MGT157 Management

  Case 1 Although one fortunate and lucky young woman was pulled out alive after 17 days buried in the rubble, over 1100 workers perished in a deadly factory building collapse in Dhaka, Bangladesh, in April 2013.89 The Rana Plaza building collapse is now considered the deadliest disaster in the history of the clothing industry. As stated in this chapter, the dynamic competitive environment facing contemporary global organizations demands new solutions, but, as this story illustrates, sometimes those solutions have consequences—tragic consequences. As global apparel retailers reassess their operations management strategies, changes are likely to be forthcoming. Rock-bottom labour costs enticed global clothing giants to Bangladesh during the mid-2000s. Many of the retailers that have relied on these factories are known for cheap, “fast” apparel: H&M, Zara, Lee, Wrangler, J.C. Penney, and Walmart. And when you’re selling many articles of clothing for $20 and under, it means your costs (especially when being shipped from another location halfway around the world) need to be tightly controlled. Also, the concept of fashion trends has changed over the past two decades. Where fashion used to be “good” for an entire season, now fashion styles, colours, shapes, and so forth, change, seemingly overnight. Retailers like Zara and H&M have hooked customers on fast fashion—that is, clothes that go from concept and design to being in your local mall stores in a matter of weeks—and clothing has become a sort of “single-serving disposable item.” Now consumers are wanting new and different items almost continuously. There’s a “constant, ceaseless rotation through looks and styles.” Providing for that demand has placed a significant strain on the operations system behind this fast, cheap fashion. Hasty expansion of factory capacity, lax governmental enforcement of permits and approvals, and a focus on keeping costs as low as possible in whatever ways needed have become the focus of factory work culture in this developing country. Because garment factories in Bangladesh don’t have a lot of the more-sophisticated machinery, like China has, their edge in the fashion industry had always been basic, simply-constructed clothing. And as the fashion industry’s fashion emphasis changed, Bangladesh’s importance to the global clothing trade rose. In fact, in six years, it rose from the 8th top clothing exporter to the 3rd (after China and Italy). Both Bangladeshi factory owners and the government were fully aware of the importance of this industry to the country. Working conditions for factory employees in developing countries have long been less than desirable. Explosions and fires have been a continual problem, as have other unsafe work conditions. (Unfortunately, this isn’t just a problem of the retail fashion industry.) Workplace protections are expensive, which doesn’t work with consumers hooked on fashionable “cheap” clothing. However, with this latest tragic loss of life at this specific garment factory, the fashion industry’s decisions—good and bad—are now on the world stage for everyone to see and criticize. Says one outspoken critic, “What happened in Bangladesh is a game-changer because of the gravity of the situation and tremendous loss of life.” Now public policy and governmental groups around the world are turning up the heat on Bangladesh to reform its labour standards and are pressuring global retailers to more carefully monitor their sourcing standards. Several of the world’s largest apparel companies agreed to a significant plan to help fund fire safety and building improvements. Part of this agreement is to not hire/use manufacturers whose clothing factories fail to meet safety standards. Well-known European retailers who signed on included Hennes & Mauritz AB (H&M), Inditex (the Spanish parent company of Zara), Tesco PLC, and others. Major US retailers, including Walmart, Target, and Gap, chose not to sign that agreement because they felt it exposed them to unlimited liability. However, a group of nearly 20 US retailers did sign a pact in which they agreed to inspect all the factories they do business with and to set up basic safety standards.90 The Bangladeshi government also has pledged to raise wages for garment workers and to fix labour laws, making it easier for workers to form labour unions.

Discuss this from a value chain management perspective. What happened? How did it happen? Why did it happen? How do incidents like this affect how managers work with a value chain?

Do some research on offshoring. What is it? What are the benefits and the drawbacks of offshoring as far as managing the operations system?

What can managers learn about managing operations from this situation? Personal moral issue: Would you pay a higher price for “ethical” clothing? Why or why not? Discuss.      

Case 2 Dairy farmer Pascal Thuot, of Saint-Alexis, Quebec, modernized his farm in 2014 to the tune of $1.5 million. Small enclosures and restraints have been replaced with a huge indoor pen. Two milking robots now serve the 110 cows, who line up in front of the machines when they feel the urge.91 The robot reads an electronic chip on the collar and can determine when the cow was last milked. Before milking, a unit extends under the cow and cleans her udder; tubes carry the milk to a refrigerator.92 These robots provide data on the amount of milk produced, as well as the cow’s temperature, weight, and udder health. They relay this data right to Thuot’s smartphone.93 All these robots provide dairy farmers with more quality of life. Whereas a dairy farmer might normally have worked from 4 a.m. to 9 p.m., now their schedules are more like anyone else’s. “This brings quality of life to my employees. Their schedules are more flexible than before,” says Thuot.94 Milk production is up 50% The information tracked on the cows has improved their health, while reducing veterinary costs. Milking robots also have allowed farms to milk cows three times per day, instead of twice, increasing the milk yield per animal. For Thuot, that’s an increase of 50 percent.95 Thuot’s farm uses other robotic devices as well: two feed systems to drop food onto the ground for the cows, a machine that pushes silage along the centre aisle for improved food distribution, and a milk bar for feeding calves. Quebec features more dairy farms (5300) than any other province in Canada, but it is a sector in decline, with almost 25 per of farms ceasing production over the past decade. Many farmers retire with no one to take their place. Instead of displacing workers, automation can actually save dairy farmers.

How can robotic milking systems help deal with an aging farming population? What are the challenges presented by robotic milking?            

 Are robotics suited for all types of farming?