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OPM WK 2

OPM WK 2

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Published by: tayyab_jamal2000 on Dec 25, 2011
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05/05/2012

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Competitive Advantage Operations Strategy

Lecturer: Muhammad Naveed OPM-BBA-BAHRIA

Role of Operations
‘make or break’ any business.
 France

takes Coca-Cola off shelves

 Low

cost and big profits from operational
Air navigation equipment failed

efficiency
 Korean  Rat

in the aisle forces BA to cancel flight out of

Africa

Hayes and Wheelwright’s four stages of operations contribution .

Redefine industry expectations Increasing strategic impact Clearly the best in the industry Stage 2 Adopt best practice Stage 1 Correct the worst problems Stage 3 Link strategy with operations Stage 4 Give an operations advantage As good as competitors Driving strategy Supporting strategy Holding the organization back Implementing strategy Externally neutral Internally supportive Externally supportive Internally neutral Increasing operations capabilities .

Where does the business get its competitive advantage? The way technological specification of its product/service? Product/Service Technology The way it produces Its goods and services The way it Positions itself in its market? Marketing Operations .

Operations as Competitive Advantage The operations function can provide a competitive advantage through its performance at the five competitive objectives      Quality Speed Dependability Flexibility Cost Being RIGHT Being Fast Being on Time Being able to Change Being Productive .

Different competitive factors imply different performance objectives Competitive factors If the customers value these Low price High quality Performance objectives Then. the operations will need to excel at these Cost Quality Fast delivery Reliable delivery Innovative products and services Wide range of products and services The ability to change the timing or quantity of products and services Speed Dependability Flexibility (products/services) Wide range of products and services Flexibility (volume and/or delivery) .

friendly and helpful  .Quality means different things in different operations Hospital  Automobile plant  Patients receive the most appropriate treatment All parts are made to specification All assembly is to specification  Treatment is carried out in the correct manner Patients are consulted and kept informed     The product is reliable The product is attractive and blemish-free Staff are courteous.

) Bus company  The buses are clean and tidy  The buses are quiet and fume-free  The timetable is accurate and userfriendly  Staff are courteous. friendly and helpful Supermarket  Goods are in good condition  The store is clean and tidy  Decor is appropriate and attractive  Staff are courteous. friendly and helpful .Quality means different things in different operations (Cont.

Speed means different things in different operations Hospital  Automobile plant  The time between requiring treatment and receiving treatment kept to a minimum The time for test results. etc. to be returned kept to a minimum  The time between dealers requesting a vehicle of a particular specification and receiving it kept to a minimum  The time to deliver spares to service centres kept to a minimum . Xrays.

making the purchases and returning kept to a minimum  The immediate availability of goods .Speed means different things in different operations (Cont.) Bus Company  Supermarket  The time between a customer setting out on the journey and reaching his or her destination kept to a minimum The time taken for the total transaction of going to the supermarket.

etc. X-rays.Dependability means different things in different operations Hospital  Automobile plant    Proportion of appointments which are cancelled kept to a minimum Keeping to appointment times Test results. returned as promised On-time delivery of vehicles to dealers On-time delivery of spares to service centres  .

Dependability means different things in different operations (Cont.) Bus Company  Supermarket   Keeping to the published timetable at all points on the route Constant availability of seats for passengers Predictability of opening hours Proportion of goods out of stock kept to a minimum Keeping to reasonable queuing times Constant availability of parking    .

Flexibility Flexibility has several distinct meanings but is always associated with an operation’s ability to change  Change what ?  The products and services it brings to the market –Product/service flexibility The mix of products and services it produces at any one time – Mix flexibility The volume of products and services it produces – Volume flexibility The delivery time of its products and services – Delivery flexibility    .

Flexibility means different things in different operations Hospital  Automobile plant  Product/service flexibility – the introduction of new types of treatment Mix flexibility – a wide range of available treatments Volume flexibility – the ability to adjust the number of patients treated Delivery flexibility – the ability to reschedule appointments       Product/service flexibility – the introduction of new models Mix flexibility – a wide range of options available Volume flexibility – the ability to adjust the number of vehicles manufactured Delivery flexibility – the ability to reschedule manufacturing priorities .

) Bus Company  Supermarket     Product/service flexibility – the introduction of new routes or excursions Mix flexibility – a large number of locations served Volume flexibility – the ability to adjust the frequency of services Delivery flexibility – the ability to reschedule trips    Product/service flexibility – the introduction of new goods or promotions Mix flexibility – a wide range of goods stocked Volume flexibility – the ability to adjust the number of customers served Delivery flexibility – the ability to obtain out-of-stock items (very occasionally) .Flexibility means different things in different operations (Cont.

Cost means different things in different operations .

Cost means different things in different operations (Cont.) .

meaning day-to-day and detailed.  ‘Operational’  is the opposite of strategic. objectives and activities.Operations Strategy ‘Operations’ is not the same as ‘operational’. .  ‘Operations’  are the resources that create products and services.  Operations strategy  is the specific decisions and actions which set the operations role.

operations strategy is a bottom-up activity where operations improvements cumulatively build strategy. operations strategy involves translating market requirements into operations decisions. operations strategy involves exploiting the capabilities of operations resources in chosen markets.    .Four Perspectives  operation strategy is a top-down reflection of what the whole group or business wants to do.

and design special food beverages and entertainment . Operations part of each function will operationalize the strategy. organize express ticketing. Marketing operations – Organize promotion and pricing Personal operations – Train its cabin and ground staff Operational Function – Supervise the refitting of the aircraft. baggage handling and waiting facilities.Implementer of Business Strategy It is operation which puts it into practice For example If an airline strategy is to attract high proportion of business class travelers.

Supporting Business Strategy Develop resources and capabilities to meet ever changing needs and requirements For Example A manufacture of PCs has decided to compete by being the first in the market -NPI .

) Operation functions needs to be capable of coping with the changes due to constant NPI. .    Flexible develop or purchase process Organize and train staff for change product Develop relationships with buyer for quick response The better the operation does at the above areas. the more support it is giving to achieve company’s strategy.Supporting Business Strategy (CONT.

The Five Ps      The Product The Plant The Processes The Programmes The People .

Structural and infrastructural strategic decision areas Structural strategic decisions New product/service design Typical questions which the strategy should help to answer How should the operation decide which products or services to develop and how to manage the development process? Supply network design Should the operation expand by acquiring its suppliers or its customers? If so. what customers and suppliers should it acquire? How should it develop the capabilities of its customers and suppliers? Process technology What types of process technology should the operation be using? Should it be at the leading edge of technology or wait until the technology is established? .

Infrastructural strategic decision areas Infrastructural strategic decisions Typical questions which the strategy should help to answer Job design and organization How should responsibility for the activities of the operations function be allocated between different groups in the operation? What skills should be developed in the staff of the operation? How should the operation forecast and monitor the demand for its products and services? How should the operation decide how much inventory to have and where it is to be located? How should the operation choose its suppliers? Develop and monitor them? How should the operation’s performance be measured? How should the operation maintain its resources so as to prevent failure? Planning and control Inventory Supplier development Improvement Failure prevention risk and recovery .

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