Transcript Process View & Strategy Part 2- Competitive Space and Strategy Based on the Book: Managing Business Process Flow.

Process View
&
Strategy
Part 2- Competitive Space and Strategy
Based on the Book: Managing Business Process Flow.
Competitive Product Space: PQVR/CQFF
B
D
A
C
L
H
Quality
Quality
H
H
Variety
Quality
H
L
D
A
A
D
C
B
B
C
Responsiveness
=1/Flow Time
Flow Time
Process View & Operations Strategy
LL
D
B
D
A
A
C
C
B
Cost Efficiency
Cost =1/Cost
H
Competitive Product Space: A for
dimensional space
representation of the Product
Attributes PQVR or Process
Competencies CQFT.
Moving outward is better.
H
Ardavan Asef-Vaziri
August , 2013
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Competitive Product Space
Variety
High
Another firm: expensive and
customized products.
B
One firm: low cost and
standardized products
A
Low
Low
High
Cost Efficiency =1/Cost
Process View & Operations Strategy
Ardavan Asef-Vaziri
August , 2013
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Strategic Positioning
Defines those positions that the firm wants to occupy in its
competitive product space. The current position and direction.
A firm must ensure that
its competitors are not
able to imitate its chosen
position. A sculpture,
not a block.
Responsiveness
High
B
It is harder for competitors
to imitate an array of
interlocked activities.
A
Low
Low
Process View & Operations Strategy
Price Efficiency = 1/Price
Ardavan Asef-Vaziri
August , 2013
High
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What is the Best Strategy
Zara: timely yet limited variety at modest cost and quality.
Aravind and Shouldice: low cost, high quality, minimal variety,
average to long response time.
Corolla: flow shop, decentralized assembly plants close to market,
short flow time, low cost.
Ferrari: job shop, only a single plant in Italy, longer flow time,
high cost.
McMaster-Carr: a materials, repair, and operations (MRO)
product distributor, a process with high flexibility, high
quality, short response time, but at a high price
WalMart: Short flow times, low inventory, low cost, average quality.
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August , 2013
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Focused Strategy, Efficient Frontier
Efficient frontier: the minimal curve covering all the current
positions in an industry.
World-class
Emergency Room
High
Responsiveness
Efficient frontier
One general
facility
World-class
(non-emergency)
Hospital
Low
High
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Cost
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Low
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Focused Strategy, Focused Operations
Focused Strategy: Committing to a limited, congruent set of
objectives in terms of demand (product, market) and supply
(input, technologies, and volumes).
A focused process is not limited to a few products.
Focused process: one whose products all fall within a small region
of the 4 dimensional product space.
Plant Within Plant(PWP): The business strategy is diverse. But
the entire business is divided into several mini-plants each with
focused processes. One PWP may focus on low cost, the other
on quick response.
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Strategic Positioning and Operational Effectiveness
Firms located on the same ray share strategic priorities. World
class firms are on the efficient frontier. Efficient frontier is the
minimal curve covering all the current positions in an industry.
Responsiveness
High
Low
Low
Efficient
operations
frontier
A
B
Firms not on the EF, are not on
strict trade-off, they can make
simultaneous improvement on
more than one dimension. They
do not need to trade-off. Firms on
EF need to trade-off.
C
Price Efficiency
Process View & Operations Strategy
High
Strategic positioning: the
direction of the improvement
from current position; the
position on the EF the
company wants to occupy.
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Efficient Frontier
Trade-off: decreasing on one dimension to increase on the other
dimension. World class firms also try to push the EF outward. As
technology and management practices advance, the EF moves
upward. But the impact is not the same in all industries.
If I have one more line to define Operations Management 
Understand Trade-off.
Different companies intentionally choose different processes to
accomplish the same goal. McDonald vs. In & Out.
Different processes lead to different advantages and
disadvantages. We always facing trade-offs.
It is not difficult to deliver books very fast. It is not difficult to
deliver books at a very low cost. But, it is difficult to deliver
book fast and at a low cost.
Process View & Operations Strategy
Ardavan Asef-Vaziri
August , 2013
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Operational Effectiveness
Operational effectiveness: developing operations strategy
(resources, processes, values, competencies) that support the
strategic positioning (customer value proposition) better than
the competitors.
How does effective differ from efficient?
Conventional Management Definition: Effectiveness; doing right
things. Efficiency; doing things right.
Operations Management Definition:
Cost Efficiency: achieving an output with minimal level
of input and resources. Low cost Operations.
Effective Process: supports execution of company’s
strategy in the four dimensions of C/Q/F/T.
Synchronized process does good in all 4 dimensions.
Process View & Operations Strategy
Ardavan Asef-Vaziri
August , 2013
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