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OPM 533 2- Operations Management Operations Strategy & Competitiveness Chapter 2
Outline ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Outline - Continued ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Learning Objectives ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Developing Missions and Strategies OPM 533 2-
Mission OPM 533 2- ,[object Object],[object Object],[object Object],[object Object],© 1995 Corel Corp.
Mission of FedEx ,[object Object],OPM 533 2-
Factors Affecting Mission OPM 533 2- Mission Philosophy & Values Profitability & Growth Environment Customers Public Image Benefit to Society
Mission/Strategy ,[object Object],[object Object],OPM 533 2-
Strategy OPM 533 2- ,[object Object],[object Object],[object Object],[object Object],© 1995 Corel Corp.
Strategy Process OPM 533 2- Marketing Decisions Operations Decisions Fin./Acct. Decisions Company Mission Business Strategy Functional Area Functional Area Strategies
Strategies for Competitive Advantage ,[object Object],[object Object],[object Object],OPM 533 2-
Competing on Differentiation ,[object Object],OPM 533 2-
Competing on Cost ,[object Object],[object Object],OPM 533 2-
Competing on Response ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Competing, Regardless of the Basis, ,[object Object],OPM 533 2-
OM’s Contribution to Strategy OPM 533 2- Response (Faster) Quality Product Process Location Layout Human Resource Supply Chain Inventory Scheduling Maintenance HP’s ability to follow the printer market Differentiation (Better) Cost leadership (Cheaper) Southwest Airlines No-frills service Sony’s constant innovation of new products Pizza Hut’s five-minute guarantee at lunchtime Federal Express’s “absolutely, positively on time” Motorola’s automotive products ignition systems Motorola’s pagers IBM’s after-sale service on mainframe computers Fidelity Security’s broad line of mutual funds FLEXIBILITY Design Volume LOW COST DELIVERY Speed Dependability QUALITY Conformance Performance AFTER-SALE SERVICE BROAD PRODUCT LINE Operations Decisions Examples Specific Strategy Used Competitive Advantage
10 Strategic OM Decisions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Goods & Services and the 10 OM Decisions OPM 533 2-
Goods & Services and the 10 OM Decisions – Continued OPM 533 2-
Goods & Services and the 10 OM Decisions – Continued OPM 533 2-
Goods & Services and the 10 OM Decisions – Continued OPM 533 2-
Process Design OPM 533 2- Low  Moderate  High Volume High Moderate Low Variety of Products Process-focused Job Shops (Print shop, emergency room , machine shop, fine dining Repetitive (modular) focus Assembly line (Cars, appliances, TVs, fast-food restaurants) Product-focused Continuous (steel, beer, paper, bread, institutional kitchen) Mass Customization Customization at high Volume (Dell Computer’s PC)
Characteristics of High ROI Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2- From the PIMS study of the Strategic  Planning Institute
Strategic Options Managers Use to Gain Competitive Advantage ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Strategic Options Managers Use to Gain Competitive Advantage ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Preconditions - To Implement a Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Impetus for Strategy Change ,[object Object],[object Object],[object Object],OPM 533 2-
Stages in the Product Life Cycle OPM 533 2- Introduction Growth Maturity  Decline  Growth rate
Strategy & Issues During Product Life ,[object Object],[object Object],OPM 533 2- Best period to increase market share R&D engineering are critical Product design and development are critical Frequent product and process design changes Over-capacity Short production runs High skilled-labor content High production costs Limited number of models Utmost attentions to quality Quick elimination of market-revealed design defects Introduction
Strategy & Issues During Product Life ,[object Object],[object Object],[object Object],[object Object],OPM 533 2- Practical to change prices or quality image Marketing is critical Strengthen niche Forecasting is critical Product and process reliability Competitive product improvements and options Shift toward product oriented Enhance distribution Growth
Strategy & Issues During Product Life ,[object Object],[object Object],[object Object],[object Object],OPM 533 2- Poor time to increase market share Competitive costs become critical Poor time to change price, image, or quality Defend position via fresh promotional and distribution approaches Standardization Less rapid product changes and more minor annual model changes Optimum capacity Increasing stability of manufacturing process Lower labor skills Long production runs Attention to product improvement and cost cutting Re-examination of necessity of design compromises   Maturity
Strategy & Issues During Product Life ,[object Object],[object Object],[object Object],[object Object],OPM 533 2- Cost control critical to market share Little product differentiation Cost minimization Overcapacity in the industry Prune line to eliminate items not returning Good margin Reduce capacity Decline
Strategy and Issues During a Product’s Life OPM 533 2-
Strategy Development and Implementation ,[object Object],[object Object],OPM 533 2-
