MMZG533

Manufacturing Planning & Control

BITS Pilani Venkatesh PS/ Pavan Potdar
Pilani Campus
 BITS Pilani
Pilani Campus

<MM ZG533, Manufacturing Planning & Control

Lecture No. 2
Defining Business strategy
Business Strategy
• Organization’s positioning in terms of the following dimensions of competence

Quality Time
• Performance • Delivery speed
• Consistent Quality • Development speed
• Reliability • Delivery Reliability

Flexibility Cost
• Product mix • Labour
• Mix of volume/ packaging • Materials
• Engineering
• Quality-related
• Servicing

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Role of Supply Chain strategy

Business
Strategy

Supply Chain
Strategy

Supply Chain
Capabilities

Supply Chain
Performance

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Defining Business strategy
Conflicting Dimensions
High Quality

Low Cost Short delivery

time

High Flexibility

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From Business to Supply chain Strategy

High Quality

Efficient Responsive
Low Cost Short delivery
time
Supply Chain Supply Chain

High Flexibility

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Supply Chain Strategy to
Supply Chain Capabilities

Business Strategy

Supply Chain Strategy

Efficiency Reponsiveness

Logistical Facilities Inventory Transportation

Cross-functional Information Sourcing Pricing

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Physically Efficient vs Market
Responsive

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Supply chain strategy and product
characteristics

Functional Innovative
Products Products
Supply Chain
Efficient

Match Mismatch
Supply Chain
Responsive

Mismatch Match

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Relevant issues

MULTIPLE products
• Separate SC
• Tailored SC

Product LIFECYCLE
• SC moves towards efficiency
• Innovative products become functional
products

Product Customization/
Standardization
• Move from customized to standardized
• SC moves from flexibility/ high cost to
consistent quality and cost

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Supply Chain strategy vs Uncertainty

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Market characteristics
Lean vs Agile

Lean Agile
• Efficient reaction to • Speedy reaction to a
stable market dynamic/ unpredictable
market

Low Variability High

High

Agile
Variety

Lean
Low

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 Supply vs Demand characteristics

Leagile
• Lean for base,
Lean Leagile predictable demand
Supply Characteristics

Long • Plan and • Postponement • Agile for surge

Leadtime Execute demand
• Upstream Lean =
efficiency/ cost
• Responsive, agile
Lean Agile downstream
Short
leadtime • Continuous • Quick response
Replenishment

Predictable Unpredictable

Demand Characteristics

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Make vs Buy

Cost of making Cost of Buying

• Production • Product Purchase price
• Extra labour • Taxes
• Monitoring • Shipping
• Storage • Inventory holding
• Waste product disposal • Ordering
• Risk of unutilized capacity • Supplier flexibility and reliability
• Investment in capacity • Leadtimes

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 Reliability vs Speed

Production leadtimes
% of production
Cumulative
No of days orders completed
%
in
0 0 0
1 25% 25%
2 25% 50%
3 15% 65%
4 20% 85%
5 5% 90%
6 3% 93%
7 3% 96%
8 2% 98%
9 1% 99%
10 1% 100%

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Made to Order vs Made to
Stock

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MTO vs MTS – SC impact

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In most industries, MTO and
MTS co-exist

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Manufacturing/ Process Strategy

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Process options - 1

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Process options - 2

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Process options - 3

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Process options - 4

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Process Characteristics

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Resource Flexibility

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Service Process Design Matrix

Mass Services Professional Services

• Retailers • Law firms
• Wholesalers • Accounting firms
Degree of Labour Intensity

• Online schools • Doctors’ offices

High
• Railroads • Graphic designers
• Tutors

Service Factories Service Shops

• Airlines • Hospitals
• E-tailers • Gourmet restaurants
Low • Hotels • Auto Repair shops
• Mail/ Cheque processing
firms

