om chapter 2 spring 2012

8/2/2019 OM Chapter 2 Spring 2012

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o p e r a t !o n s

m a n a g e m e n t

PirzadaJanuary 31, 2012


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Assignment 1

Due next Tuesday

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Outsourcing1111111111111111111111111111111111111111111111111111

Smart Factories

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RFIDs

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Uses of RFIDs


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http://www.ccint.net/services.phpCompetitive capabilities International
http://www.ccint.net/services.phphttp://www.ccint.net/services.php


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operat!ons strategy

competitiveness


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Objectives

Operations Strategy

Competitive Dimensions

Order Qualifiers and Winners

Strategy Design Process

A Framework for Manufacturing Strategy

Service Strategy Capacity Capabilities

Productivity Measures


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Strategy

"Strategy is the directionand scope of

an organization over the long-term:

which achieves advantage for the

organization through its

configuration ofresources within a

challenging environment, to meetthe needs ofmarkets and to fulfill

stakeholderexpectations".
http://www.michaelmccurry.net/wp-content/uploads/2010/04/Strategy.jpg


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Strategy

What resources (skills, assets, finance, relationships, technical

competence, facilities) are required in order to be able to

compete? (resources)?

What external, environmental factors affect the businesses'ability to compete? (environment)?

What are the values and expectations of those who have

power in and around the business? (stakeholders)

http://tutor2u.net/business/strategy/what_is_strategy.htm


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Competitive Dimensions

Cost or Price Make the Product or Deliver the Service Cheap

Quality

Make a Great Product or Deliver a Great Service

Delivery Speed Make the Product or Deliver the Service Quickly

Delivery Reliability

Deliver It When Promised

Coping with Changes in Demand

Change Its Volume Flexibility and New Product Introduction Speed

Change It

Other Product-Specific Criteria

Support It


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Trade-offs

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

For example, if we improve customer service problem

solving by cross-training personnel to deal with a wider-range of problems, they may become less efficient atdealing with commonly occurring problems.

Cost

Quality

DeliveryFlexibility


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Plant-within-a-Plant-I

A facility that is attempts too much or is optimized for the

wrong task can be a millstone.

The plant layout has regions that become, essentially,

standalone factories. Each has (at least substantially) its

own area and infrastructure such as maintenance,

purchasing and engineering.


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Plant-within-a-Plant-II

Example

Two major product lines had

conflicting demands from

customers and conflictingdemands on the factory's

infrastructure.

In addition, one of the

product lines had highlydissimilar processes. The

factory was split into three

Focused Factories, as shown.


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Reading Assignment 2

Read the case ofStraddling on Page 27-28.

Find another case from Web.

Get ready for discussion in the next class.


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Order Qualifiers and Winners

Order qualifiers are the basic criteria that permit thefirms products to be considered as candidates for purchase bycustomers

Order winners are the criteria that differentiates theproducts and services of one firm from another


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Service Breakthroughs

Abrand name can be an order

qualifier

Repair services can beorder

winners

Examples: Warranty, Roadside

Assistance, Leases, etc
http://images.sodahead.com/polls/000103645/polls_car5_0655_974947_poll_xlarge.png


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Kaplan and Nortons Generic Strategy Map-I

- 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


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Kaplan and Nortons Generic Strategy Map-II

Revenue Growth Strategy is generally made up fromtwo components:

Build the franchise: Develop new sources of revenue

Increase customer value: Work with existing customers to

expand relationships with company


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Kaplan and Nortons Generic Strategy Map-III

- Customer Perspective

The 3 suggested ways as means of differentiating a

company from others in a marketplace:

Product leadership

Customer intimacy

Operational excellence


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Kaplan and Nortons Generic Strategy Map-IV

- Learning & Growth Perspective

There are 3 principle categories of intangible assets needed

for learning:

Strategic competencies

Strategic technologies

Climate for action


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Kaplan and Nortons Generic Strategy Map-IV

- Learning & Growth Perspective

There are 3 principle categories of intangible assets needed

for learning:

Strategic competencies

Strategic technologies

Climate for action


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Developing a Manufacturing Strategy

Segmentthe market according to the product group

Identify product requirements1, demand patterns2, and profit

margins3 of each group

Determine order qualifiers and winners for each group

Convert order winners into specific performance

requirements


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Service Strategy Capacity Capabilities

Process-based Capacities that transforms material or information and provide

advantages on dimensions of cost and quality

Systems-based

Capacities that are broad-based involving the entire operatingsystem and provide advantages of short lead times and customize ondemand

Organization-based Capacities that are difficult to replicate and provide abilities to

master new technologies


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Productivity Total and Partial

A common measure on how well resources are being used.

