Operations Management Productivity & Competitive Advantage
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Transcript Operations Management Productivity & Competitive Advantage
Operations
Management
Productivity & Competitive
Advantage
Growth rate
Stages in the Product Life
Cycle
Introduction
Floppy
Disks
Growth
mp4 players
iphone
mp3 players
DVD’s
CD players
Maturity
cassette
players
Fax
Machine
Decline
Strategy & Issues During Product Life
Introduction
Company
Strategy &
Issues
OM
Strategy &
Issues
Best period to increase market share
R&D engineering are critical
Product design and development are critical
Frequent product and process design changes
Short production runs
High production costs
Utmost attention to quality
Quick elimination of market-revealed design
defects
Strategy & Issues During Product Life
Growth
Company
Strategy &
Issues
OM Strategy
& Issues
Sensitive to Changes in price or quality
Marketing is critical
Strengthen niche
Forecasting is critical
Product and process reliability
Competitive product improvements and
options
Enhance distribution
Strategy & Issues During Product Life
Maturity
Company
Strategy &
Issues
OM Strategy
& Issues
Poor time to increase market share
Competitive costs become critical
Usually poor time to change quality or price
Defend position via fresh promotional and
distribution approaches
Standardization - Increasing stability of
manufacturing process
Less rapid product changes and more minor annual
model changes
Optimum capacity
Long production runs
Re-examination of necessity of design changes
Strategy & Issues During Product
Life
Decline
Company
Strategy &
Issues
OM Strategy
& Issues
Cost control critical to market share
Little product differentiation
Cost minimization
Overcapacity in the industry
Prune line to eliminate items not
returning a good margin
Reduce capacity
Strategy Development and
Implementation
Understand issues – research, preconditions,
dynamics
Research
High return on investment
High product quality (relative to competition)
High capacity utilization
High operating efficiency
High capital turnover
Strategy Development and
Implementation
Understand issues – Preconditions
Strengths and Weaknesses of competitors as well as new entrants
into the market, substitutes
Current and prospective environmental, technological, legal and
economic issues.
Product life cycle
Resources available within the firm and within the OM functions
Integration of OM strategy with the company’s strategy and other
functional areas.
Strategy Development and
Implementation
Understand issues – Dynamics
Strategic changes due to two reasons:
Changes within the org.
Personnel, finance, product life
Changes in the environment
Strategy Development and
Implementation
Form a strategy for competitive advantage
Identify critical success factors Critical success
factors are the factors that are key to
achieving competitive advantage.
Build and staff the organization
Integrate OM with other activities.
Identifying
Critical Success Factors
Marketing
Finance/Accounting
Service
Distribution
Promotion
Channels of distribution
Product positioning
(image, functions)
Leverage
Cost of capital
Working capital
Receivables
Payables
Financial control
Lines of credit
Production/Operations
Decisions
Sample Option
Product
Quality
Process
Location
Layout
Human resource
Supply chain
Inventory
Schedule
Maintenance
Customized, or standardized
Define customer expectations and how to achieve them
Facility size, technology, capacity
Near supplier or customer
Work cells or assembly line
Specialized or enriched jobs
Single or multiple source suppliers
When to reorder, how much to keep on hand
Stable or fluctuating productions rate
Repair as required or preventive maintenance
CSF’s of Microsoft
It focuses on one business – software
It thinks globally – operates and sells
Senior management involved in product
development process
It recruits and retains top people in its field
Emphasizes on speed to market
Southwest Airline’s Low Cost Competitive
Advantage CSF’s
Courteous, but limited
passenger service
Lean, productive
employees
High aircraft
utilization
Competitive Advantage:
Low Cost
Standardized fleet of
Boeing 737 aircraft
Short haul, point-to-point
routes, often to secondary
airports
Frequent, reliable
schedules