Professional Documents
Culture Documents
Operations Strategy and Competitiveness
Operations Strategy and Competitiveness
Operations Strategy
Competitive Dimensions
Order Qualifiers and Winners
Strategy Design Process
A Framework for Manufacturing
Strategy
Service Strategy (Capacity/Capabilities)
Productivity Measures
Operations Strategy
Strategy Process Example
Decisions on Processes
and Infrastructure Build New Factory
Competitive Dimensions
Cost
Product Quality and Reliability
Delivery Speed
Delivery Reliability
Coping with Changes in Demand
Flexibility and New Product Introduction
Speed
Other Product-Specific Criteria
Dealing with Trade-offs
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Order Qualifiers and Winners
Defined
Order qualifiers are the basic criteria
that permit the firms products to be
considered as candidates for purchase by
customers
or
= Goods and services
produced
All resources used
Partial Measure Productivity
Output .
Labor + Capital + Energy
or
Output .
Labor + Capital + Materials
Example of Productivity
Measurement
You have just determined that your service
employees have used a total of 2400 hours of
labor this week to process 560 insurance
forms. Last week the same crew used only
2000 hours of labor to process 480 forms.
Which productivity measure should be
used?
Answer: Could be classified as a Total Measure or
Partial Measure.
Is productivity increasing or decreasing?
Answer: Last week’s productivity = 480/2000 =
0.24, and this week’s productivity is = 560/2400
= 0.23. So, productivity is decreasing slightly.
Outline
1
6
Global Company Profile: Komatsu
Identifying Missions and Strategies
Mission
Strategy
Achieving Competitive Advantage Through
Operations
Competing on Differentiation
Competing on Cost
Competing on Response
Outline - continued
1
7
Ten Strategic OM decisions
Issues in Operations Strategy
Research
Preconditions
Dynamics
Strategy Development and Implementation
Identify Critical Success Factors
Build and Staff the Organization
Integrate OM with Other Activities
Learning Objectives
1
8
When you complete this chapter, you should be
able to :
Identify or Define:
Mission
Strategy
Ten Decisions of OM
Describe or Explain:
Specific approaches used by OM to achieve strategic
concepts
Differentiation
Low Cost
Response
Komatsu Strategies
1
1960s - licensed designand
9 technology from
others; improved quality
1970s - became global enterprise and built export
markets aided by increasing value of yen
1980s - joint ventures with Dresser, and
manufacturing outside Japan
1990s - used the latest technology to improve
quality and drive down costs; focused on electronic
engine controls
2000s - increased European presence through
ownership and joint ventures
Komatsu Strategies
2
0
Philosophy &
Values
Profitability
Environment
& Growth
Mission
Business
Strategy
FunctionalArea
Functional Area
Strategies
Differentiation
Cost leadership
Quick response
better, cheaper, more responsive
Competing on Differentiation
2
9
Flexible
Reliable
Rapid
Location DELIVERY
Pizza Hut’s five-minute guarantee at lunchtime Speed
Layout Federal Express’s “absolutely, positively on time” Dependability Differentiation
(Better)
Human Resource
QUALITY
Motorola’s automotive products ignition systems Conformance Response
Supply Chain Cost leadership (Faster)
Motorola’s pagers Performance (Cheaper)
Inventory
Maintenance Fidelity Security’s broad line of mutual funds BROAD PRODUCT LINE
10 Decision Areas of OM
3
4
Goods & service design
Quality
Process & capacity design
Location selection
Layout design
Human resource and job design
Supply-chain management
Inventory
Scheduling
Maintenance
Goods & Services and the 10
Operations Management Decisions
Operations Goods Services
Decisions
Goods & Product is usually Product is usually
services tangible intangible
decisions
Quality Objective quality Subjective quality
standards standards
36
Goods & Services and the 10
Operations Management Decisions
Operations Goods Services
Decisions
Supply chain Supply-chain Supply-chain relationships
management relationships critical to important, not necessarily
final product critical
Inventory Raw materials, work- Most services cannot be
in-process, and stored
finished goods
Scheduling Ability to convert Primarily concerned with
inventory may allow meeting the customer's
leveling of production immediate schedule
rates
37
Goods & Services and the 10
Operations Management Decisions
Operations Goods Services
Decisions
Maintenance Maintenance is often Maintenance is often
preventive and takes "repair" and takes place at
place at the production the customer's site
site
38
Operations Strategies for Two Drug
Companies
3
9
Brand Name Drugs, Generic Drug Corp.
