Olympus Case
Recommendations
Olympus Optical Company has come a long way in regards to reducing cost and recapturing market share but they are continuing to face problems. In addition to cost issues Olympus is also facing flexibility issues, such as shorter product life cycles and an increasing number of products needed to satisfy customers.
To address these problems we recommend Olympus implement a concurrent engineering program, a modular production strategy, and reconsider the functional group management approach. The concurrent engineering program will reduce product development time and reduce cost. Modular production will increase customer satisfaction by allowing customers to customize cameras with the features they desire. Continuing with the functional management approach will result in increased overhead and redundancy, conflict of interests, and increased overall costs.
Cost Reduction Further cost reductions will be realized through concurrent engineering, product modularity, and by evaluating the production process as a whole and not as 10 independent companies. Concurrent engineering will reduce new product development costs by shortening the development cycle and reducing the need for product and process redesigns. Rather than passing off product designs to the next stage, cross-functional teams can work together to develop innovative, cost-effective new products.
Product modularity will reduce overall costs by postponing product differentiation, which reduces inventory needs. Instead of producing certain amounts of every model, Olympus can create a base model that has standard features, but with the option to include additional specialty features.
Evaluating the production process as a whole, rather than 10 individual companies will reduce overhead requirements and redundancy. Ten functional groups would require ten times the amount of management and support personnel. Additionally, the pressures to reduce costs within each functional group
Olympus Optical Company has come a long way in regards to reducing cost and recapturing market share but they are continuing to face problems. In addition to cost issues Olympus is also facing flexibility issues, such as shorter product life cycles and an increasing number of products needed to satisfy customers.
To address these problems we recommend Olympus implement a concurrent engineering program, a modular production strategy, and reconsider the functional group management approach. The concurrent engineering program will reduce product development time and reduce cost. Modular production will increase customer satisfaction by allowing customers to customize cameras with the features they desire. Continuing with the functional management approach will result in increased overhead and redundancy, conflict of interests, and increased overall costs.
Cost Reduction Further cost reductions will be realized through concurrent engineering, product modularity, and by evaluating the production process as a whole and not as 10 independent companies. Concurrent engineering will reduce new product development costs by shortening the development cycle and reducing the need for product and process redesigns. Rather than passing off product designs to the next stage, cross-functional teams can work together to develop innovative, cost-effective new products.
Product modularity will reduce overall costs by postponing product differentiation, which reduces inventory needs. Instead of producing certain amounts of every model, Olympus can create a base model that has standard features, but with the option to include additional specialty features.
Evaluating the production process as a whole, rather than 10 individual companies will reduce overhead requirements and redundancy. Ten functional groups would require ten times the amount of management and support personnel. Additionally, the pressures to reduce costs within each functional group