Strategic Operational Management: Zappos, Lean, and Optimization

This presentation provides an analysis of strategic operational management, focusing on several key areas. It begins with an examination of Zappos' adoption of holacracy, exploring the reasons behind its implementation and its subsequent impact on the organization, including both positive and negative outcomes. The presentation then delves into the generic business-level and functional-level strategies employed by Zappos. Following this, it shifts to a discussion of lean production, detailing its strategic adoption and successful implementation, using Virginia Mason Hospital as a case study. The presentation also covers optimization techniques, including the use of Excel Solver for profit maximization and the application of Overall Equipment Effectiveness (OEE) analysis. The conclusion summarizes the findings, emphasizing the effectiveness of holacracy, lean production, and optimization tools in improving organizational performance. The presentation includes references to key sources, such as Zappos, Holacracy, and Toyota Company.

Strategic Operational
Management
Assessment 2 presentation

Introduction
 This presentation entails
 Reasons why Zappos adopted holacracy
 Impact of the holacracy at Zappos
 Generic business level strategies at Zappos
 Functional level activities

Cont.’
 Adoption of lean production strategy
 Implementation of the lean strategy at Virginia hospital
 Optimization using excel solver
 Effectiveness of XYZ Ltd

Q1(a) Why Zappos adopted
holacracy
 To increase accountability among the Zappos employees
 To allow employees an opportunity to make strategic decisions and
create an environment in which their ideas can thrive.
 To distribute authority and reduce the burden of decision making on
the senior managers.
 Adopting holacracy gives room for individuals to be responsible for
their thoughts and actions.

Q1(b) Impact of holacracy at
Zappos
 Introduction of holacracy at Zappos yielded several negative impacts.
 First the firm did loose 20% of its employees upon enrolling the new culture.
 The shift of the system did disrupt the daily performance of the firm
especially enrolment of the project ‘super cloud’.
 The past achievement of Zappos were called into question following the
potential disruption generated by the holacracy introduction.
 One positive result form the shift is that the firm was able to filter and
remain with employees that believed in Tony’s ideologies.

Q2 (a) Generic business level
strategy at Zappos
 Zappos under the leadership of Tony Hsieh applied a number of strategies to
gain competitive advantage over other firms.
 One of the strategies was cost-leadership strategy.
 Zappos used a shorter supply chain that involved direct shipping of products to
consumers from the manufacturing points. This reduced cost of the products.
 The other strategy was differentiation strategy. Zappos did thrive to create a
unique value for the client by applying the use of technology for example e-
commerce.

Q 2(b) Activities to be undertaken at
the functional level
 For the firm to succeed the following activities need to be undertaken
at the functional level.
 Develop a superior fit along the value chain activities of logistics,
purchasing and customer service.
 Build a superior marketing and production system
 Good customer relations network

Q3(a) Strategic adoption of the lean
production philosophy
 Lean production means removing unnecessary constraints so as to
improve production efficiency and minimize the overall costs.
 It enhances customer satisfaction. The system did cut treatment time
from 66 to 12 days in Virginia hospital
 Lean production minimizes operational costs. By implementing the
system Virginia hospital freed up an equivalent of 77 full time employees.
 The system did reduce staff walking distance by 60 miles hence allowing
them more time to concentrate in service delivery

Q3 (b) Keys to the successful
implementation of lean production strategy
 The system was applied to improve financial returns, patient satisfaction as well as
eliminate errors during patient treatment.
 Understanding the lean philosophy. Prior to implementing the lean production in
Virginia hospital, the management of the firm did visit Toyota in Japan to learn more
about it.
 Routine followed by cultural change. The managers did change the routine adhered
to by the employees and eliminated any process that was deemed unnecessary.
 Sharing knowledge and learning from mistakes. The administration of Virginia
hospital took time to train the employees on lean production and even conducted
trials to verify its success.

Q4(a) Optimizing profits
Bicycles Mopedes Child Seats
Profit $24,192 $6,864 $0
Resources used
Capital $300 $1,200 $0 $1,500 <= $91,200
Storage $108 $22 $0 $130 <= $130
Total Profit
Order Size 216 22 0 $29,426
Cycle Trader

Q4(a) Dataset used

Q4(b) Effectiveness of XYZ Ltd
Item Data Captured v. Performance=(ideal cycle time*Total count)/Runtime
Shift Length 540 minutes 92.87%
Breaks 84 minutes
Down Time 54 minutes vi. Quality=Actual good time components/Total counts
Ideal Cycle Time 1 seconds 98.80%
Total Count 22400 Doodads
Reject Count 268 Doodads viii. OEE=(Actual good total*Ideal time)/Planned production time
80.89%
i. Planned production = Shift length-break
540-84 Discusion
456 minutes The equipment is of very good
ii. Run Time= Shift length-(Breaks+Down Time) quality and of required performance
540-84-54
402 minutes The firm though ought to improve
iii. Actual Good Total of Components=Total counts-Reject counts the availability of their equipments
22132 Doodads
iv. Availability=Run Time/Planned production time
88.16%