Too Much of a Good Thing is Bad, Especially Drugs

break(great for any design)

Many of us have not reached the the point in our lives where we are trying to reverse the effects of father time and because of this we may not know what much about the company Allergan. Allergan is the company that makes Botox, a prescription drug that is injected into the skin to help alleviate wrinkles. But this is not all they do, Allergan is a  $53 billion pharmaceutical company with an inventory of products ranging from headache to glaucoma medication.

Recently Allergan was in talks to acquire Salix Pharmaceutical Ltds, a company that specializes in a bowel medication, but during the due diligence Allergan spotted something that threw the deal off. This key detail that ended the acquisition of the $9 billion company was inventory. Salix management seemed to have misjudged how much inventory they had and had overstated the amount sold. This meant that Salix has a large amount of inventory on hand, which we know is one of the most expensive asset of a company, that they could not sell to make revenue.  Another problem with this is that these products were finished goods meaning that they were not raw materials or even work in progress products so this prohibited them from re-purposing the drug.

The effects of inventory is profound. The effects of a misjudged inventory estimate is devastating. In this case not only has Salix lost the chance to pay back stakeholders by being bought out by a large corporation such as Allergan, Allergan may have lost it’s chance to protect themselves from a takeover. Allergan is in the midst of being taken over by an even bigger pharmaceutical company, Valient Pharmaceuticals International Inc. The acquisition of Salix was suppose to make them too expensive to be taken over, but because of this inventory mistake they are ripe for the taking.

As shown above inventory is a major factor in a company, whether they want to be bought out or are just running their daily operations. The management of inventory is crucial to a companies daily operations in that the company needs to have enough inventory for the demand but not too much that a company does not seem liquid enough. The company also needs to balance the right amount so that their financial standings are not in question. Not only do managers need to understand how inventory needs to be ordered they need to what type of inventory needs to be ordered.  Balancing inventory is something that will take a lot of experience and knowledge to achieve , hopefully we all reach a point in our careers where we are at this level.

Do you think Allergan should not have put so much weight on the inventory of Salix ?

Are you surprised that Allergan did not go through with the acquisition of Salix if it meant they would not be taken over?


Quality Matters

Quality is a factor that can affect what a consumer purchases. As consumers, we do not want a product that will fall apart the next day. We don’t want a car that will blow up if we get rear-ended. If a company produces products or services that consumers do not deem to be good, this can affect sales and also the company’s reputation. Because of this, quality is an important part of operations management. Our text defines quality as “the ability of a product or service to meet customer needs.” (Heizer 209.) This definition might seem vague, but in reality, quality can mean different things to different consumers, such as reliability, durability, or even performance. The textbook mentions that two ways quality can improve a company’s profitability are creating sales gains and reducing costs (Heizer 208.)

An example of how quality comes into play in management is the situation going on in the auto industry and the handling of vehicle quality and safety. Recently, Audi and Honda have recalled certain vehicles. The Wall Street Journal reported that Audi’s recall was a result of an air-bag deployment glitch. “Audi’s action is the latest in an industry burdened by recalls. There have been tens of millions of vehicle recalls issued this year, costing…billions of dollars and denting the reputations of executives the companies they run.” (WSJ.) This highlights the fact that when a company’s product or service is perceived to have bad quality, it will cost the company money and will impact the company’s reputation. In addition, not only will recalls affect customers’ perception of a company, but they can lead to government investigations, fines, and lawsuits, all of which will impact the company’s operations management. The article mentions that Honda is reforming its quality assurance structure and will create a new job to oversee the safety changes the company will implement.

Personally, I believe quality is a vital part of operations management. I prefer to buy and spend more for products that I know are not going to fall apart a right after purchasing them. With all of these vehicle recalls, I believe the auto industry really needs to look at its quality standards. Companies need to look at where quality ranks in its operations and consider improving the system. Quality can help a company gain a competitive advantage over others, which will lead to higher profitability and a better reputation. As the textbook mentions, quality can reduce costs and improve sales, which are two features that all companies want. For instance, a product made of higher quality material will have a lower warranty cost for the company. Also, if consumers know a company produces high quality products, they are more likely to buy from that company.

Questions for the reader:

How do you define quality? Do you think its has a big effect on operations management? What are your thoughts on the continuous product recalls?


Heizer, Jay, and Barry Render. Principles of Operations Management. Upper Saddle River. 2013. Print. 208-209.

