Learning_Curve_Theory

Applying the Learning Curve Theory Edwin Punzalan OPSGM/571 Feb 23 2011 Mr. Taousakis Introduction Understanding a process is an essential element in ensuring the success of a company. If a competitor uses a process that is more efficient, it will cost them less. After planning an automotive keyless entry fob, it is concluded that a single international company has been chosen to supply a control chip that has a time delivery rate of 82%. This low rate has the ability to slow down the manufacturing process and will cost the company significant money. The best business practice is to consider an alternate process for the organization. The aim of this essay is recommending and examining cultural factors of a new supplier, statistical process control techniques, and tests of the existing process. Cross Cultural Factors The first process contained a company from Canada that would supply the control chip for the remote. Based on the discovery of their on time delivery rate, it would be in the company’s best interest to use a Chinese company as an alternate supplier. The goal in choosing the right supplier is always to have a scenario in which the two groups are being benefited. According to Deresky, international negotiations are complex because of “differences in cultural values, lifestyles, expectations, verbal and nonverbal language, approaches to formal procedures, and problem-solving techniques” (Deresky, p. 153). The fact that the supplier is in a different country means that the organization must do research and prepare for all of these items relative to the Chinese culture. This point is important due to the fact that a failure to communicate properly with the Chinese will lead to a potential loss of an alliance and a good quality control chip. Statistical Process Controls After securing a Chinese supplier, the company will need to ensure that the quality of the product and the process is exceptional. This can be done using a statistical process control called Six-Sigma. This is a form of total quality management that aims to excel on all dimensions of the product that are important to the customer. The objective of Six-Sigma is eliminating defects within a given process. The metric used is defects per million opportunities and it allows management to analyze the performance of a process and make comparisons. The company will need to use these tools in order to evaluate the quality of the keyless entry fob and its individual components including the control chip from China. Learning Curves If Six-Sigma and continuous improvement tools are used correctly within the company, there is a potential for a decrease in the manufacturing hours as time goes on. This concept is described by the learning curve theory which states that “there is a relationship between unit production time and the cumulative number of units produced” (Chase, Jacobs, & Aquilano, p. 135). Keeping in mind that the initial data of the new process will have a higher production time, the estimate should be made as the curve smoothes out. This comparison will be important in evaluating which process works better and leads the company to higher profit. Conclusion The goal of the company is to earn higher levels of market share and profit. This can be done by taking an in depth look at processes and improving upon them. After reviewing the on time delivery rate of one of the suppliers, the recommendation to switch to a Chinese supplier has been made. Preparing for the cultural differences will be a key element in successful negotiations with the new supplier. In addition to securing suppliers, the process will need to be measured in the form of defect elimination. This can be done using Six-Sigma and continuous improvement tools. Lastly, the old and new processes can be compared using the Learning Curve theory. This will be the deciding factor between choosing amongst the alternatives. If these tools are all used properly, the recommendations above will lead to the success of the company as a whole. References Deresky, Helen (2008). International Management: Managing Across Borders and Cultures (6th ed.). New York, NY: Pearson Education, Inc. Chase, Jacobs, & Aquilano (2006). Operations Management for Competitive Advantage (11th ed.). New York, NY: McGraw-Hill Company.