has been learned and to suggest new directions for further study in this important area of research. Our review of this literature resulted in the selection of thirty‐one relevant articles, many of which draw upon multiple theoretical perspectives. We identify eight such theoretical perspectives, and go on to classify these perspectives in terms of the scope of inquiry employed in the research (focused versus aggregated) and the researcher's assumptions about choice processes (behavioral versus rational). In doing so, we show that this body of work is dominated by papers that draw upon theoretical perspectives enabling a more holistic scope of inquiry, with a bias towards a view of strategy as a highly rational process. Building on our systematic review and integration of the literature, we suggest multiple areas for future research.

The purpose of this paper is to develop a general framework for supply contracts in which portfolios of contracts can be analyzed and optimized. We focus on a multi‐period environment with convex contract, spot market, and inventory holding costs. We specialize the model to the case of a portfolio consisting of option contracts. We characterize the optimal replenishment policy and show that it has a simple structure. Namely, the use of every different option contract and the spot market is dictated by a modified base‐stock policy. In addition, we derive conditions to determine when an option is relatively attractive compared to other options or the spot market. Finally, we present our computational study, where we report the sensitivity of the results to the parameters of the model. Our experiments indicate that portfolio contracts not only increase the manufacturer's expected profit, but can also reduce its financial risk.

This paper investigates the long‐term stock price effects and equity risk effects of supply chain disruptions based on a sample of 827 disruption announcements made during 1989–2000. Stock price effects are examined starting one year before through two years after the disruption announcement date. Over this time period the average abnormal stock returns of firms that experienced disruptions is nearly –40%. Much of this underperformance is observed in the year before the announcement, the day of the announcement, and the year after the announcement. Furthermore, the evidence indicates that firms do not quickly recover from the negative effects of disruptions. The equity risk of the firm also increases significantly around the announcement date. The equity risk in the year after the announcement is 13.50% higher when compared to the equity risk in the year before the announcement.

The project scheduling problem involves the scheduling of project activities subject to precedence and/or resource constraints. Of obvious practical importance, it has been the subject of intensive research since the late fifties. A wide variety of commercialized project management software packages have been put to practical use. Despite all these efforts, numerous reports reveal that many projects escalate in time and budget and that many project scheduling procedures have not yet found their way to practical use. The objective of this paper is to confront project scheduling theory with project scheduling practice. We provide a generic hierarchical project planning and control framework that serves to position the various project planning procedures and discuss important research opportunities, the exploration of which may help to close the theory‐practice gap.