Transcript ERP – The Power of Information

-Operations Strategy
-ERP – The Power of Information
COB 300C
Dr. Mike Busing
Fall 2001
COB 300C
Operations Strategy
Dr. Busing
Fall 2001
Strategy
• Definition:
Strategy
• Definition: the science or art of military
command as applied to the overall planning
and conduct of large-scale combat
operations. (The American Heritage
Dictionary)
Elements of Strategy from a
Business Unit Perspective
Corporate Mission
• is a set of long-range goals unique to each
organization.
• Includes statements about:
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kind of business the company wants to be in
who its customers are
its beliefs about business
its goals of survival, growth, and profitability
Business Strategy
• long-range game plan for the the
organization.
• provides road-map of how to achieve the
corporate mission given:
– global business conditions
– distinctive competencies/weaknesses (anything
that helps the firm to capture market share)
Competitive Priorities
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Low production costs
High quality products and services
Fast/on-time delivery
Customer service and flexibility
Speed
Operations Strategy
• long-range game plan for the production of
a company’s products and services. It
provides a road map for what operations
must do if business strategies are to be
achieved.
Operations Strategy (cont’d)
• Answers such questions as:
– What new products must be developed?
– When should new products be introduced into
production?
– What new production facilities are needed?
– When should the new production facilities be
completed?
Elements of Operations Strategy
I. Positioning the Operations System
• Type of product design
– custom products
– standardized products
Elements of Operations Strategy
I. Positioning the Operations System
• Type of product design
– custom products
– standardized products
• Type of production processing system
– product focused or line flow (good for low
variety high volume)
– process focused (good for high variety
(custom), low volume)
Elements of Operations Strategy
I. Positioning the Operations System
• Type of finished-goods inventory policy
– produce to stock (aka: make to stock)
– produce to order (aka: make to order)
Elements of Operations Strategy
I. Positioning the Operations System
Elements of Operations Strategy
II. Focus of Production
• Without economies of scale, it may be
beneficial to focus on a narrow product mix
for a particular niche. Otherwise the
factory/service facility may become
vulnerable to smaller and more specialized
competitors who can provide better cost,
delivery, quality, and/or service.
Elements of Operations Strategy
III. Product/Service Plans
• Introduction: production and marketing
developing and profit is negative.
• Growth: sales grow dramatically,
marketing efforts intensify, production
concentrates on expanding capacity fast
enough to keep up with demand and profits
begin.
Elements of Operations Strategy
III. Product/Service Plans
• Maturity: production concentrates on high
volume, efficiency, and low costs;
marketing uses competitive sales promotion
aimed at increasing or maintaining market
share. Profits at peak
• Decline: product may be dropped by the
firm or replaced by improved products due
to declining profits and sales.
Elements of Operations Strategy
IV. Production Process and Technology Plans
• Matching high volume/low variety product
line with product focused production
technology
• Matching low volume/high variety product
line with process focused production
technology
• Intermediate case??
Elements of Operations Strategy
V. Allocation of Resources to Strategic Alternatives
• Resources are scarce
– e.g., product mix problem and other
optimization problems
Elements of Operations Strategy
VI. Facility Plans
• Capacity, location, and layout decisions
– The internal arrangement of workers,
production processes, and departments within
the facilities can affect the ability to provide
desired volume, quality, and cost of products.
– Walker manufacturing example.
Positioning Strategies for
Services
• Type of Service Design: (i.e., standard or
custom product, amount of customer
contact, mix of physical goods and
intangible services)
• Type of Production Process: (i.e., quasi
manufacturing, customer as participant,
customer as product)
Competitive Priority
Low production costs
Deliver y
performance
High-quality
products/services
Customer service
and flexibility
Marketing
HRM
Operations
Finance
ERP
• Enterprise
• Resource
• Planning
ERP – Key Point
• Common Database
benefits?
ERP Benefits
• Integration of Financial Data
• Standardization of Manufacturing Process
• Standardization of HR Information
Issues to Consider
ERP package will most likely not match current
business process.
Cost is significant (average TCO = $15MM).
Implementation Time can be long (1-3 years is
typical).
No payback is typical until 8 months after
installation is complete.
Average payback is $1.6MM/yr.
Problems and Budget Overruns
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Training (including business process)
Integration/Testing (add-on packages)
Data Conversion
Data Analysis (data warehousing)
Consultants (staff training)
Replacing your best and brightest
Implementation teams never stop
Waiting for ROI
Post ERP Depression (productivity drop)
Lux Capital Corp. Business Plan
Competition
Business Concepts will be judged partly on the following criteria:
· Does the business opportunity serve an attractive market?
· How large is this market?
· Is the business opportunity realistic?
· How does your product/service serve this market?
· How will you make money from this opportunity (what is your business
model)?
· Who are your competitors?
· What is your competitive advantage and how will you protect your business
from competitors?
· How well does the team understand the industry and market?
· Who are the customers you will target? Who will be the first customers?
· How will you develop and market your product/service and how long will it
take to break-even?
· What is the required capital investment to start the business?
· Are financial projections realistic and based on solid analysis?
· Who will manage the business and why will they be successful?
· Who do you need to bring in to the business and how will you attract them?
· Who are the investors?
· How will the investment money be spent?
· How and when will the investors be paid-back for their investment?
· How will this business become a market leader and how will a leadership
position be maintained?