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Process View & Strategy Part 2- Competitive Space and Strategy Based on the Book: Managing Business Process Flow.

Process View & Strategy Part 2- Competitive Space and Strategy Based on the Book: Managing Business Process Flow. Competitive Product Space: PQVR/CQFF. Quality. Quality. Quality. Quality. Quality. Cost Efficiency =1/Cost . Variety . Cost . Responsiveness =1/Flow Time . Flow Time . D.

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Process View & Strategy Part 2- Competitive Space and Strategy Based on the Book: Managing Business Process Flow.

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  1. Process View& StrategyPart 2- Competitive Space and StrategyBased on the Book: Managing Business Process Flow.

  2. Competitive Product Space: PQVR/CQFF Quality Quality Quality Quality Quality Cost Efficiency =1/Cost Variety Cost Responsiveness =1/Flow Time Flow Time D B D D D A A D B A H H H H H C A C C B B A B C C Competitive Product Space: A for dimensional space representation of the Product Attributes PQVR or Process Competencies CQFT. Moving outward is better. H H H H H L L L L L

  3. Competitive Product Space Variety B A Low Cost Efficiency =1/Cost High Another firm: expensive and customized products. One firm: low cost and standardized products Low High

  4. Strategic Positioning Responsiveness B A Low High Price Efficiency = 1/Price Defines those positions that the firm wants to occupy in its competitive product space. The current position and direction. A firm must ensure that its competitors are not able to imitate its chosen position. A sculpture, not a block. High It is harder for competitors to imitate an array of interlocked activities. Low

  5. What is the Best Strategy Zara: timely yet limited variety at modest cost and quality. Aravind and Shouldice: low cost, high quality, minimal variety, average to long response time. Corolla: flow shop, decentralized assembly plants close to market, short flow time, low cost. Ferrari: job shop, only a single plant in Italy, longer flow time, high cost. McMaster-Carr: a materials, repair, and operations (MRO) product distributor, a process with high flexibility, high quality, short response time, but at a high price WalMart: Short flow times, low inventory, low cost, average quality.

  6. Focused Strategy, Efficient Frontier World-class Emergency Room Efficient frontier One general Responsiveness facility World-class (non-emergency) Hospital Cost Efficient frontier: the minimal curve covering all the current positions in an industry. High Low High Low

  7. Focused Strategy, Focused Operations Focused Strategy: Committing to a limited, congruent set of objectives in terms of demand (product, market) and supply (input, technologies, and volumes). A focused process is not limited to a few products. Focused process: one whose products all fall within a small region of the 4 dimensional product space. Plant Within Plant(PWP):The business strategy is diverse. But the entire business is divided into several mini-plants each with focused processes. One PWP may focus on low cost, the other on quick response.

  8. Strategic Positioning and Operational Effectiveness A B Responsiveness C High Price Efficiency Low Firms located on the same ray share strategic priorities. World class firms are on the efficient frontier. Efficient frontier is the minimal curve covering all the current positions in an industry. Strategic positioning: the direction of the improvement from current position; the position on the EF the company wants to occupy. Efficient operations frontier Firms not on the EF, are not on strict trade-off, they can make simultaneous improvement on more than one dimension. They do not need to trade-off. Firms on EF need to trade-off. High Low

  9. Efficient Frontier Trade-off:decreasing on one dimension to increase on the other dimension. World class firms also try to push the EF outward. As technology and management practices advance, the EF moves upward. But the impact is not the same in all industries. If I have one more line to define Operations Management  Understand Trade-off. Different companies intentionally choose different processes to accomplish the same goal. McDonald vs. In & Out. Different processes lead to different advantages and disadvantages. We always facing trade-offs. It is not difficult to deliver books very fast. It is not difficult to deliver books at a very low cost. But, it is difficult to deliver book fast and at a low cost.

  10. Operational Effectiveness Operational effectiveness: developing operations strategy (resources, processes, values, competencies) that support the strategic positioning (customer value proposition) better than the competitors. How does effective differ from efficient? Conventional Management Definition: Effectiveness; doing right things.Efficiency; doing thingsright. Operations Management Definition: Cost Efficiency: achieving an output with minimal level of input and resources. Low cost Operations. Effective Process: supports execution of company’s strategy in the four dimensions of C/Q/F/T. Synchronized process does good in all 4 dimensions.

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