POM - J. Galván 1 PRODUCTION AND OPERATIONS MANAGEMENT Ch. 2: Operations Strategy for Competitive...

POM - J. GalvánPOM - J. Galván 11

PRODUCTION AND PRODUCTION AND OPERATIONS OPERATIONS

MANAGEMENTMANAGEMENT

Ch. 2: Operations Strategy for Ch. 2: Operations Strategy for Competitive AdvantageCompetitive Advantage


Operations StrategyOperations Strategy

Customer Needs Corporate Strategy

Operations Strategy

Alignment

CoreCompetencies

Decisions

Processes, Infrastructure, and Capabilities


Operations PrioritiesOperations Priorities CostCost QualityQuality Delivery FlexibilityDelivery Flexibility Delivery SpeedDelivery Speed Delivery ReliabilityDelivery Reliability Coping with Changes in DemandCoping with Changes in Demand Flexibility and New Product Introduction Flexibility and New Product Introduction

SpeedSpeed Other Product-Specific CriteriaOther Product-Specific Criteria


Dealing with Trade-offsDealing with Trade-offsCost

Quality

DeliveryFlexibility

FOCUS FOCUS

FOCUSFOCUS

Plant within a Plant (PWP)

TraditionalApproach

Advanced Approaches

World Class Manufacturing

Trade-offs


World-Class ManufacturingWorld-Class ManufacturingWorld-class manufacturers no longer World-class manufacturers no longer view view costcost, , qualityquality, , speed of deliveryspeed of delivery, , and even and even flexibilityflexibility as tradeoffs. as tradeoffs.They have become They have become order qualifiersorder qualifiers..What are the What are the order winners order winners in in today’s market? today’s market?


Service BreakthroughsService Breakthroughs ServiceService can be can be

an an “order “order winner”winner” Warranty

RoadsideAssistance

TravelPlanning

LoanerVehicles

Leases


8

A Framework for Manufacturing A Framework for Manufacturing StrategyStrategy

Customer Needs

New and CurrentProducts

Performance Prioritiesand Requirements

Quality, Dependability,Speed, Flexibility, and Price

Operations & Supplier Capabilities

Technology PeopleSystems R&D CIM JIT TQM Distribution

Support Platforms

Financial Management Human Resource Management Information Management

Enterprise Capabilities

Strategic Vision


Strategy Begins with PrioritiesStrategy Begins with PrioritiesConsider the case of a personal computer manufacturer.Consider the case of a personal computer manufacturer.

1.1. How would we segment the market according to How would we segment the market according to product group?product group?

2.2. How would we identify product requirements, demand How would we identify product requirements, demand patterns, and profit margins for each group?patterns, and profit margins for each group?

3.3. How do we identify order winner and order qualifiers How do we identify order winner and order qualifiers for each group?for each group?

4.4. How do we convert order winners into specific How do we convert order winners into specific performance requirements?performance requirements?

Us(Core competencies)

Competition(Them) Differentiation


ManufacturingManufacturing’s Role in ’s Role in Corporate StrategyCorporate Strategy

Stage 1--Stage 1--Internally NeutralInternally Neutral• Minimize manufacturing’s negative Minimize manufacturing’s negative

potentialpotential• Management control systemsManagement control systems

Stage II--Stage II--Externally NeutralExternally Neutral• Achieve parity with competitorsAchieve parity with competitors• Follow industry practiceFollow industry practice

Stage III--Stage III--Internally SupportiveInternally Supportive• Support the business strategySupport the business strategy

Stage IV-- Stage IV-- Externally SupportiveExternally Supportive• Manufacturing-based competitive Manufacturing-based competitive

advantageadvantage


Four Stages of Four Stages of ServiceService Firm Firm CompetitivenessCompetitiveness

Stage I. Stage I. Available for ServiceAvailable for Service• Reactive, non-performance-based survivalReactive, non-performance-based survival

Stage II. Stage II. JourneymanJourneyman• Firm neither sought nor avoidedFirm neither sought nor avoided• Reliable but uninspired operationReliable but uninspired operation

Stage III. Stage III. Distinctive Competence AchievedDistinctive Competence Achieved• Reputation for meeting customers’ expectationsReputation for meeting customers’ expectations• Customer-focused operations--management supportCustomer-focused operations--management support

Stage IV. Stage IV. World Class Service DeliveryWorld Class Service Delivery• Firm name synonymous with service excellence--Firm name synonymous with service excellence--

focus on delighting rather than satisfying customersfocus on delighting rather than satisfying customers• Continuous learning and improvement of operationsContinuous learning and improvement of operations


MIT Commission on Industrial ProductivityMIT Commission on Industrial Productivity1985 Recommendations1985 Recommendations

Place less emphasis on short-term financial payoffs and Place less emphasis on short-term financial payoffs and invest more in R&D.invest more in R&D.

Revise corporate strategies to include responses to Revise corporate strategies to include responses to foreign foreign competition.competition.

• greater investment in people and equipmentgreater investment in people and equipment Knock down Knock down communication barrierscommunication barriers within organizations within organizations

and recognize mutuality of interests with other companies and recognize mutuality of interests with other companies and suppliers.and suppliers.

Recognize that the Recognize that the labor force is a resourcelabor force is a resource to be nurtured, to be nurtured, not just a cost to be avoided.not just a cost to be avoided.

Get back to basics in managing production operations. Get back to basics in managing production operations. • Build in Build in quality at the designquality at the design stage. stage. • Place more emphasis on Place more emphasis on process innovationsprocess innovations rather than rather than

focusing sole attention on product innovations.focusing sole attention on product innovations.


U. S. Competitiveness DriversU. S. Competitiveness Drivers Product DevelopmentProduct Development

• Teams speed development and enhance Teams speed development and enhance manufacturabilitymanufacturability

Waste ReductionWaste Reduction (JIT Philosophy) (JIT Philosophy)• WIP, space, tool costs, and human effortWIP, space, tool costs, and human effort

Improved Improved Customer-Supplier RelationshipsCustomer-Supplier Relationships• Borrowed from Japanese KeiretsuBorrowed from Japanese Keiretsu

Improved Improved LeadershipLeadership• Strong, independent boards of directorsStrong, independent boards of directors

POM - J. Galván 1 PRODUCTION AND OPERATIONS MANAGEMENT Ch. 2: Operations Strategy for Competitive...

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