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Operations Management Operations Strategy for Competitive Advantage in a Global Environment. Reasons to Globalize. Reduce costs (labor, taxes, tariffs) Improve supply chain Provide better goods and services HLL’s Wheel in response to Nirma Understand markets Learn to improve operations - PowerPoint PPT Presentation
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Operations Operations ManagementManagement
Operations Strategy for Operations Strategy for Competitive Advantage Competitive Advantage
in a Global in a Global EnvironmentEnvironment
Reasons to GlobalizeReasons to Globalize
Reduce costs (labor, taxes, tariffs)
Improve supply chain
Provide better goods and services
HLL’s Wheel in response to Nirma
Understand markets
Learn to improve operations
Attract and retain global talent
Vision and MissionVision and Mission
Mission – What an org. does, its action. Provides
boundaries & focus
More functional in nature dealing with pricing, quality, market place and other items of the value chain
Vision – The ultimate result of action What an org.
would like to happen as a result of the action that it does.
Vision and Mission of a Vision and Mission of a hospitalhospital
To make the denizens of kathmandu
healthier
To provide a healing environment with
family-cantered care with compassion,
comfort and respect with best
possible medical facilities available.
Mission/StrategyMission/Strategy
Strategy - how you are going to get there; the action plan to achieve the mission
The answer to the third intrinsic question: Where are we? Where do we want to be? How to achieve?
Mission of OM Mission of OM DepartmentsDepartments
Product Design: To Design products with superb
quality and inherent customer value.
Quality: To be consistent with quality in every
single aspect of production, right from design,
procurement, production etc.
Process Design: To determine and design
production process compatible with low cost, high
quality product.
ContinuedContinued
Location selection: To locate, design, efficient and
economical facilities that will yield high values to the
company.
Layout: To achieve production effectiveness and
efficiency while supporting a high quality of work.
Human Resources: To provide a good quality of work
atmosphere, well designed, safe rewarding jobs, stable
employment, equitable pay in exchange for outstanding
individual contribution from employees at all levels.
ContinuedContinued
Supply Chain: To collaborate with suppliers to
develop innovative products from stable, efficient
and effective sources of supply.
Inventory: To achieve low investments in inventory
consistent with high facility utilizations.
Maintenance: To achieve high utilization of facilities
and equipment by effective preventive maintenance
and prompt repair of facilities and equipment
Strategies & Competitive Strategies & Competitive AdvantageAdvantage
Ability of the firm to outperform its industry i.e. to earn a high rate of profit than the industry norm
Competitive advantage: The creation of a unique advantage over others
To achieve a competitive advantage, a firm must create more value than its competitors Differentiation Cost leadership Quick response
Competing on Competing on DifferentiationDifferentiation
Create unique bundles of products/services that will be highly valued by customers
Differentiation should be thought of going beyond the physical characteristics and service attributes to encompass everything about the product or service that will influence the potential customer.
Experience Differentiation: selling experience
Eg.; Disney does this where people get immersed surrounded by a dynamic visual and sound experience
Can encompass everything related to product or service that influences value
Broad Product Line
Product features
Product Services
Status Symbol
Technical Innovation
Competing on CostCompeting on Cost
Maximize value as defined by customers
Does not mean low quality
Establishing a low cost position relative to
competitors through
Optimum utilization of resources
Economies of scale
Coverage of variable costs and a lesser
proportion of fixed costs (Dumping by the
Chinese)
Competing on Competing on ResponseResponse
Including the values related to timely product development and delivery, as well as reliable scheduling and flexible performance.
Flexibility – ability to match changes in marketplace. Volumes and Designs changes
Reliability – scheduling. Communicated to the customer so that he/she can rely on.
Timeliness – design, production, delivery
OM’s Contribution to OM’s Contribution to StrategyStrategy
Response(Faster)
Quality
Product
Process
Location
Layout
Human Resource
Supply Chain
Inventory
Scheduling
Maintenance
HP’s ability to follow the laptop 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 lunchtimeFederal Express’s “absolutely, positively on time”
Motorola’s automotive products ignition systemsSpice Nepal’s network
IBM’s after-sale service on mainframe computers
Fidelity Security’s broad line of mutual funds
FLEXIBILITY
DesignVolume
LOW COST
DELIVERY
SpeedDependability
QUALITY
ConformancePerformance
AFTER-SALE SERVICE
BROAD PRODUCT LINE
Operations Decisions Examples Specific
Strategy UsedCompetitive Advantage