Operations Rules: Delivering Customer Value through Flexible Operations

Dec. 16, 2010

The book offers some ideas on how companies can cope with oil-price fluctuations, suggesting that a flexible manufacturing strategy can help reduce the increase in transportation costs.

Dave Blanchard

Operation Rules: Delivering Customer Value through Flexible Operations is by David Simchi-Levi, The MIT Press, 2010
Is corporate social responsibility just another way of saying "I gave at the office," allowing companies the ability to write off charitable donations in the name of burnishing their reputations? Is it possible that a manufacturer can actually do well by doing good?

Not only is it possible, but that concept forms one of the essential "operations rules" that serve as the framework for this book, written by David Simchi-Levi, an MIT professor and supply chain expert: Corporate social responsibility can create tangible business opportunities and value. The author offers several examples, such as Fonterra, Coca-Cola and Nestle, where companies were able to not only improve the environment while streamlining their supply chains, but also to create value for themselves.

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The book also sets out to emphasize the importance of lean-manufacturing principles to achieve system, process and product-design flexibility. Either by design or by default, the book attempts to rehabilitate Toyota's somewhat battered reputation as the world's leading proponent of lean (the automaker's recall problems were old news at the time of publication, yet the book makes no mention of Toyota's quality issues). It looks specifically at how Toyota has achieved flexibility through worker cross-training, and shows how luxury car maker Lamborghini has similarly used the Toyota Production System to reduce inventory by 50%.

The book also offers some ideas on how companies can cope with oil-price fluctuations, suggesting that a flexible manufacturing strategy can help reduce the increase in transportation costs. Economic uncertainty on a global scale, the author notes, requires a shift in thinking toward more regional supply chain activities.