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Operations and Supply Strategy

The document discusses operations and supply strategy. It covers topics like competitive dimensions, order qualifiers and winners, strategy design process, a framework for manufacturing strategy, service strategy, capacity capabilities, and productivity measures. It also provides examples and questions to test understanding.

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loloalpsheidi
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73 views26 pages

Operations and Supply Strategy

The document discusses operations and supply strategy. It covers topics like competitive dimensions, order qualifiers and winners, strategy design process, a framework for manufacturing strategy, service strategy, capacity capabilities, and productivity measures. It also provides examples and questions to test understanding.

Uploaded by

loloalpsheidi
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Chapter 2

Operations and Supply Strategy

OBJECTIVES

Operations and Supply Strategy

Competitive Dimensions
Order Qualifiers and Winners Strategy Design Process A Framework for Manufacturing Strategy Service Strategy Capacity Capabilities Productivity Measures

What is Operations and Supply Strategy?


Operations and supply strategy is concerned with setting broad policies and plan for using the resources of a firm to best support its long-term competitive strategy.

Operations Strategy
Strategy Process
Customer Needs

Example
More Product

Corporate Strategy

Increase Org. Size

Operations Strategy

Increase Production Capacity

Decisions on Processes and Infrastructure

Build New Factory

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

Dealing with Trade-offs


For example, if we reduce costs by reducing product quality inspections, we might reduce product quality. For example, if we improve customer service problem solving by cross-training Flexibility personnel to deal with a wider-range of problems, they may become less efficient at dealing with commonly occurring problems.

Cost

Delivery
Quality

Order Qualifiers and Winners

Defined
Order

qualifiers are the basic criteria that permit the firms products to be considered as candidates for purchase by customers winners are the criteria that differentiate the products and services of one firm from another

Order

Service Breakthroughs
A

brand name car can be an order qualifier

Repair services can be order winners


Examples: Warranty, Roadside Assistance, Leases, etc.

Strategy Design Process


Strategy Map
Financial Perspective

What it is about!
Improve Shareholder Value

Customer Perspective

Customer Value Proposition

Internal Perspective

Build-Increase-Achieve

Learning and Growth Perspective

A Motivated and Prepared Workforce

Kaplan and Nortons Generic Strategy Map


In the Kaplan and Nortons Generic Strategy Map, under the Financial Perspective, the Productivity Strategy is generally made up from two components:

1. Improve cost structure: Lower direct and indirect costs 2. Increase asset utilization: Reduce working and fixed capital

Kaplan and Nortons Generic Strategy Map (Continued)


In the Kaplan and Nortons Generic Strategy

Map, under the Financial Perspective, the Revenue Growth Strategy is generally made up from two components:

1. Build the franchise: Develop new sources of revenue 2. Increase customer value: Work with existing customers to expand relationships with company

Kaplan and Nortons Generic Strategy Map (Continued)


In the Kaplan and Nortons Generic Strategy

Map, under the Customer Perspective, there are three ways suggested as means of differentiating a company from others in a marketplace:

1. Product leadership 2. Customer intimacy 3. Operational excellence

Kaplan and Nortons Generic Strategy Map (Continued)


In the Kaplan and Nortons Generic Strategy

Map, under the Learning and Growth Perspective, there are three principle categories of intangible assets needed for learning:

1. Strategic competencies 2. Strategic technologies 3. Climate for action

Operations Strategy Framework


Customer Needs

New product : Old product

Competitive dimensions & requirements

Quality, Dependability, Speed, Flexibility, and Price

Enterprise capabilities Operations andSupplier capabilities Operations & Supplier Capabilities R&D R&D Technology Systems Technology Systems People People Distribution Distribution

Support Platforms Financial management

Human resource management

Information management

Steps in Developing a Manufacturing Strategy


1. Segment the market according to the product group 2. Identify product requirements, demand patterns, and profit margins of each group 3. Determine order qualifiers and winners for each group 4. Convert order winners into specific performance requirements

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 operating system and provide advantages of short lead times and customize on demand
Capacities that are difficult to replicate and provide abilities to master new technologies

Organization-based

What is Productivity?

Defined

Productivity is a common measure on how well resources are being used. In the broadest sense, it can be defined as the following ratio: Outputs Inputs

Total Measure Productivity


Total Measure Productivity = Outputs Inputs

or
= Goods and services produced All resources used

Partial Measure Productivity


Partial

measures of productivity =

Output or Output or Output or Output


Labor Capital Materials Energy

Multifactor Measure Productivity

Multifactor measures of productivity =


Output
Labor + Capital
or

.
+ Energy

Output
Labor + Capital +

.
Materials

Example of Productivity Measurement


You have just determined that your service employees have used a total of 2400 hours of labor this week to process 560 insurance forms. Last week the same crew used only 2000 hours of labor to process 480 forms. Which productivity measure should be used? Is productivity increasing or decreasing?

Question Bowl
An operations strategy is concerned with which of the following? a. Setting specific policies and plans b. Short-term competitive strategies c. Coordination of operational goals d. All of the above e. None of the above

Question Bowl
Typically a strategy breaks down into what major components? a. Operations effectiveness b. Customer management c. Production innovation d. All of the above e. None of the above

Question Bowl
A criterion that differentiates the products and services of one firm from another can be which of the following? a. An order qualifier b. An order winner c. PWP

d. None of the above

Question Bowl
A travel agency processed 240 customers on Day 1 with a staff of 12, and 360 customers the on Day 2 with a staff of 15. What can be said about the productivity shift from Day 1 to Day 2? a. An increase in productivity from Day 1 to Day 2 b. A decrease in productivity from Day 1 to Day 2 c. The same productivity from Day 1 to Day 2 d. Can not be computed from data above e. None of the above

Question Bowl
In addition to traditional financial measures, what critical questions can a Balanced Scorecard help a company answer?
a. How do customers see us? b. What must we excel at? c. How can we continue to improve and create value? d. All of the above e. None of the above

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