MANAJEMEN OPERSAI GLOBAL (OperationsStrategy)

7/28/2019 MANAJEMEN OPERSAI GLOBAL (OperationsStrategy)

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adapted by Fabio Emanuele Noia 2005

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Operations

Management

Operations StrategyUnit 2 - Chapter 2





Learning Objectives

Define: define mission, strategy, ten decisions of OM, multinational

corporations

describe specific approaches used by OM to achieve

strategiesExplain

differentiation, low cost, and response strategies

explain four global operations strategies and why global

issues are important





Managerial Issues

Developing and Implementing Effective

Strategies

Meeting the challenges of increased competition in a

globalized business environment.

Keeping up with technology advances.

Learning to do more with less.Staying ahead of copycat competitors.

Keeping an eye on the future.





Examples of Global Strategies

Boeing – both sales and production are

worldwide.

Benetton – moves inventory to stores around

the world faster than its competitor by buildingflexibility into design, production, and

distribution

Sony – purchases components from suppliersin Thailand, Malaysia, and around the world

GM is building four similar plants in Argentina,

Poland, China, and Thailand





Management Issues inGlobal Operations

Global Strategic Context

Differentiation

Cost leadership

Response

LogisticsManagement

LocationDecisions

Supply ChainManagement





Management Issues in

Global Operations Supply chain management

Sourcing

Vertical integration

Make-or-buy decisions

Partnering

Location Decisions Country-related issues

Product-related issues

Government policy/political risk

Organizational issues

Materials Management

Flow of materials Transportation options and speed

Inventory levels

Packaging

Storage





Defining Global Operations

International business - engages in cross-border transactions

Multinational Corporation - has extensive involvement

in international business, owning or controllingfacilities in more than one country

Global company - integrates operations from differentcountries, and views world as a single marketplace

Transnational company - seeks to combine thebenefits of global-scale efficiencies with the benefitsof local responsiveness





Reasons to Globalize Operations

Reduce costs (labor, taxes, tariffs, etc.)

Improve the supply chain

Provide better goods and services

Attract new markets

Learn to improve operationsAttract and retain global talent

Tangible

Intangible





Free trade may

take us into the era of the floating factory - a

six person crew will take a factory from portto port in order to obtain the best market,

material, labor and tax advantages





Achieving Global Operations-Four Considerations-

Global product design (social and cultural

differences)

Global process design and technology (work

around the clock – reduce time to market)

Global factory location analysis – country

selection)

Impact of Culture and Ethics - differences





To Establish Global Services

Determine if sufficient people or facilities

exist to support the service

Identify foreign markets that are open - not

controlled by governments

Determine what services are of most interest

to foreign customers

Determine how to reach global customers





Managing Global Service

Operations

Must take a different perspective on

Capacity planning

Location Planning

Facilities design and layout

Scheduling





Four International Operations

Strategies International Strategy: uses exports and licenses to

penetrate the global area

Multidomestic Strategy: uses decentralized authoritywith substantial autonomy at each business

Global Strategy: Uses a high degree of centralization,with headquarters coordinating to seekstandardization and learning between plants

Transnational Strategy: Exploits economies of scale

and learning, as well as pressure for responsiveness,by recognizing that core competencies resideeverywhere in the organization





Four International OperationsStrategies





Developing a Mission - what

Mission

Philosophy &

Values

Profitability

& Growth Environment

Customers Public Image Benefit to

Society





Developing a Strategy - how

Action plan to achieve

mission

Shows how mission willbe achieved

Company has a business

strategy

Functional areas have

strategies © 1995 Corel Corp.





Strategy Process

Marketing Decisions

Operations Decisions

Fin./Acct. Decisions

CompanyMission

Business

Strategy

Functional Area Functional Area

Strategies





Strategies for Competitive

Advantage Differentiation - Uniqueness can go beyond both the physical

characteristics and service attributes to encompass

everything that impacts customer’s perception of value

Cost leadership - Provide the maximum value as perceived bycustomer. Does not imply low value or low quality.

Quick response – Flexibility, Reliability, Timeliness. Requiresinstitutionalization within the firm of the ability to respond,change and adapt.





Operations Strategy

Operations StrategyHow the operations function contributes to

competitive advantage.

Competitive PrioritiesHow the operations function provides a firm with a

competitive advantage.Priorities—Low cost, high quality, fast delivery,

flexibility, and service.





What is Operations Strategy?

Operations Strategy

Determining how to best utilize the firm’s resources

to achieve corporate objectives.

Major long-term structural issues

How big do we make the facilities?Where do we locate them?

When do we build them?

What type of process(es) do we install to make theproducts?







