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Unit2OperationsManagementII

Operations strategy involves making decisions on operations to support competitive strategy and enhance customer orientation. It includes considerations of capacity, production logistics, and specialization of plants, alongside competitive priorities such as cost, quality, time, and flexibility. The document also discusses the importance of hardware and software decisions in aligning operations with corporate strategy to effectively compete in the market.

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13 views

Unit2OperationsManagementII

Operations strategy involves making decisions on operations to support competitive strategy and enhance customer orientation. It includes considerations of capacity, production logistics, and specialization of plants, alongside competitive priorities such as cost, quality, time, and flexibility. The document also discusses the importance of hardware and software decisions in aligning operations with corporate strategy to effectively compete in the market.

Uploaded by

josep julia
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Operations Management II UNIT 2.

OPERATIONS STRATEGY

1. What’s Operations strategy?


Vocab list:
- competitive strategy:the firm says how it wants to compete. e.g. ikea is positioning on cost and
availability.
- ops strategy: making decisions on operations in order to help the firm compete. type of
decisions in ops:
1. capacity ​(being able to produce big volumes) the key is economies of scales leading to low
costs. e.g. tramontana process design: high customization low volume (12 cars a year) hand
made. In mini they compete in cost and quality tramontana is tailoring the car for the buyer
they have differentiation.
e.g. comparing mini and tramontana: capacity: 12 cars are produced in a job shop// for mini I
need a large factory
2. production and logistics: r​ efers to location in mini there were 3 plants 1 was assembling
the other was pressing and the other was producing engines.
- specialisation of plants: we have a net worth of plants. if my firm only has 1 manufacturing
plant i cannot talk about the specialisation of plants.
you an specialize plants basing on:
- product focus: i have plants each for a product: e.g. one for shampoo another for
diapers if i'm p&g.
- process focus: if I’m mini separation on activities.
p&g you produce shampoo for everyone not only for spain (you take advantage of economies
of scale) you have more distribution costs though. This is a tradeoff situation in which one cost
increases and the other decreases. you have to balance you compare the cost of specializing
with the situation of not specializing

OPERATIONS STRATEGY:​ Determine the m ​ eans​ by which operations implements corporate


strategy and ​contributes to building​ a customer-oriented company (Krajewski, et al., 2010)

process design:
tramontana case is very manual is a jobshop creation the mini you have a more automated process a
capital intensive process vs the other which has a people intensive dimension.
- vertical integration: making or buy decision. case of the mini should I produce or buy the
engines if I buy how should I choose my supplier.

2. What are competitive priorities?


Competitive Priorities Competitive capabilities
The critical dimensions that a process or supply The cost, quality, time, and flexibility dimensions
chain ​must possess​ to satisfy its internal or that a process or supply chain a ​ ctually
external customers, both nowand in the future possesses​ and is able to deliver.

EXAMPLES
COST Definition Process Considerations Example

1.Low-cost Delivering a service or a product at Processes must be designed and Costco


operations the lowest possible cost operated to make them efficient

QUALITY

2.Top quality Delivering an outstanding service May require a high level of customer Rolex
or product contact and may require superior
product features

3.Consistent Producing services or products Processes designed and monitored to McDonald’s


quality that meet design specifications on reduce errors and prevent defects
a consistent basis

TIME Definition Process Considerations Example

4.Delivery Quickly filling a customer’s order Design processes to reduce lead time Dell
speed

5.On-time Meeting delivery- time promises Planning processes to increase United Parcel
delivery percent of customer orders shipped Service (UPS)
when promised

6.Development Quickly introducing a new service Cross-functional integration and Zara


speed or a product involvement of critical external
suppliers

FLEXIBILITY Definition Process Considerations Example


7.Customization Satisfying the unique needs of Low volume, close customer contact, Ritz Carlton
each customer by changing and easily reconfigured
service or products designs

8.Variety Handling a wide assortment of Capable of larger volumes than Amazon.com


services or products efficiently processes supporting customization

9.Volume Accelerating or decelerating the Processes must be designed for The United
flexibility rate of production of service or excess capacity States Postal
products quickly to handle large Service
fluctuations in demand (USPS)

ORDER WINNERS AND QUALIFIER


Order Winners Order Qualifiers
The criterion customers use to differentiate the The minimum level required from a set of criteria
services or products of one firm from those of for a firm to do business in a particular market
another. segment.

ORDER QUALIFIERS & COMPETITIVE PRIORITIES

3. Hardware and software decisions

CORPORATE STRATEGY → OPERATIONS STRATEGY


OPERATIONS STRATEGY (I): HARDWARE DECISIONS
hardware vs software​: hardware which is visible managing of human resources choosing personnel
etc this is intangible (software). the tramontana employee e.g. is more skilled than the mini worker.
regarding quality: higher quality in tramontana you have to control quality more with tramontana
(human activity is prone to errors) while with mini you control with machines.
planning and control: tramontana produces12 cars a year it's made to order though they have to plan
on capacity. in mini planning and scheduling is very important.
at the beginning when galanz was competing the structure was very centralised to control the cost a
lot. if they want to compete con service response time for customers is high, for fast response you
need to decentralize.
measuring and control.
focus on cost: types of measures i have to control are manufacturing cost etc if I want service I need a
quick response time.

OPERATIONS STRATEGY (II): SOFTWARE DECISIONS


EXAMPLES:
Bread:
high volume
standardized product

live process
high automation
low flexibility
labour
expensive to increase capacity

pastry:
moderate volume/variety

batch process
equipment relatively inexpensive
simple automation
moderate flexibility.

cakes
low volume
high variety
Job shop process
high labour intensity
capacity: labour (skilled) easy to increase.
GALANZ CASE:
OEM OED OBM

design X X

production X X X

brand X

customer service X

many producers transferred production lines to galanz.


they made little investment and could thus compete in cost.
OBM: Cost, flexibility because they get larger variety
in the beginning OEM was more important than OBM.
magnetrons had to be supplied suppliers where competitors and cut supply so they had to develop
their own magnetrons they opened their doors to international OBM.
being in both OEM and OBM= tensions your competitors are your clients.
also the models are different hardware and software decisions are thought for OEM not for OBM.
hardware:

hardware:
OEM→ Cost/very standardised and overseas OBM

capacity huge, big volumes, the more the better big capacity big market in china
but enough to cover demand.

location low cost location same

production large batches flexible process which permits


process production of small batches of
different products.

outsourcing cost is the criterium flexib cost services

problem your hardware is thought for OEM you need adjustment to start selling OBM e..g more
flexible production process

software
OEM OBM

HR non highly qualified non highly qualified but flexible,


you need good after sales
department.

total quality

planning and done by the customer OEM producers base on forecasting and planning
control based on customer request. imbalances in inventory has to be
beared.you decide
organiz structure centralized become a little bit more flexible and
decentralized.

KPI cost measures cost measures, stock out, inventory


level., forecast accuracy.

NPD no need to do it invest on product development

planning: ​sell as much as you can then for OBM they need to plan accurately

should galanz continue as it is or should it change??


no best solution adapt the structure you have.

CONCLUSIONS
• Operations Strategy: Hardware and software decisions that contribute to building a
customer-oriented company
• Decisions aligned with competitive priorities

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