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SESSION 2 Prod & Opn. Strategy
SESSION 2 Prod & Opn. Strategy
What is a System?
A set of interconnected elements that must function together in unison within a certain environment
E
al b n lo G atio iz
S THIC
OIL Price
CSR
W ar oba m l in g Gl
Ta
xe s
Banks
Suppliers
Transport Modes
Uni o
ns
-M ITC
LS
KYOTO
Te c
Competi tors
Train
hn ol o
Sh ho arelde rs
Your organization
Customers
ss ine s s Bu ycle C
gy
ld or e W rad T
i ng
Kyoto Protocol
Inputs
Shareholders
Transformation
Outputs
Trade Unions
Customers
Government Regulations
Globalization
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Action Point
Using the template below, illustrate your organization from a systems perspective i.e. your organization interacting with its environment:
Suppliers
Inputs
Transformation
Outputs
Customers
Vision/Mission
Operations Strategy
Financial Strategy
Marketing Strategy
Planning levels:
Strategic planning Tactical planning
is the preparation of long-term plans by top management aimed at achieving organizational goals and objectives. is the preparation of medium- term plans by middle management aimed at supporting the strategic plan by achieving functional goals and tactical objectives.
Operational planning
is the preparation of short-term plans by first-line management aimed at supporting tactical plans and achieving operational goals and objectives. 8
Types of Planning
Strategic Planning: long-range decisions (typically 1 to 5 years)
Examples of Decisions
Tactical Planning: medium-term decisions (Typically one month and less than 1 year)
Operational Planning & Control (OPC): short-term decisions (daily, weekly, monthly)
Where do we locate a new factory? Top What new products do we introduce? Manage- How do we increase market share? Should we implement ISO 9001? ment Do we need additional capacity? When? What layout do we need for the new product? When ? What new Senior quality checks are required? or Middle What equipment do we Management replace? Do we need an extra shifts?
What orders have priority? When can we schedule maintenance? How do we increase productivity?
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Order Winners: the criteria that differentiate the goods and/or services of one business from those of another, and which result in it being awarded the order.
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Action Point
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A holistic strategic planning system that aligns the various business activities of an organization with its overall vision and mission using balanced performance measures in four areas: financial, customers, internal processes and learning & growth.
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From an operations management strategic viewpoint, these four performance measures could include the following:
Financial Perspective Customer Perspective How do we add value for our customers but also reduce our operating and material costs? How do we create value for our customers? How do we change to meet our customers present and future demands? What are our training needs? How do we improve our processes to meet the present and future demands of our customers?
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SERVICE
QUALITY
FLEXIBILITY
DELIVERY
TIME
COST
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QUALITY
High and consistent quality is essential to prosper in a competitive environment It is the easiest of the key criteria for a customer to judge
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DELIVERY
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COST
Higher productivity leads to lower costs Lower costs allow a business to offer lower prices This helps to increase its market share
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TIME
12 9
6 3
In
recent decades, competition has changed: from price to price & quality to price & quality & delivery to price & quality & delivery & TIME
FLEXIBILITY
It means being able to adapt rapidly to changing business conditions respond quickly to evolving customer needs Three types of flexibility: Volume flexibility responding to changes in demand Variety (or mix) flexibility providing the range of products that customers ask for Product flexibility developing new products when needed
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SERVICE
It is the fusion of the other five competencies a blend of quality, delivery, cost, time & flexibility It also means agility how quickly a business responds to both market and customer needs Agility is increasingly important with the growing focus on supply chains
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Productivity
Agility in servicing customers enables organizations along a supply chain to obtain a competitive advantage One way of achieving this is to improve productivity Productivity is probably the performance measure most used in operations management
It measures the amount of output (goods and / or services) achieved per unit of input (labour, materials, capital & energy)
Productivity = Output Input It measures how efficiently resources have been used
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