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Chapter :
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1
The Role of Operations Management
2
Analyzing Operations
3
Inventory Management
4
Total Quality Management
5
Operations Strategy
6
Supply Chain Management
7
Business Process Reengineering
8
Planning & Control
9
New Product/process development
10
Project Management
11
Issues For International Operations
12
Time Based Competition
13
Cost Elements
Production & Operations Management
Lecture Outlines

How Operations Strategy its the Operations Management Philosophy ?

Customer-Driven Operations Strategy

Developing a Corporate Strategy

Core Competencies

Global Strategies

Market Analysis

Arriving at the Competitive Priorities

Competitive Priorities

Competitive Capabilities

Quality Function Deployment (QDF)

Corporate Strategy and Key Operations Management Decisions
Operations Strategy
How Operations Strategy fits the
Operations Management Philosophy
Using
Operations to
complete
Operations As a Competitive
Weapon
Operations Strategy
Project Management
Managing
Processes
Managing Value
Chain
Process Strategy
Process Analysis
Process Performance and Quality
Constraint Management
Process Layout
Lean Systems
Supply Chain Strategy
Location
Inventory Management
Forecasting
Sales and Operations
Planning
Resource Planning
Scheduling
Starbucks
• If someone says, “Lets go out for coffee,” Starbucks often
comes to mind.
• Entrepreneur Howard Schultz had an operations strategy in
mind in 1990 when he bought the 17-store Seattle chain and
turned it into a global success.
• Service strategy was key.
•
Offering a variety of specialized products and services, such as
Internet access, phone ahead ordering, and CD burning, all in
a socially interactive atmosphere.
Operations Strategy
• Operations strategy is the means by which operations
implements the firm’s corporate strategy and helps to build a
customer-driven firm.
• It links long-term and short-term operations decisions to
corporate strategy.
• It is the core of managing processes and value chains.
Customer-Driven
Operations Strategy
• Corporate strategy views the organization as a system
of interconnected parts, each working with the others to
achieve desired goals.
• Operations Strategy supports the corporate strategy and
requires continuous cross-functional interaction.
• The operations strategy should be customer driven.
Developing a Corporate Strategy
• Developing a corporate strategy involves three considerations:
• Monitoring and adapting to the environment
• Identifying and developing core competencies
• Developing the firm’s core processes
• Adapting requires environmental scanning to monitor trends for
opportunities and threats.
• Core Competencies are the unique resources and strengths an
organization possesses.
Core Competencies
• Core competencies include…
– A well-trained and flexible Workforce
– Having well-located & flexible Facilities
– Having Market and Financial Know-How.
– Expertise in Systems and Technology.
• The core competencies should determine the firm’s core
processes.
– These can include customer relations, new service/product
development, order fulfillment, and supplier relationships.
– A firm may have all of these or focus on a subset of them, as
determined by its core competencies.
Global Strategies
• A global strategy may include buying foreign services or parts
and entering or expanding foreign markets.
• Two effective global strategies are:
– Strategic Alliances
• Collaborative efforts
• Joint ventures
• Technology licensing
– Locating abroad
Market Analysis
• A Market Analysis is one key to developing a customer-driven
strategy, and is accomplished in two parts:
•
Market Segmentation, which identifies groups of customers with enough in
common to warrant developing services and/or products for them.
•
Needs Assessment identifies the needs of each market segment. Needs
include such things as:
– Service or product needs
– Delivery system needs
– Volume needs
Arriving at the
Competitive Priorities
Corporate Strategy
•
•
•
•
environmental scanning
core competencies
core processes
global strategies
Market analysis
• segmentation
• needs analysis
Competitive priorities
• cost
• quality
• time
• flexibility
Competitive Priorities
Cost
Quality
Time
Flexibility
1.
2.
3.
4.
5.
6.
7.
8.
9.
Low-cost operations
Top quality
Consistent quality
Delivery speed
On-time delivery
Development speed
Customization
Variety
Volume flexibility
Competitive Capabilities
• The Competitive Capabilities are the cost, quality, time and
flexibility dimensions of competitive priorities that a process or
value chain actually possesses and is able to deliver.
–
Low Cost means delivering a service or product at the lowest
possible cost to the satisfaction of the customer.
Quality as a
Competitive Capability
• The Competitive Capabilities are the cost, quality, time and
