Ch2 op.str+&+comp.

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  • 1. 1 Operations Strategy and Competitiveness
  • 2. Operations Strategy as a competitive weapon One of the key objectives of any business organization is to reach a position where it is able to attract more customers than its competitors Shorter Product Cycle / Pioneer status advantage Production flexibility Low-cost process (e.g. Outsourcing) Convenience and Location (e.g. Courier services) Product variety and Facility size (e.g. super markets) Quality (e.g. MNCs producing cars in India for Exports) 2
  • 3. Competitive Dimensions Cost or Price Make the Product or Deliver the Service Cheap Quality Make a Great Product or Deliver a Great Service Delivery Speed Make the Product or Deliver the Service Quickly Delivery Reliability Deliver It When Promised Coping with Changes in Demand Change Its Volume Flexibility and New Product Introduction Speed Change It Other Product-Specific Criteria Support It 3
  • 4. 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 Order winners are the criteria that differentiates the products and services of one firm from another 4
  • 5. 5 Service Breakthroughs A brand name car can be an order qualifier Repair services can be order winners Examples: Warranty, Roadside Assistance, Leases, etc
  • 6. 6 Operations Strategy Strategy Process Customer Needs Corporate Strategy Operations Strategy Decisions on Processes and Infrastructure Example More Products Increase Org. Size Increase Production Capacity Build New Factory
  • 7. 7 Strategy Design Process Strategy Map What it is about! Financial Perspective Improve Shareholder Value Customer Perspective Customer Value Proposition Internal Perspective Build-Increase-Achieve Learning and Growth Perspective A Motivated and Prepared Workforce
  • 8. 8 The Balanced Scorecard Judicious mix of financial and operational measures for measuring the performance Customer perspective Business process perspective Innovation and learning perspective
  • 9. Balanced Scorecard Model for Measuring Operations Performance How do stakeholders view Operations? Financial Perspective How do customers view the Operations? Goals Measures Customer Perspective Goals At which Operations tasks must we excel Internal / Process Perspective Measures Goals Innovation & Learning Perspective Goals Measures measures
  • 10. 10 Kaplan and Nortons Generic Strategy Map In the Kaplan and Nortons Generic Strategy Map, under the Financial Perspective, the Productivity Strategy is generally made up from two components: 1. Improve cost structure: Lower direct and indirect costs 2. Increase asset utilization: Reduce working and fixed capital
  • 11. Kaplan and Nortons Generic Strategy Map (Continued) In the Kaplan and Nortons Generic Strategy Map, under the Financial Perspective, the Revenue Growth Strategy is generally made up from two components: 1. Build the franchise: Develop new sources of revenue 2. Increase customer value: Work with existing customers to expand relationships with company 11
  • 12. Kaplan and Nortons Generic Strategy Map (Continued) In the Kaplan and Nortons Generic Strategy Map, under the Customer Perspective, there are three ways suggested as means of differentiating a company from others in a marketplace: 1. Product leadership 2. Customer intimacy 3. Operational excellence 12
  • 13. 13 Kaplan and Nortons Generic Strategy Map (Continued) In the Kaplan and Nortons Generic Strategy Map, under the Learning and Growth Perspective, there are three principle categories of intangible assets needed for learning: 1. Strategic competencies 2. Strategic technologies 3. Climate for action
  • 14. Developing an Operations Strategy Corporate Corporate Objectives Objectives Business Plan Marketing Plan Budget Production Plan Other Plan Functional Areas Operations Marketing Business Strategies Financing/Accounting Business Strategies Research & Dev. Strengths and Weaknesses Human Capital Operations Operations Objectives Objectives Operation Strategies Operation Strategies Long-range Decisions about Products, Processes and Facilities Position the Production System Focus of Factories or Service Facilities Product / Service Design and Development Allocation of Resources to Alternatives Facility Planning : Capacity, Location and Layout
  • 15. 15 Steps in Developing a Manufacturing Strategy 1. Segment the market according to the product group 2. Identify product requirements, demand patterns, and profit margins of each group 3. Determine order qualifiers and winners for each group 4. Convert order winners into specific performance requirements
  • 16. 16 Service Strategy Capacity Capabilities Process-based Systems-based Organization-based Capacities that transforms material or information and provide advantages on dimensions of cost and quality Capacities that are broad-based involving the entire operating system and provide advantages of short lead times and customize on demand Capacities that are difficult to replicate and provide abilities to master new technologies
  • 17. 17 What is Productivity? Defined Productivity is a common measure on how well resources are being used. In the broadest sense, it can be defined as the following ratio: Outputs Inputs
  • 18. Productivity Introduction & Definition Productivity primarily is an attitude of mind an attitude of looking at the scope for improvement It stands for the elimination of MUDA( Japanese ) or Waste in all forms It is the function of providing more and more of everything, for more and more people with less and less consumption of Resources The essence of productivity lies in producing the same
  • 19. Factors affecting Productivity External Factors Beyond the control of individual Enterprise External Infrastructure Non- availability of Funds, Water, Power, Transportation Raw Material Supply constraints Government Policies ( Emission Laws etc.) Social / Political / Economic Environment
  • 20. Factors affecting Productivity ( contd.) Internal Factors Hard Factors Products / Technology / Plant & Eqpt. / Raw Materials Soft Factors People / Work Methods / Systems & Procedures / Organisation Structure / Management Practices
  • 21. Total Measure Productivity Total Measure Productivity = Outputs Inputs or = Goods and services produced All resources used 21
  • 22. 22 Partial Measure Productivity Partial measures of productivity = Output or Output or Output or Output Labor Capital Materials Energy
  • 23. 23 Multifactor Measure