Defined as the following ratio: Outputs

Inputs

Total Productivity = OutputsInputs

or = Goods and services produced

All resources used

Partial Productivity =Output or Output or Output or Output

Labor Capital Materials Energy


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Multifactor Productivity

Multifactor Productivity =

Output .

Labor + Capital + Energy

or

Output .

Labor + Capital + Materials


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Example

Problem:

Your service employees have used a total of 2400 hours oflabor this week to process 560 insurance forms. Last week

the same crew used only 2000 hours of labor to process 480forms. Has productivity increased or decreased?


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Example

Answer:

Last weeks productivity = 480/2000 = 0.24.

This weeks productivity is = 560/2400 = 0.23.

So, productivity has decreased slightly.


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Definitions

- It is all becoming a great manager

Operations management (OM) is defined as the design,

operation, and improvement of the systemsthat create and

deliver the firms primary products and services.

It is getting the dayto-day work done quickly,

efficiently, without errors and at low cost.


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Definitions

Efficiencymeansdoing something at the lowest possible cost.

(- at smallest input).

Effectivenessmeansdoing the right thing to creat the most

value for the company.

Value- Quality/ price

Smart management can achieve high value that is key to

corporate competitiveness .


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Reasons for Studying OM

Provides:

Understanding of modern approaches to managing

operations.

Systematic way of looking at organizational processes.

Career opportunities

Tools of Operations Management are useful in many other

functions of business (daily life).


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Transformations

Physical- manufacturing

Locational- transportation

Exchange- retailing

Storage- warehousing

Physiological- health care

Informational- telecommunications


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Services or Goods?

A service is an intangible process.

Service facility and direct customers at same location.

Direct involvement of customer.

If you drop it on your foot, it wont hurt you.

(Good or service?)


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Core Services

Core services are basic things that customers want

from products they purchase

Value-added services features other than essentialyrequired in the product or services that make the

customers life easier. Value added services build

relationships that generates loyal customers.


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Value-added services

Information

- Critical data on product performance, process

parameters e.g. quality data material property data.

Problem solving

- Troubleshooting in operations and quality

Sales support

- Demonstrating technology, equipment

Field support.- replacing defective parts, replenish stocks


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Historical Development of OM

See Exhibit 1.4 on page 16

Recent Concepts

JIT Just in time manufacturing aiming at reducing of inventoriesTQC Total quality control for eliminating of wastes

BPR Business Process reengineering making radical changes

MRP/ERP Supply chain Management

E-Commerce On-line business


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Current Issues

Contract manufacturing

Optimizing global business

Co-production

Managing customer touch points

Raising awareness


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Core Services Performance Objectives

Speed Quality

Flexibility Price


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The Progressive Corporation

commonly known as the

Progressive Casualty Insurance Company

Business Vehicle Insurance

Headquarters: Mayfield Village, Ohio, U.S.

Revenue: $15 Billion USD (2010)

Employees: 27,250 (2010)

www.progressive.com
http://www.progressive.com/http://www.progressive.com/http://en.wikipedia.org/wiki/U.S._dollarhttp://en.wikipedia.org/wiki/United_States


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Combined Ratio Analysis

Combined Ratio Analysis

(expenses + claims payouts) / insurance premium

Progressive 96 percent

Others 102 percent (recover from insurance)

Introduced a new concepts!


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Concepts

Immediate response claims handling short cycle time

24-7 service

Inspection within 9 hours

A check at the spot

Faster service

Less hustle

Reduce cost to progressive10,000 claims daily


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Pay As You Drive insurance

- also generically known as usage-based insurance (1990- )

Snapshot : Voluntary discount program where drivers can save

money on their car insurance by sharing their driving habits

with Progressive.

Best for people who drive less, in safer ways and duringsafer

times of day.

Making changes to their driving habits can lead to bigger

discounts .


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om chapter 2 spring 2012

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