Operations+strategy+and+competitiveness
- 2. Strategy in Operations • • • • • Formulation Competitive issues Corporate Strategy Decision Making Deployment
- 3. Operations Strategy • The operations strategy is a statement of how operations function will contribute to the achievement of corporate goals.
- 4. Steps in Strategy Formation • Define primary task – What is the firm’s main business • Assess core competencies – Where do you have advantage over others • What will win the order? • Positioning the firm – So that it compete with others • Demand Management and Forecasting
- 5. Factors to Consider for Competitive Advantage • Cost – Southwest airlines • Quality – Japanese auto industry • Flexibility – Raymond suits • Speed – Citibank, Dell
- 6. Operations Role in Strategy • Can differentiate the firm from other competitors • Provide the support
- 7. Wal-Mart Example • Low prices everyday • Strategy – Low inventory – Sort flow lines • Support structure – All store linked – Fast transportation • High volume / low unit margin
- 8. Internet • Banking • Amazon • Back-office support
- 9. Corporate Strategy Design ... 1 • Integration of Finance, Marketing and Operations function • Financial perspective : ROI, ROCE, EVA – Build new sources of revenue and Enhance the value of existing accounts – Improve cost structure and asset utilization • Customer perspective – Product leadership (Sony, Intel) – Customer intimacy (HDFC Bank) – Operational excellence (Jet, Reliance)
- 10. Corporate Strategy Design ... 2 • Internal perspective : defines the business processes and the specific activities the organization must master to support the customer value proposition. • Learning and Growth : – Strategic competencies – Strategic technologies – Climate for action ... Culture, motivation, empowerment
- 11. Strategic Fit • All activities relate to each other • Making these efficient means reducing the cost • Making them effective means the combined set of activities support the company’s strategy
- 12. Southwest Airline • • • • • • • Only 737 in the fleet No connections, only direct flights Smaller airports Multi tasking by staff Quick turnaround More hours in the air for pilots No meals, baggage transfers, seat allocation
- 13. Strategy for Delivering Products and Services • Make to order • Make to stock • Assemble to order
- 14. Production Systems • Project (Low standardization, low volume) • Batch (Low-medium standardization, lowmedium volume) • Mass Production (Medium standardization, medium volume) • Continuous production (High standardization, High volume)
- 15. Services • Professional service – highly specialized, e.g. Lawyer • Service shop – customized , e.g. Teacher • Mass service – less customized, e.g. Retail store • Service factory – e.g. Electricity
- 16. Capacity and Facility • Capacity – When, How much, in what form • Facility – Centralization vs. De-centralization – Specialized facilities – Location
- 17. Manpower Resources • Skill levels, education • Training needs • Comp and benefits, promotion and increment policies • Structure of employment – permanent or contract • Bonus, profit sharing, stock options
- 18. Quality • • • • • Definition of quality Measurement of quality Who is responsible for quality Training and awareness Customer feedback
- 19. Make vs. Buy • What are all the components made by the company (e.g. Car assembly) • Suppliers – Who – When – Selection process – How much – How many – Relationship with the suppliers
- 20. Productivity Measurement • Productivity = output / input • Productivity = output / resources consumed • Productivity = Output / (Labour+Capital+Energy) • Economic productivity = value / cost • Productivity is a relative measure • IT examples: Function Point Analysis, Lines of Code
- 21. Balanced Scorecard • Developed by David Norton and Robert Kaplan • Strategic Performance Management Tool • Mixture of Financial and non-financial measures • Comparison with the target values within a common report
- 22. Balances Scorecard Design • Translate the vision into operational goals • Communicate the vision and link it to individual performance • Business planning, index setting • Feedback and learning, and adjusting the strategy accordingly • SMART metrics (Specific, Measurable, Achievable, Realistic and Timely)
- 23. Examples of key Performance Indicators • Marketing – Customer attrition, new customers • Manufacturing – Cycle time, utilization • IT – Availability, MTBF
- 24. Manpower 12 10 8 Defect Density Customers 6 4 2 Last Year 0 This year Cycle Time Products Partners Suppliers
Editor's Notes
- #6: Cost: Southwest airline Quality: Japanese carsFlexibility: Raymond tailored suits