Low High
Degree of Customization vs Customer interaction

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Service Blueprint
(Hotel service)
Physical Key components of the service blueprint
distinguishes between onstage and backstage employee activities which are represented with its key
Evidence/ components.
Deliverable Customer actions: central to the creation of the service blueprint, lay it out first. includes the steps,
actions, choices, and interactions the customer performs while evaluating, purchasing or using the
service delivery process. Chronological, left to right.
Customer Onstage/ visible contact employee actions: appears after customer actions, separated by the line of
actions/ interaction. Actions include what frontline contact employees do when they encounter customers face-
interaction to-face.
Backstage/ invisible contact employee actions: Backstage/ behind the scene actions taken by contact
employees, not visible to the customer. Non-visible interactions with the customer - telephone calls and
Onstage other activities backstage contact employees carry out to support the onstage activities.
Support processes: Includes all actions, interactions, internal services carried out by individuals or units
Employee (not contact employees) within the company to support contact employees deliver the service. They are
actions not visible to the customers.
Physical evidence: this comes at the top of the diagram and represents the physical evidence of the
service. They are typically listed above each point of contact. For example, the physical evidence of a
Backstage face-to-face meeting can be listed as office decor.
Employee Lines: Each component of the service blueprint is separated by a line. First is the line of interaction -
direct interaction between customer & organization
actions Line of visibility. All components that come above this line are visible to the customer while the ones
that come below it are invisible.
Internal line of interaction. This separates contact employee activities from other service support
Support activities and people. Vertical lines cutting across the line of internal interaction represent internal
service encounters.
processes Arrows: These represent the relationships/ dependencies. A single arrow indicates a one-way exchange,
and a double arrow indicates the need for agreement from both parties or codependence.

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 Service Blueprint – Homework
(Hotel service) - Solution
Evidence

Bill
Physical

Desk
Hotel Cart for Bags Elevators Cart for Bags Delivery Tray Room Lobby
Paperwork
Ad Website Exterior Employee Hallway Employee Menu Food Food Amenities Hotel
Lobby
Parking Dress Room Dress Appearance Bathroom Exterior
Key
Parking
Customer
Actions

Receive
Make Arrive at Give bags to Call Room Sleep Check out &
Check in Go to room Receive bags food/ sign/ Eat
Reservation hotel bell person Service Shower leave
tip

Line of interaction
Employee
Onstage

Actions

Greet & take Process Process

Deliver bags Deliver food
bags Registration Check out

Line of visibility
Backstage
Employee
Actions

Make
Take bags to Take food
Reservation
room order
for Guest

Line of internal interaction

Processes
Support

Reservation Registration Registration

Process food
system system system

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Location Strategy

Operating
expenses

Risk and Revenue

Profits driver

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Factors affecting location
decisions

Exchange
Labour
Rates and Costs
Productivity
Currency Risk

Political Risk,
Proximity to Proximity to
Values,
markets suppliers
Culture

Proximity to
Competitors
(Clustering)

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Layout strategies

(a) Fixed (c) Process

(b) Process (d) Product/
Position (Work cell)
Layout Line Layout
Layout layout

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Layout strategies - application

Offices Retail Stores Manufacturing

Warehouses Service areas Sales offices

Dealerships/
Distribution

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Location strategy example –
SmartBank India - Homework
SmartBank India, a new entrant in the banking sector, aims to cater specifically to the middle-income category of the population.
The bank focuses on providing innovative financial services, seamless digital banking, and personalized customer experiences.
Choosing the right locations for branches is crucial for SmartBank's success in serving its target market.
a) Define the concept of location strategy in the context of SmartBank India's expansion. Discuss the factors that SmartBank should
consider when selecting branch locations to effectively reach the middle-income population. Provide examples to illustrate the
importance of location strategy.
b) SmartBank is considering opening branches in two potential locations: a busy commercial district and a residential area with high
footfall. Analyze the advantages and disadvantages of each location in terms of customer accessibility, visibility, and operational costs.
Recommend a location based on your analysis.
c) The middle-income population is increasingly tech-savvy. Suggest two alternative location strategies that SmartBank could consider
to complement its physical branch network and enhance digital accessibility for customers. Discuss the benefits and potential
challenges associated with each strategy.
d) SmartBank plans to offer special promotions for middle-income customers during the launch phase. Propose a location strategy that
maximizes visibility and foot traffic to attract potential customers to take advantage of these promotions. Explain how this strategy
aligns with SmartBank's target market.

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Layout strategy example –
Govt run shipyard - Homework
You work for a Government-run shipyard that manufactures small boats for the coast
guard (made of fiber-reinforced plastic) in bulk. Now, the government has decided to
also manufacture large war ships in the same shipyard (largely made of steel). You are
called upon to design the process layout for this large value order. Explain the choice of
layout, the associated factors leading to the choice, alternative strategies to address
some of the issues associated with the layout.

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Post-reads for session 2

T1 Chapters 7, 8 and 9
Go through the examples and problems therein
Articles
• T1 Case study on D-Mart (Chapter 8) titled “D-Mart emerged as top retailer”
– read through and summarize the advantages and D-Mart faces because
of its choice of location/ layout/ market-facing strategies
• Why investing in company location still matters - McKinsey Quarterly
• In banking, location is everything again—for now – McKinsey Quarterly
• Other articles on SC/ Process strategies
• Complete Guide on Safe Design of a New Production/Manufacturing Plant |
LinkedIn
• Plant Layout (hse.gov.uk)

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Thank you

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