Operations Strategy Means

Adding Value for the Customer

“Value is in the eye of the beholder” What affects customer perceptions of value?

If benefits exceed costs, the customer perceivesvalue for the product or service.

CostsTotal

BenefitsTotal ValueCustomer Perceived

CostsTotal-BenefitsTotalValueCustomer Perceived

M i i i V l Add d i





Maximizing Value Added in

Operations

Exhibit 2.2





Operations Strategy Means

Adding Value for the Customer

How to add value:

Reduce product costs to customer.

Make the product more readily available.

Provide faster service.

Provide customers with additional relevantinformation.

Customize the product to the customer’s specific

needs.





OM’s Contribution to Strategy

Response

(Faster)

1. Quality

2. Product

3. Process

4. Location

5. Layout

6. Human Resource

7. Supply Chain

8. Inventory

9. Scheduling

10.Maintenance

HP’s ability to follow the printer market

Differentiation

(Better)

Cost

leadership(Cheaper)

Southwest Airlines No-frills service

Sony’s constant innovation of new products

Pizza Hut’s five-minute guarantee at lunchtime

Federal Express’s ―absolutely, positively on time‖

Motorola’s automotive products ignition systems Motorola’s pagers

IBM’s after -sale service on mainframe computers

Fidelity Security’s broad line of mutual funds

FLEXIBILITY

Design

Volume

LOW COST

DELIVERY

Speed

Dependability

QUALITY

ConformancePerformance

AFTER-SALE SERVICE

BROAD PRODUCT LINE

10OperationsStrategic

Decisions

Examples Specific

Strategy Used

Competitive

Advantage





10 Strategic OM Decisions

Goods & service design Quality

Process & capacity design

Location selection

Layout design

Human resource and job design

Supply-chain management

Inventory Scheduling

Maintenance



Goods & Services and the 10 OM





OperationsDecisions

Goods Services

LocationSelection

May need to be near raw

materials or labor force

Product is usually

intangible

LayoutDesign

Layout can enhance

production efficiency

Subjective quality

standards

HumanResourcesand JobDesign

Workforce focused on

technical skills.

Labor standards consistent.

Output-based wage system.

Customer may be directly

involved in process.

Capacity matches

demand to avoid lost

sales

Goods & Services and the 10 OMDecisions – Continued






OperationsDecisions

Goods Services

Supply chain

management

Supply-chain

relationships critical tofinal product

Supply-chain relationships

important, not necessarilycritical

Inventory Raw materials, work-

in-process, and

finished goods

Most services cannot be

stored

Scheduling Ability to convert

inventory may allow

leveling of production

rates

Primarily concerned with

meeting the customer's

immediate schedule








OperationsDecisions

Goods Services

Maintenance Maintenance is often

preventive and takes

place at the production

site

Maintenance is often

"repair" and takes place at

the customer's site





Process Design

Low Moderate High

Volume

High

Moderate

Low

V a r i e t y o f P r o d u c t s

Process-focused

Job Shops(Print shop, emergency

room , machine shop,

fine dining

Repetitive (modular)

focus

Assembly line(Cars, appliances, TVs,

fast-food restaurants) Product-focused

Continuous

(steel, beer, paper,bread, institutional

kitchen)

Mass Customization

Customization at high

Volume

(Dell Computer’s PC)





Characteristics of High ROI Firms

High quality product

High capacity utilization

High operating effectivenessLow investment intensity

Low direct cost per unit

Strategic Options Managers Use





Strategic Options Managers Useto Gain Competitive Advantage

Low- cost product Product-line breadth Technical superiority Product characteristics/differentiation Continuing product innovation Low-price/high-value offerings Efficient, flexible operations adaptable to

consumers Engineering research development Location Scheduling



St i th P d t Lif C l



adapted by Fabio Emanuele Noia 2005© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Stages in the Product Life Cycle

Introduction

Growth

Maturity

Decline

G r o

w t h r a t e

Strategy and Issues During a Product’s Life




Strategy and Issues During a Product s Life

SWOT A l i P




SWOT Analysis Process

Environmental Analysis

Determine Corporate Mission

Form a Strategy

SWOT Analysis to Strategy




y gyFormulation

Strategy

Mission

External O pportunities

Internal S trengths

Internal W eaknesses

External T hreats

Competitive

Advantage

Identifying




y gCritical Success Factors

Decisions Sample Option Chapter Product Customized, or standardized 5

Quality Define customer expectations and how to achieve them 6, S6

Process Facility size, technology, capacity 7, S7

Location Near supplier or customer 8

Layout Work cells or assembly line 9Human resource Specialized or enriched jobs 10, S10