Pfanner, Eric, Boston, William, and Megumi Fujikawa. “Audi, Honda Swept Up In Concerns Over Safety.” The Wall Street Journal, 2014. Web. 

The Life, Death, and Resurrection (?) of the Blackberry Phone


Blackberry has released a new phone called the Blackberry Passport. It boasts a large square screen and, of course, a physical keyboard. With another attempt by Blackberry to regain its former glory I thought it would be interesting to see how the Blackberry product got to its present point in its evolution.

When the Blackberry was first introduced it filled a void in the market. Until the Blackberry was introduced in the late 1990s, there were no products that allowed people to send emails through their phones. The growth of the Blackberry came when it implemented a phone application to the device. Now the device was able to make phone calls, text, and send emails, thus making it incredibly popular among professional. These were the strengths that Blackberry kept focusing on to continue the growth of the product. As the product reached its maturity other phones began to emerge as competitors for the Blackberry. The most notable competitor was the original iPhone. With its innovative touch screen and product design the iPhone quickly became a more popular phone than the Blackberry. While the iPhone was gaining market share Blackberry did not innovative enough to keep up with the iPhone and quickly the products sales began to decline until it became an afterthought in the mobile phone industry.

Operation management lessons from Blackberry – Product Life Cycles

  1. Introductory Phase – Even before the Blackberry was launched it took many changes until a final, market ready product could be released. As with any other products in the introductory phase many changes will need to be made until the product is ready to be released.
  2. Growth Phase – When the Blackberry reached the growth phase it was the most popular phone for professionals. And just like other products in this phase demand is high and the companies with products in this phase to supply the demand.
  3. Maturity Phase – The maturity phase saw the Blackberry facing many competitors one of which was the iPhone. In this phase a company needs to have other high innovative products to compete with the competitors.
  4. Decline Phase- This is the end of the product and companies begin to withdraw resources away from them and focus on other products.

Follow Up Questions

Do you think the Blackberry Passport can help Blackberry regain market share?

If you were an operation manager how important would product design be for you?


With Elon Musk, It is rocket science!


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


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?








Do you have a Toyota?

Do you remember the Toyota recall in Bahrain? Have you ever thought what really went wrong and why Toyota is recalling those vehicles?

I’ve read an interesting paper What Really Happened to Toyota?  that was analyzing the different recall acts of Toyota which took place in USA due to quality and safety issues. The paper analyzed the main reasons behind such issues as the brand image and sales revenue were severely impacted.

 Toyota and its chain of suppliers had always pioneered quality management methodologies of total quality control since they believed that quality, customer satisfaction and profits are deeply connected. Quality is a major component of Toyota’s strategy and production system, and was always looked at as a role model by other competitors, such as Ford, GE and Honda.

So what really happened that made “Quality” suffer?

The paper states that there are two main reasons behind the quality issues:

  1. Toyota executive management always believed that quality should have a high priority, however, when the new management came in, their focus has changed. The new focus was on rapid growth rather than quality. As Toyota expanded in new markets, from 2003 onward their sales grew faster than the company can manage, and therefore, growth had taken priority over the traditional focus on quality. The decisions were made in favor of meeting sales, cost cutting and profit target while sacrificing product development, supplier management and production.
  2.  The second reason is a result of the increasing complexity of car products due to technological changes. Government regulations on safety, emissions and fuel consumption and the rising customer demands for environment friendly cars with luxury features have all added to the complexity level. This point applies to other car manufacturer as well, but due to the continuous demand and market expansion, Toyota was faced with the challenge of changing its production process to meet the demand of safe, clean, fuel-efficient and comfortable cars.


Some of the process change decisions were to compress the lead time between exterior design approval and start of sales to less than 20 months. Another change in process was to introduce an accelerated design cycles that have stressed the development and production systems which have created conditions for quality failure.

 Toyota’s supplier management and its performance were also affected by the above two points. To meet the rapid demand and product complexity, Toyota had to outsource engineers and contract with new suppliers because the current engineers and suppliers were not sufficient. Most of those contract engineers and suppliers were inexperienced with Toyota’s standards and practices, and they were overseas (none Japanese speakers) contacts which had lead to coordination and communication problems.

I think that for any company, risk assessment should be conducted before moving with growth and expansion decision. With Toyota, the quality has suffered because they banded their core values of quality and focused on growth.

In your opinion, what went wrong with Toyota?