Volume-variety and design
In Chapter 1 the four V’s of operations were described. These were volume, variety, variation and visibility. The first two of these – volume and variety – are particularly important when considering design issues in operations management. Not only do they usually go together (high variety usually means low volume, high volume normally means low variety) but together they also impact on the nature of products and services and processes which produce them. The volume and variety of an operation’s activities are particularly influential in determining the way it thinks about its performance objectives. The figure below illustrates how the definitions of quality, speed, dependability, flexibility and cost are influenced by the volume-variety position of the operation. [pic]
Quality in a low volume-high variety process such as an architects’ practice, for example, is largely concerned with the final aesthetic appearance of the building and the appropriateness of its detailed design. In an exceptionally high volume-low variety process, such as an electricity supply company, quality is exclusively concerned with error-free service – electricity must be constantly available in the correct form (in terms of voltage, frequency, etc.). The meaning of quality has shifted from being concerned primarily with the performance and specification of the product or service towards conformity to a predefined standard, as we move from low volume-high variety operations through to high volume-low variety operations.
Speed for the architects’ practice means negotiating a completion date with each client, based on the client’s needs and the architects’ estimates of how much work is involved in each project. Speed is taken to its extreme in the electricity utility where speed means literally instant delivery. No electricity company could ask its customers to wait for their ‘delivery’ of electricity. Speed therefore means an individually negotiated delivery time in low volume-high variety operations, but moves towards meaning ‘instant’ delivery in some high volume-low variety operations.
Dependability in processes such as the architects’ practice means keeping to each individually negotiated delivery date. In continuous operations, dependability often means the availability of the service itself. A dependable electricity supply is one which is always there. So dependability has moved from meaning ‘on-time delivery’ in low volume-high variety operations to ‘availability’ in high volume-low variety operations.
Flexibility in low volume-high variety processes such as the architects’ practice means the ability to design many different kinds of buildings according to its clients’ various requirements. With the electricity company’s process, the need for product flexibility has disappeared entirely (electricity is electricity, more or less) but the ability to meet almost instantaneous demand changes through volume flexibility is vital if the company is to maintain supply. Flexibility has moved from meaning product flexibility in low volume-high variety operations to volume flexibility in high volume-low variety operations.
Cost, in terms of the unit cost per product or service, varies with both the volume of output of the operation and the variety of products or services it produces. The variety of products or services in low-volume operations is relatively high, which means that running the operation will be expensive because of the flexible and high skill levels employed. Further, because the volume of output is relatively low, a few products or services are bearing the operation’s high cost base. Also, and more significantly for the operation, the cost of each product or service is different. At the other end of the scale, high-volume operations usually produce similar products or services, output is high, so that whatever the base cost of the...
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