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PRODUCTION AND OPERATIONS MANAGEMENT. Ch. 2: Operations Strategy for Competitive Advantage. Alignment. Core Competencies. Decisions. Operations Strategy. Customer Needs. Corporate Strategy. Operations Strategy. Processes, Infrastructure, and Capabilities. Operations Priorities. Cost

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Production and operations management l.jpg

PRODUCTION AND OPERATIONS MANAGEMENT

Ch. 2: Operations Strategy for Competitive Advantage

POM - J. Galván


Operations strategy l.jpg

Alignment

Core

Competencies

Decisions

Operations Strategy

Customer Needs

Corporate Strategy

Operations Strategy

Processes, Infrastructure, and Capabilities

POM - J. Galván


Operations priorities l.jpg
Operations Priorities

  • Cost

  • Quality

  • Delivery Flexibility

  • Delivery Speed

  • Delivery Reliability

  • Coping with Changes in Demand

  • Flexibility and New Product Introduction Speed

  • Other Product-Specific Criteria

POM - J. Galván


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Cost

Flexibility

Delivery

Quality

World Class Manufacturing

FOCUS

FOCUS

Advanced Approaches

FOCUS

FOCUS

Trade-offs

Dealing with Trade-offs

Traditional

Approach

Plant within a Plant (PWP)

POM - J. Galván


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World-Class Manufacturing

  • World-class manufacturers no longer view cost, quality, speed of delivery, and even flexibility as tradeoffs.

  • They have become order qualifiers.

  • What are the order winners in today’s market?

POM - J. Galván


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Service Breakthroughs

  • Service can be an “order winner”

Travel

Planning

Warranty

Leases

Roadside

Assistance

Loaner

Vehicles

POM - J. Galván


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Customer Needs

Strategic Vision

New and Current

Products

Performance Priorities

and Requirements

Quality, Dependability,

Speed, Flexibility, and Price

Enterprise Capabilities

Operations & Supplier Capabilities

Technology

Systems

People

R&D

CIM

JIT

TQM

Distribution

Support Platforms

Financial Management

Human Resource Management

Information Management

A Framework for Manufacturing Strategy

POM - J. Galván

8


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Differentiation

Strategy Begins with Priorities

Consider the case of a personal computer manufacturer.

  • How would we segment the market according to product group?

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

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

  • How do we convert order winners into specific performance requirements?

Competition

(Them)

Us

(Core competencies)

POM - J. Galván


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Manufacturing’s Role in Corporate Strategy

  • Stage 1--Internally Neutral

    • Minimize manufacturing’s negative potential

    • Management control systems

  • Stage II--Externally Neutral

    • Achieve parity with competitors

    • Follow industry practice

  • Stage III--Internally Supportive

    • Support the business strategy

  • Stage IV-- Externally Supportive

    • Manufacturing-based competitive advantage

POM - J. Galván


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Four Stages of Service Firm Competitiveness

  • Stage I. Available for Service

    • Reactive, non-performance-based survival

  • Stage II. Journeyman

    • Firm neither sought nor avoided

    • Reliable but uninspired operation

  • Stage III. Distinctive Competence Achieved

    • Reputation for meeting customers’ expectations

    • Customer-focused operations--management support

  • Stage IV. World Class Service Delivery

    • Firm name synonymous with service excellence--focus on delighting rather than satisfying customers

    • Continuous learning and improvement of operations

POM - J. Galván


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MIT Commission on Industrial Productivity1985 Recommendations

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

  • Revise corporate strategies to include responses to foreign competition.

    • greater investment in people and equipment

  • Knock down communication barriers within organizations and recognize mutuality of interests with other companies and suppliers.

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

  • Get back to basics in managing production operations.

    • Build in quality at the design stage.

    • Place more emphasis on process innovations rather than focusing sole attention on product innovations.

POM - J. Galván


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U. S. Competitiveness Drivers

  • Product Development

    • Teams speed development and enhance manufacturability

  • Waste Reduction (JIT Philosophy)

    • WIP, space, tool costs, and human effort

  • Improved Customer-Supplier Relationships

    • Borrowed from Japanese Keiretsu

  • Improved Leadership

    • Strong, independent boards of directors

POM - J. Galván


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