Supply chain Single or multiple source suppliers 11, S11

Inventory When to reorder, how much to keep on hand 12, 14,16

Schedule Stable or fluctuating productions rate 13, 15

Maintenance Repair as required or preventive maintenance 17

MarketingService

Distribution

Promotion

Channels of distribution

Product positioning

(image, functions)

Finance/AccountingLeverage

Cost of capital

Working capital

Receivables

Payables

Financial control

Lines of credit

Production/Operations

Activity Mapping: Southwest Airline’s




y pp gLow Cost Competitive Advantage

Trends Affecting Operations




Trends Affecting Operations

Strategy Decisions

Globalization

TechnologyConnectivity, Speed, Intangibility

Simultaneous Competition on Multiple

Competitive PrioritiesNo traditional trade-offs of priorities

Competitive Priorities




Competitive Priorities

Type Priority

Low Cost Providing low cost products.Controlling costs across the board.

Quality Providing high quality products.

Focus is on product and process quality.

Delivery Providing products reliably and quickly.

Flexibility Providing a wide variety of products (masscustomization).

How fast a firm can produce a new product line.

Service Providing “value-added” service. How products are delivered and supported.

The Next Sources of




The Next Sources of

Competitive Advantage?

Two New Trends

The use of environmentally friendly processes andenvironmentally friendly products

The use of information

Large quantities data can now be accurately stored and

transmitted inexpensively.

Competitive advantage can be gained through products and

services that provide enhanced levels of feedback.

Developing an Operations Strategy




Developing an Operations Strategy

from Competitive Priorities

Factory Focus and Trade-offsA factory could not focus on all four competitive priorities (cost,

quality, delivery, and flexibility). Focusing performance on one priority limits/eliminates the ability to focus

on another priority.

Plant-within-a-Plant (PWP) concept (Skinner)Different locations with a facility would focus on their own competitive

priority.

Questioning the Trade-OffsWorld-class operations led to the establishment of a hierarchy among

the competitive priorities. Increased competitive capabilities led to increased performance on all

priorities by all competitors.

Focus shifted from cost minimization to maximizing the value added.

Customer value is enhanced by the focus on multiple priorities.

Time Line for Operations Strategies




Time Line for Operations Strategies




Superior Performance Curves

Distinguishing between




Distinguishing between

Order Qualifiers and Order Winners

Focusing on Core Capabilities




Focusing on Core Capabilities

Core Capabilities

Specific strengths that allow a company to achieve

its competitive priorities.The skill or set of skills that the operations

management function develops that allows the firm

to differentiate itself from its competitors.

Focusing is achieved by:

Divesting non-critical activities.

Subcontracting ancillary activities and services.

Integration of Manufacturing and




Manufacturing and

Services

The Customer’s Activity Cycle (CAC)

Component Actions

Pre-purchase activities Being responsive to customer inquires and the ability todemonstrate technical expertise.

Purchase activities Actual sale and delivery of theproduct and collecting payment.

Post-purchase activities After-sales service and productwarranties

Service Strategies for Manufacturing Firms




Service Strategies for Manufacturing Firms

Service Strategy Function

Embedded Services Specific functions that are a part of the product itself.

Comprehensive Services The manufactured product is“married” to additional services.

Integrated Solutions Combining product and servicesinto a seamless offering thataddresses a specific customer

requirement.

Distribution Control Manufacturing goes downstream toassume responsibility for productdistribution.

Additional Approaches for

I i M f i d




Integrating Manufacturing and

Services

Demonstration of Knowledge and Expertise

Reassuring customers by allowing them to view theproduction process and have access to production

employees.

Customer Training

Providing product training to customers to build

product loyalty and increased use of products.

Practice Problems




Practice Problems

Problem 1:

Identify how changes in the external environment may affect the OM

strategy for a company. For example, what impact are the following

factors likely to have on OM strategy?

a. The occurrence of a major storm or hurricane.

b. Terrorist attacks of 9/11/01.

c. The much discussed decrease in the quality of American primary

and secondary school systems.

d. Trade Legislation such as WTO and NAFTA and changes in tariffsand quotas.

e. The rapid rate at which the cost of health insurance is increasing.

f. The Internet.

Practice Problems




Practice Problems

Problem 2:Identify how the changes in the internal environment may affect the OM

strategy for a company. For example, what impact are the following

factors likely to have on OM strategy?

a. The increased use of Local and Wide Area Networks (LANs

and WANs).

b. An increased emphasis on service.

c. The increased role of women in the workplace.

d. The seemingly increasing rate at which both internal and

external environments change.

Practice Problems




act ce ob e s

Problem 3:Operations managers are called upon to support the organization's strategy.

OM does this with some combination of one of three strategies. What are

these three strategies?

a. Differentiation.

b. Low-cost leadership.

c. Response.

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