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POM - J. GalvánPOM - J. Galván 11
PRODUCTION AND PRODUCTION AND OPERATIONS OPERATIONS
MANAGEMENTMANAGEMENT
Ch. 2: Operations Strategy for Ch. 2: Operations Strategy for Competitive AdvantageCompetitive Advantage
POM - J. GalvánPOM - J. Galván 22
Operations StrategyOperations Strategy
Customer Needs Corporate Strategy
Operations Strategy
Alignment
CoreCompetencies
Decisions
Processes, Infrastructure, and Capabilities
POM - J. GalvánPOM - J. Galván 33
Operations PrioritiesOperations Priorities CostCost QualityQuality Delivery FlexibilityDelivery Flexibility Delivery SpeedDelivery Speed Delivery ReliabilityDelivery Reliability Coping with Changes in DemandCoping with Changes in Demand Flexibility and New Product Introduction Flexibility and New Product Introduction
SpeedSpeed Other Product-Specific CriteriaOther Product-Specific Criteria
POM - J. GalvánPOM - J. Galván 44
Dealing with Trade-offsDealing with Trade-offsCost
Quality
DeliveryFlexibility
FOCUS FOCUS
FOCUSFOCUS
Plant within a Plant (PWP)
TraditionalApproach
Advanced Approaches
World Class Manufacturing
Trade-offs
POM - J. GalvánPOM - J. Galván 55
World-Class ManufacturingWorld-Class ManufacturingWorld-class manufacturers no longer World-class manufacturers no longer view view costcost, , qualityquality, , speed of deliveryspeed of delivery, , and even and even flexibilityflexibility as tradeoffs. as tradeoffs.They have become They have become order qualifiersorder qualifiers..What are the What are the order winners order winners in in today’s market? today’s market?
POM - J. GalvánPOM - J. Galván 66
Service BreakthroughsService Breakthroughs ServiceService can be can be
an an “order “order winner”winner” Warranty
RoadsideAssistance
TravelPlanning
LoanerVehicles
Leases
POM - J. GalvánPOM - J. Galván 77
8
A Framework for Manufacturing A Framework for Manufacturing StrategyStrategy
Customer Needs
New and CurrentProducts
Performance Prioritiesand Requirements
Quality, Dependability,Speed, Flexibility, and Price
Operations & Supplier Capabilities
Technology PeopleSystems R&D CIM JIT TQM Distribution
Support Platforms
Financial Management Human Resource Management Information Management
Enterprise Capabilities
Strategic Vision
POM - J. GalvánPOM - J. Galván 88
Strategy Begins with PrioritiesStrategy Begins with PrioritiesConsider the case of a personal computer manufacturer.Consider the case of a personal computer manufacturer.
1.1. How would we segment the market according to How would we segment the market according to product group?product group?
2.2. How would we identify product requirements, demand How would we identify product requirements, demand patterns, and profit margins for each group?patterns, and profit margins for each group?
3.3. How do we identify order winner and order qualifiers How do we identify order winner and order qualifiers for each group?for each group?
4.4. How do we convert order winners into specific How do we convert order winners into specific performance requirements?performance requirements?
Us(Core competencies)
Competition(Them) Differentiation
POM - J. GalvánPOM - J. Galván 99
ManufacturingManufacturing’s Role in ’s Role in Corporate StrategyCorporate Strategy
Stage 1--Stage 1--Internally NeutralInternally Neutral• Minimize manufacturing’s negative Minimize manufacturing’s negative
potentialpotential• Management control systemsManagement control systems
Stage II--Stage II--Externally NeutralExternally Neutral• Achieve parity with competitorsAchieve parity with competitors• Follow industry practiceFollow industry practice
Stage III--Stage III--Internally SupportiveInternally Supportive• Support the business strategySupport the business strategy
Stage IV-- Stage IV-- Externally SupportiveExternally Supportive• Manufacturing-based competitive Manufacturing-based competitive
advantageadvantage
POM - J. GalvánPOM - J. Galván 1010
Four Stages of Four Stages of ServiceService Firm Firm CompetitivenessCompetitiveness
Stage I. Stage I. Available for ServiceAvailable for Service• Reactive, non-performance-based survivalReactive, non-performance-based survival
Stage II. Stage II. JourneymanJourneyman• Firm neither sought nor avoidedFirm neither sought nor avoided• Reliable but uninspired operationReliable but uninspired operation
Stage III. Stage III. Distinctive Competence AchievedDistinctive Competence Achieved• Reputation for meeting customers’ expectationsReputation for meeting customers’ expectations• Customer-focused operations--management supportCustomer-focused operations--management support
Stage IV. Stage IV. World Class Service DeliveryWorld Class Service Delivery• Firm name synonymous with service excellence--Firm name synonymous with service excellence--
focus on delighting rather than satisfying customersfocus on delighting rather than satisfying customers• Continuous learning and improvement of operationsContinuous learning and improvement of operations
POM - J. GalvánPOM - J. Galván 1111
MIT Commission on Industrial ProductivityMIT Commission on Industrial Productivity1985 Recommendations1985 Recommendations
Place less emphasis on short-term financial payoffs and Place less emphasis on short-term financial payoffs and invest more in R&D.invest more in R&D.
Revise corporate strategies to include responses to Revise corporate strategies to include responses to foreign foreign competition.competition.
• greater investment in people and equipmentgreater investment in people and equipment Knock down Knock down communication barrierscommunication barriers within organizations within organizations
and recognize mutuality of interests with other companies and recognize mutuality of interests with other companies and suppliers.and suppliers.
Recognize that the Recognize that the labor force is a resourcelabor force is a resource to be nurtured, to be nurtured, not just a cost to be avoided.not just a cost to be avoided.
Get back to basics in managing production operations. Get back to basics in managing production operations. • Build in Build in quality at the designquality at the design stage. stage. • Place more emphasis on Place more emphasis on process innovationsprocess innovations rather than rather than
focusing sole attention on product innovations.focusing sole attention on product innovations.
POM - J. GalvánPOM - J. Galván 1212
U. S. Competitiveness DriversU. S. Competitiveness Drivers Product DevelopmentProduct Development
• Teams speed development and enhance Teams speed development and enhance manufacturabilitymanufacturability
Waste ReductionWaste Reduction (JIT Philosophy) (JIT Philosophy)• WIP, space, tool costs, and human effortWIP, space, tool costs, and human effort
Improved Improved Customer-Supplier RelationshipsCustomer-Supplier Relationships• Borrowed from Japanese KeiretsuBorrowed from Japanese Keiretsu
Improved Improved LeadershipLeadership• Strong, independent boards of directorsStrong, independent boards of directors