flexibility dimensions of competitive priorities that a process or
value chain actually possesses and is able to deliver.
–
Low Cost means delivering a service or product at the
lowest possible cost to the satisfaction of the customer.
Time as a
Competitive Capability
• Delivery Speed is quickly filling a customer’s order.
– Lead Time is the time between receipt of an order and filling
the order.
• On-Time Delivery means meeting the delivery time promises.
• Development Speed is quickly introducing a new service or
product.
• Time-Based Competition is a strategy that focuses on
development speed and delivery speed.
Flexibility as a
Competitive Capability
• Customization means satisfying the unique needs of each
customer by changing the service or product designs.
• Variety involves handling a wide assortment of services or
products efficiently.
• Volume Flexibility requires accelerating or decelerating the rate
of production quickly to handle large fluctuations in demand.
Order Winners
and Order Qualifiers
• These are criteria used by customers in service or product
selection.
• Order Winners are criteria for differentiating services or products
of one firm from those of another.
•
Price, quality, time, flexibility, after sales support, reputation, etc.
• Order Qualifiers are demonstrated levels of performance required
to do business in a particular market segment.
Service or Product
Development Strategies
•
•
•
•
•
•
Product Variety: Offering a wide assortment.
Design: Ease of use and desirable features.
Innovation: Translate new technology into new products.
Service: Products with services added.
Leader: Being first to introduce new services and/or products.
Middle of the Road: Wait for the leaders to introduce new
services and/or products.
• Laggard: Wait to see if the leader’s new services and/or products
catch on in the market.
Service Package
• A Service Package is a collection of goods and services
provided by a service process to its customers. It consists of four
features:
– Supporting Facility: The physical resources that must be in place
before a service can be offered.
– Facilitating Goods: The materials purchased or consumed by the
customer or the items provided by the customer to receive a service.
– Explicit Services: The readily observable benefits.
– Implicit Services: Psychological benefits.
Quality Function
Deployment (QDF)
• Quality Function Deployment (QDF) is a means of translating
customer requirements into the appropriate technical
requirements for service or product development. Questions it
seeks to answer are…
–
–
–
–
What do our customers want?
How well are we doing relative to our competition?
What technical measures relate to our customers’ needs?
What are the relationships between what our customers want and the
technical measures?
– How does our service or product performance compare to the
competition?
– What are the potential technical trade-offs?
Quality Function
Deployment (QDF)
• Quality Function Deployment (QDF) is a means of translating
customer requirements into the appropriate technical
requirements for service or product development. Questions it
seeks to answer are…
–
–
–
–
What do our customers want?
How well are we doing relative to our competition?
What technical measures relate to our customers’ needs?
What are the relationships between what our customers want and the
technical measures?
– How does our service or product performance compare to the
competition?
– What are the potential technical trade-offs?
“House of Quality”
Quality
Function
Deployment
Voice of
the
Engineer
Voice of
the
Customer
Correlations
Technical Comparison
© 2007 Pearson Education
Competitive
Analysis
“House of Quality”
Quality
Function
Deployment
Voice of
the
Engineer
Voice of
the
Customer
Correlations
Technical Comparison
© 2007 Pearson Education
Competitive
Analysis
Development Process
Design
Specifications are
developed for new
services or products
Service or product
not profitable
Analysis
A critical review of how
it will be produced,
resource requirements
and capabilities.
Need to rethink
the idea.
Development
Cross-functional
coordination,
process design.
Sales & promotion
Post-launch
review
Full Launch
Concurrent Engineering
•
Concurrent Engineering brings product engineers, process
engineers, marketers, buyers, information specialists, quality
specialists, and suppliers together to design a product and the
processes
that
will
meet
customer
expectations.
– This is an essential cross-functional effort during the
service and/or product development phase to insure a
timely and well-coordinated process that brings value to
the customer.
Corporate Strategy and Key Operations
Management Decisions
Corporate strategy
Market analysis
Competitive priorities
New Service/
Product Development
No
Performance
Gap?
Yes
Operations strategy
Decisions
• Managing Processes
• Managing Value Chains
Capabilities
THANK YOU!
Ahmed BELAFQUIH