SWOT Analysis Process ,[object Object],OPM 533 2- ,[object Object],[object Object]
SWOT Analysis to Strategy Formulation OPM 533 2- Strategy Mission External O pportunities Internal S trengths Internal W eaknesses External T hreats Competitive Advantage
Identifying  Critical Success Factors OPM 533 2- Decisions Sample Option  Chapter Product Customized, or standardized  5 Quality Define customer expectations and how to achieve them  6, S6 Process Facility size, technology, capacity  7, S7 Location Near supplier or customer  8 Layout Work cells or assembly line  9 Human resource Specialized or enriched jobs  10, S10 Supply chain   Single or multiple source suppliers  11, S11 Inventory When to reorder, how much to keep on hand  12, 14,16 Schedule Stable or fluctuating productions rate  13, 15 Maintenance  Repair as required or preventive maintenance  17 Marketing Service Distribution Promotion Channels of distribution Product positioning (image, functions) Finance/Accounting Leverage Cost of capital Working capital Receivables Payables Financial control Lines of credit Production/Operations
Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Courteous, but limited passenger service Lean, productive employees Short haul, point-to-point routes, often to secondary airports High aircraft utilization Standardized fleet of Boeing 737 aircraft Frequent, reliable schedules Competitive Advantage: Low Cost
Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Courteous, but limited passenger service No seat assignments No baggage transfers Automated ticketing machines No meals
Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Short haul, point-to-point routes, often to secondary airports Lower gate costs at secondary airports High number of flights, reduces employee idle time between flights
Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Frequent, reliable schedules High number of flights reduces employee idle time between flights Saturate a city with flights lowering administrative costs per passenger for that city
Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Standardized fleet of Boeing 737 aircraft Pilot training on only one type of aircraft Reduced maintenance inventory required because of only one type of aircraft Excellent supplier relations with Boeing has aided financing
Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- High aircraft utilization Flexible employees and standard planes aids scheduling Flexible union contracts Maintenance personnel trained on only one type of aircraft 20 minute gate turnarounds
Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Lean, productive employees High level of stock ownership Hire for attitude, then train High employee compensation Empowered employees Automated ticket machines
Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Courteous, but limited passenger service Lean, productive employees Short haul, point-to-point routes, often to secondary airports High aircraft utilization Standardized fleet of Boeing 737 aircraft Frequent, reliable schedules Competitive Advantage: Low Cost
Examples of Global Strategies ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Management Issues in  Global Operations ,[object Object],[object Object],[object Object],[object Object],OPM 533 2- Logistics Management Location Decisions Supply Chain Management
Supply-Chain Management ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Location Decisions ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Materials Management ,[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Defining Global Operations ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Reasons to Globalize Operations ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2- Tangible Intangible
Trade and Tariff ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
[object Object],[object Object],OPM 533 2-
Achieving Global Operations -Four Considerations- ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Global  Product Design ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Global  Process Design and Technology ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Global  Facility Location Analysis ,[object Object],[object Object],[object Object],[object Object],OPM 533 2- Using CSFs for Country Selection
You May Wish To Consider ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2- ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Global Impact of Culture and Ethics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2-
To Establish Global Services ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Managing Global Service Operations ,[object Object],[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Some Definitions ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Some Global Strategies ,[object Object],[object Object],[object Object],[object Object],OPM 533 2-
Four International Operations Strategies OPM 533 2-

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C2 operations strategy

  • 1. OPM 533 2- Operations Management Operations Strategy & Competitiveness Chapter 2
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  • 5. Developing Missions and Strategies OPM 533 2-
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  • 8. Factors Affecting Mission OPM 533 2- Mission Philosophy & Values Profitability & Growth Environment Customers Public Image Benefit to Society
