Chapter 2 operations strategy and competitiveness
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Chapter 2 Operations Strategy and Competitiveness. Operations Strategy Competitive Dimensions Order Qualifiers and Winners A Framework for Manufacturing Strategy Service Strategy Capacity Capabilities Productivity Measures. Operations Strategy. Strategy Process. Example. Customer Needs.

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Chapter 2 operations strategy and competitiveness
Chapter 2Operations Strategy and Competitiveness

  • Operations Strategy

  • Competitive Dimensions

  • Order Qualifiers and Winners

  • A Framework for Manufacturing Strategy

  • Service Strategy Capacity Capabilities

  • Productivity Measures


Operations strategy
Operations Strategy

Strategy Process

Example

Customer Needs

More Product

Corporate Strategy

Increase Org. Size

Operations Strategy

Increase Production Capacity

Decisions on Processes

and Infrastructure

Build New Factory


Competitive dimensions
Competitive Dimensions

  • Cost –

  • Product Quality and Reliability -

  • Delivery Speed -

    • Delivery Reliability -

  • Volume Flexibility –

  • Flexibility and New Product Introduction Speed -

  • Other Product-Specific Criteria -


Dealing with trade offs

Cost

Flexibility

Delivery

Quality

Dealing with Trade-offs

For example, if we reduce costs by reducing product quality inspections, we might reduce product quality.

Firms must decide how they are going to compete on these dimensions.

Who determines the winning combination?

CUSTOMERS

Current thinking - work to improve all four dimensions simultaneously


Order qualifiers and winners terry hill
Order Qualifiers and Winners - Terry Hill

  • Order qualifiers

  • Order winners

  • Order losers


Service breakthroughs
Service Breakthroughs

  • A brand name car can be an “order qualifier”

  • Repair services can be “order winners”

  • Examples: Warranty, Roadside Assistance, Leases, etc.


Kaplan and norton s generic strategy map
Kaplan and Norton’s Generic Strategy Map

In the Kaplan and Norton’s Generic Strategy Map, under the Financial Perspective, the Productivity Strategy is generally made up from two components:

  • Improve cost structure: Lower direct and indirect costs

  • Increase asset utilization: Reduce working and fixed capital


Kaplan and norton s generic strategy map continued
Kaplan and Norton’s Generic Strategy Map (Continued)

In the Kaplan and Norton’s Generic Strategy Map, under the Financial Perspective, the Revenue Growth Strategy is generally made up from two components:

  • Build the franchise: Develop new sources of revenue

  • Increase customer value: Work with existing customers to expand relationships with company


Kaplan and norton s generic strategy map continued1
Kaplan and Norton’s Generic Strategy Map (Continued)

In the Kaplan and Norton’s Generic Strategy Map, under the Customer Perspective, there are three ways suggested as means of differentiating a company from others in a marketplace:

  • Product leadership

  • Customer intimacy

  • Operational excellence


Kaplan and norton s generic strategy map continued2
Kaplan and Norton’s Generic Strategy Map (Continued)

In the Kaplan and Norton’s Generic Strategy Map, under the Learning and Growth Perspective, there are three principle categories of intangible assets needed for learning:

  • Strategic competencies

  • Strategic technologies

  • Climate for action


Operations strategy framework

Customer Needs

New : Old

product : product

Competitive

dimensions & reqs.

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

Operations Strategy Framework


Steps in developing a manufacturing strategy
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.


Distinctive competencies
Distinctive Competencies

  • Organizational strengths (SWOT) possessed by few competing firms

    • e.g., ability to engineer small-sized products

  • Exploiting can lead to competitive advantage

    • Condition that increases chances of achieving strategy

    • e.g., miniaturization of products to meet customer demands and lower shipping costs

  • Sometimes referred to as core competencies


Strategic capabilities
Strategic Capabilities

  • Process-based

    • Capabilities that transforms material or information and provide advantages

  • Systems-based

    • Capabilities that are broad-based involving the entire operating system and provide advantages

  • Organization-based

    • Capabilities that are difficult to replicate and provide abilities


Total measure productivity
Total Measure Productivity

  • Total measure Productivity = Outputs

    Inputs

    or

    = Goods and services produced

    All resources used


Partial measure productivity

or

or

or

or etc.

Partial Measure Productivity

  • Partial measures of productivity =


Multifactor measure productivity

or

or etc.

Multifactor Measure Productivity

  • Multifactor measures of productivity =


Example of productivity measurement
Example of Productivity Measurement

  • You have just determined that your service employees have used a total of 2400 hours of labor this week to process 560 insurance forms. Last week the same crew used only 2000 hours of labor to process 480 forms.

  • Which productivity measure should be used?

  • Answer:

  • Is productivity increasing or decreasing?

  • Answer:


Another example
Another Example

A fast-food restaurant serves hamburgers, cheeseburgers, and chicken sandwiches. The restaurant counts cheeseburgers as equivalent to 1.2 hamburgers and chicken sandwiches as equivalent to .75 hamburgers. Five employees work 40 hours/week at the restaurant. If the restaurant sold 500 cheeseburgers, 700 hamburgers, and 1000 chicken sandwiches in one 40 hour week, what is its labor productivity?


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