operating costs

With Elon Musk, It is rocket science!

Posted on by valentina30133f14

                                                                   spacex-toppermanual

After selling PayPal for $1.5 billion dollars to Ebay in 2002 visionary Elon Musk could not just sit back and enjoy his multimillion achievement. He had greater things in mind, Space X. In 2002, Elon Musk invested his own money and founded the first private space company, which today opens the doors to space exploration again. After Nasa retired their 30 year program in 2011, many people thought that space exploration would come to an end. Elon’s goal was to make people believe in space again, and so he did. The idea of building shuttles and sending them to space seemed oddly expensive. One of the reasons why NASA retired after 30 years was the extremely high expense of building, fueling, manning, and sending just a single shuttle into space. Elon knew how expensive it was to maintain a space program like NASA so he started SpaceX with a particular goal in mind. What was this goal? To make spaceflight routine and affordable. In addition, to make humans a multi-planetary species. So how did he do it and how does he continue to strive to reach these goals?

Rocket Science                                                         elon_musk_portrait_by_lewis3222-d51e46s

  1. Understand why building rockets was so expensive

  2. Figure out how to go to orbit cheaper by lowering the cost by a third

  3. Hire NASA’s veteran engineers as well as passionate young engineers

  4. Break through barriers (literally and figuratively) even though the odds were astronomical (pun intended)

  5. Create a sustainable and reusable system to maintain lower costs

  6. Make more than 70% of each launch vehicle manufactured and assembled at the SpaceX Hawthorne production facility in order to avoid pitfalls associated with single source parts dependency

  7. Name his first two shuttle Falcon and Dragon (just because he can)

                                                                                                                                                                                                                            v2_interior_wide            article-2643186-1E52F3A300000578-946_634x414

8. Establish a viable business plan by charging other countries to send cargo to the ISS

9. Secure a 6.8 billion dollar contract from NASA along with Boeing to finish designs, build, test and ultimately fly crews to the ISS

10. Become the real life Iron Man

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It took more than a decade to accomplish what people never thought would be possible. Only world superpowers had been able to accomplish the same feats Elon did before he accepted the challenge. Even though the odds were not always in  his favor, his operation management and business skills were what lead SpaceX to be the first private company to ever launch a rocket out of Space. What is something else no one thought would be possible that was accomplished by a single man and his vision? Would you change anything about how Elon runs SpaceX or the process taken to accomplish his goals? Why were his operations management skills so essential to achieve his goal?

Sources:

http://www.forbes.com/sites/alexknapp/2014/09/16/nasa-awards-boeing-and-spacex-contracts-to-deliver-astronauts-to-the-space-station/

http://www.businessweek.com/articles/2012-09-13/elon-musk-the-21st-century-industrialist

http://www.cbsnews.com/news/tesla-and-spacex-elon-musks-industrial-empire/

 

 

 

 

 

 

It’s Not Easy Growing Green

Posted on by spr1313aperrotin

They call it weed because it can grow anywhere but it requires rigorous effort.

 

Making a legitimate business out of marijuana requires high labor costs and extreme costly maintenance. Hundreds of Medicinal Marijuana Entrepreneurs have gone under because of competition or cost. The CEO of Pink House Blooms, Elliot Klug (pictured above) explains, “In order to survive in any business, you’ve got to be cost effective, so that was one of our drivers.”

Pink house and other commercial growers are required to document the life of each plant from the time it’s a cutting to the time its flowers are sold and the state of Colorado requires cameras in every room that has plants to prevent marijuana from entering the black market. These extra requirement are not comparable to any other industry or cheap either.

The Marijuana flower is trimmed by hand because the machine would damage their Trichomes, the part of the plant that is rich in the high-inducing THC. This results in high labor costs.  Payroll can make up more than a third of production costs. Retaining employees who learned their trade by growing clandestinely, is also a challenge because “they aren’t used to being part of a regular society”, says Jason Katz, chief operating officer of Local Product of Colorado.

Growing space can cost $100 or more per square foot and Pink House Blooms has a 6000 square foot warehouse. To have operation costs as inexpensive as possible they use every inch of their warehouse. To save on air conditioning costs, Pink house developed a system that uses water to cool the powerful lights that make marijuana grow.  Those lights, causing a $14,000-a-month electric bill, are on 24/7 making their electricity bill a huge portion of their expenses and preventing the company from paying back the borrowed money.

The employees may have gauges and there are Pink Floyd posters covering the walls but it is not as mellow as one would think, It is a tough business. They have supplier issues because many companies do not want to be associated with a pot-growing business.

Is this still a touchy subject or is there something  operations managers do to convince suppliers to work with them?

Operations Management for this industry is not typical at all. They have to create new equipment specialized for their product because it cannot be found on the shelf. This business could have high costs because it is relatively new.

Is it possible that over time, operation managers will find better ways to lower their costs? Any specific ideas?

Colorado and Washington has approved the use of Marijuana for Medicinal use and recreational use effect by next year. Will a higher demand leading to higher profits  make it possible for these companies to increase production efficiency?

What methods might this industry use to forecast. Why might the naive approach lead to too much forecasting error?

Source: http://online.wsj.com/article/SB10001424127887324345804578426963236807452.html?KEYWORDS=marijuana