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  • 11. Strategy Process OPM 533 2- Marketing Decisions Operations Decisions Fin./Acct. Decisions Company Mission Business Strategy Functional Area Functional Area Strategies
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  • 17. OM’s Contribution to Strategy OPM 533 2- Response (Faster) Quality Product Process Location Layout Human Resource Supply Chain Inventory Scheduling Maintenance HP’s ability to follow the printer market Differentiation (Better) Cost leadership (Cheaper) Southwest Airlines No-frills service Sony’s constant innovation of new products Pizza Hut’s five-minute guarantee at lunchtime Federal Express’s “absolutely, positively on time” Motorola’s automotive products ignition systems Motorola’s pagers IBM’s after-sale service on mainframe computers Fidelity Security’s broad line of mutual funds FLEXIBILITY Design Volume LOW COST DELIVERY Speed Dependability QUALITY Conformance Performance AFTER-SALE SERVICE BROAD PRODUCT LINE Operations Decisions Examples Specific Strategy Used Competitive Advantage
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  • 19. Goods & Services and the 10 OM Decisions OPM 533 2-
  • 20. Goods & Services and the 10 OM Decisions – Continued OPM 533 2-
  • 21. Goods & Services and the 10 OM Decisions – Continued OPM 533 2-
  • 22. Goods & Services and the 10 OM Decisions – Continued OPM 533 2-
  • 23. Process Design OPM 533 2- Low Moderate High Volume High Moderate Low Variety of Products Process-focused Job Shops (Print shop, emergency room , machine shop, fine dining Repetitive (modular) focus Assembly line (Cars, appliances, TVs, fast-food restaurants) Product-focused Continuous (steel, beer, paper, bread, institutional kitchen) Mass Customization Customization at high Volume (Dell Computer’s PC)
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  • 29. Stages in the Product Life Cycle OPM 533 2- Introduction Growth Maturity Decline Growth rate
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  • 34. Strategy and Issues During a Product’s Life OPM 533 2-
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  • 37. SWOT Analysis to Strategy Formulation OPM 533 2- Strategy Mission External O pportunities Internal S trengths Internal W eaknesses External T hreats Competitive Advantage
  • 38. Identifying Critical Success Factors OPM 533 2- Decisions Sample Option Chapter Product Customized, or standardized 5 Quality Define customer expectations and how to achieve them 6, S6 Process Facility size, technology, capacity 7, S7 Location Near supplier or customer 8 Layout Work cells or assembly line 9 Human resource Specialized or enriched jobs 10, S10 Supply chain Single or multiple source suppliers 11, S11 Inventory When to reorder, how much to keep on hand 12, 14,16 Schedule Stable or fluctuating productions rate 13, 15 Maintenance Repair as required or preventive maintenance 17 Marketing Service Distribution Promotion Channels of distribution Product positioning (image, functions) Finance/Accounting Leverage Cost of capital Working capital Receivables Payables Financial control Lines of credit Production/Operations
  • 39. Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Courteous, but limited passenger service Lean, productive employees Short haul, point-to-point routes, often to secondary airports High aircraft utilization Standardized fleet of Boeing 737 aircraft Frequent, reliable schedules Competitive Advantage: Low Cost
  • 40. Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Courteous, but limited passenger service No seat assignments No baggage transfers Automated ticketing machines No meals
  • 41. Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Short haul, point-to-point routes, often to secondary airports Lower gate costs at secondary airports High number of flights, reduces employee idle time between flights
  • 42. Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Frequent, reliable schedules High number of flights reduces employee idle time between flights Saturate a city with flights lowering administrative costs per passenger for that city
  • 43. Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Standardized fleet of Boeing 737 aircraft Pilot training on only one type of aircraft Reduced maintenance inventory required because of only one type of aircraft Excellent supplier relations with Boeing has aided financing
  • 44. Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- High aircraft utilization Flexible employees and standard planes aids scheduling Flexible union contracts Maintenance personnel trained on only one type of aircraft 20 minute gate turnarounds
  • 45. Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Lean, productive employees High level of stock ownership Hire for attitude, then train High employee compensation Empowered employees Automated ticket machines
  • 46. Activity Mapping: Southwest Airline’s Low Cost Competitive Advantage OPM 533 2- Courteous, but limited passenger service Lean, productive employees Short haul, point-to-point routes, often to secondary airports High aircraft utilization Standardized fleet of Boeing 737 aircraft Frequent, reliable schedules Competitive Advantage: Low Cost
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  • 66. Four International Operations Strategies OPM 533 2-