pm lecture 2_ftui.pdf
TRANSCRIPT
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Chapter 2 The Strategic Role and
Objectives of Operations
the roles of the operations function include:
as implementer of business strategy
as a support to business strategy
developing resources to achieve organisational goals
as the driver of business strategy
by ensuring long term competitive edge
there are 5 performance objectives:
quality:
do things right
good quality products mean high customer satisfaction and their return
fewer internal errors reduces costs
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2 The Strategic Role and Objectives of Operations
speed:
do things fast
time that customers wait to receive products
faster the customer receives product, more likely they will buy it
internally, waiting time creates large stocks (inventories) of products
dependability:
do things on time
deliver goods and service when they were promised
reduces disruption to production internally
reduces cost by eliminating ineffective use of time
establishes stability through trust
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2 The Strategic Role and Objectives of Operations
flexibility:
change what you do
product/service flexibility (new products)
mix flexibility (wide range of products)
volume flexibility (level of output)
delivery flexibility (timing of delivery)
internal flexibility gives fast service, saves time, and maintains dependability
cost:
do things cheaply
reducing costs can give competitive advantage to companies competing on price
costs are incurred generally for:
staff
facilities, technology, equipment
materials
costs are also reduced by improving upon other 4 objectives
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3 Operations Strategy
top-down perspective:
corporate strategy is concerned with the corporations position globally,economically, politically and in the social environment gives direction to total
business: where to invest
priorities in terms of sales revenue growth
allocation of investment funds, in line with priorities
Corporate strategy
Business strategy
Functional strategy
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3 Operations Strategy
each business unit within the corporate group has its own strategy, withindividual mission and objectives this is called business strategy:
ie. business units of a bank: corporate banking, retail banking, financial markets,
mortgages, insurance
for each, identify markets to compete in, grow in
identify in which functinal tasks to invest in
within the business, functional strategies consider what part each functionshould play in contributing to the strategic objectives of the business:
functions include operations, marketing, product development
eg. support competing in markets
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3 Operations Strategy
market requirements perspective:
competitive factors define customers requirements, which implies differentperformance objectives:
low price (cost)
high quality (quality)
fast delivery (speed)
reliable delivery (dependability)
innovative products and services (flexibility p/s)
wide range of products and services (flexibility mix)
ability to change timing/quantity (flexibility volume/delivery)
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3 Operations Strategy
competitive factors may be split into 2 categories:
order-winning factors
directly contribute to winning business
are key reasons for purchasing a product and service
qualifying factors
are those aspects of competitiveness where the operations performance has to beabove a particular level just to be considered by the customer
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3 Operations Strategy
the product/service life cycle can be used to understand behaviour ofcustomers and competitors:
introduction: flexibility required, due to uncertainty in the market
quality to maintain product performance
growth:
speed and dependability in responding to demand
maturity:
costs to be reduced and dependability in supply achieved
decline: cost reduction required
Introduction Growth Maturity Decline
t
Salesvolume
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3 Operations Strategy
operations resources perspective:
structural decisions are those which primarily influence design activities:
new product development strategy (leader?, follower?)
vertical integration strategy
facilities strategy (location, capacity)
technology strategy
infrastructural decisions influence the workforce, planning and control, andimprovement activities:
workforce strategy (roles, skills)
capacity adjustment strategy (demand forecast)
supplier development strategy (choosing, relationship)
inventory strategy (quantity, location)
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3 Operations Strategy
operations strategy is about the reconciliation between the marketrequirements and developing operations resources:
Structural andinfrastructural
decisions
Operationsresources
Operationscapabilities
Operationsprocesses
Performaobjectives
nce
Competitorsactions
Stage inproduct/service
life cycle
Customersneeds
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3 Operations Strategy
operations strategy matrix combines the last 2 perspectives:
quality
speed
dependability
flexibility
cost
Structural decisions Infrastructural decisions
Resource
usage
Marketcompetitiveness
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Strategy Formulation
Strategy depends on internal and external
conditions and performance objectives
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Strategic Planning - FormulationMission &
Vision
BusinessStrategy
Marketing
Strategy
Operations
Strategy
Financial
Strategy
Voice of theBusiness
Voice of theCustomer
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External Conditions
Economic conditions
interest rates unemployment rates
Political conditions tariffs and trade restrictions
political stability
Market conditions needs and desires of customers
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External Conditions
Social conditions
social trends changing demographics
Technological conditions new products
new processes
information technology
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Internal Conditions
(measuring current performance) Current strengths and weaknesses
Existing products Existing customers
Existing distribution or delivery systems Human resources
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Internal Conditions
Current facilities
Technological capabilities Patents
Availability of capital
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Policy Deployment
Focuses employees on common goals &
priorities Translates strategy into measurable
objectives Aligns day-to-day decisions with strategic
plan
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Vision: Total customer satisfaction
Strategic goal: Improve customer retention
Customer complaint: It takes too long to repairthe copier
Functional performance goal: Reduce downtime oncopier
Policy Deployment Example:
Copyplus
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Specific Action
What
Improve
stocking
of parts
Who
Gladys
Wray
WhenJune 1
MeasureNumber of
repeatvisits due topart not onhand
Resources
$500*
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Strategies for cost ...
Traditional:
low overhead dedicated equipment
(hard automation)
high utilization large volumes
(economy of scale)
low wages
Lean:
reduced scrap andrework
reduced WIP
reduced wastereduced inspection
product
standardization andsimplification
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Strategies for quality...
Traditional:
increased inspection more expensive
processes
Lean:skilled, trained workers
continuous improvement
poka-yoke
statistical process control
rapid discovery andcorrection of problems(effective measuringmethod)
product standardizationand simplification
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Strategies for dependability...
Traditional:
large inventory complex scheduling
systems
Lean (measurable):
low equipmentfailures
high quality - no scrapor rework
low WIP
low lead times
small batch sizesflexible manufacturing
Strategies for flexibility and
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Strategies for flexibility and
speed... Traditional:
general purposeequipment (e.g. jobshop)
reserve capacity
flexible automation
Lean:
low setup timesmall batch size
multi-skilled
workersconcurrentengineering
short lead timeslow WIP