Inc.
Competitive Product Differentiation Low Cost
Advantage
Product Heavy R&D; Little R&D
Selection Extensive Labs
and Design
Quality Quality is a major Meets regulatory requirements on
priority; a country-by-country basis as
Standards exceed necessary
regulatory
requirements
Operations Strategies for Two Drug
Companies - continued
4
0
Brand Name Drugs, Generic Drug Corp.
Inc.
Processes Product & modular Process focuses
production processes General production processes;
Long product runs in Job Shop approach, short run;
specialized facilities Focus on high utilization
Build capacity ahead
of demand
Location Still located in city in Recently moved to low tax, low labor cost
which it was founded environment
Scheduling Central production Many short run products complicate
planning scheduling
Operations Strategies for Two Drug
Companies - continued
4
1
Brand Name Drugs, Generic Drug Corp.
Inc.
Human Hires the best; nation- Very experienced top executives
Resources wide searches provide direction; other
personnel paid below average
Supply Long term supplier Tends to purchase competitively
Chain relationship to find bargains
Inventory Maintains high finished Process focus drives up WIP
goods inventory, inventory.
primarily to ensure all Finished goods inventory tends
demands are met to be low
Operations Strategies for Two Drug
Companies - continued
4
2
18% Marketing/Distribution
17% Momentum/name recognition
16% Quality/service
14% Good management
4% Financial resources
3% Other
Preconditions -
To Implement a Strategy
4
7
Introduction
Growth rate
Growth
Maturity
Decline
Strategy and Issues During a
Product’s Life
5
0
Introduction Growth Maturity Decline
Best period to Practical to change price Poor time to change image, Cost control
increase market share or quality image price, or quality critical
R&D product Strengthen niche Competitive costs become
engineering critical critical
Defend market position
Company Strategy/Issues
Sales
Station
Internet wagons
Color copiers
HDTV
Forecasting is critical
OM Strategy Product and process reliability
& Issues Competitive product improvements and
options
Shift toward product oriented
Enhance distribution
Strategy & Issues During Product Life
5
3
Maturity
Poor time to increase market share
Company Competitive costs become critical
Poor time to change price, image, or quality
Strategy Defend position via fresh promotional and
& Issues distribution approaches
Standardization
Less rapid product changes and more minor annual
model changes
Optimum capacity
OM Strategy Increasing stability of manufacturing process
& Issues Lower labor skills
Long production runs
Attention to product improvement and cost cutting
Re-examination of necessity of design compromises
Strategy & Issues During Product Life
5
4
Decline
Environmental Analysis
Form a Strategy
Identifying
Critical Success Factors
5
7
Marketing Finance/Accounting Production/Operations
Service Leverage
Distribution Cost of capital
Promotion Working capital
Channels of distribution Receivables
Product positioning Payables
(image, functions) Financial control
Lines of credit
No seat assignments
No baggage transfers
Automated ticketing machines
No meals
Activity Mapping: Southwest Airline’s
Low Cost Competitive
6
Advantage
1
Standardized fleet of
Boeing 357 aircraft
Activity Mapping: Southwest Airline’s
Low Cost Competitive
6
Advantage
4
If competitive Distinctive
advantage, leads to Company
competencies
achieving Mission
affect
Business
Strategy
Functional Area
Strategies