Lecture 1_2 1.OS Strategy 1_2 English

8/3/2019 Lecture 1_2 1.OS Strategy 1_2 English

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Operations and Supply Strategy

Chapter 1


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10 seconds break Close your eyes

Keep silent


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Notice

If you choose English exercise option Join a study group

Meet once a week One student (in turn) give out quizzes for 14 sentences : 10

sentences with one blank (one or two vocabulary for each

blank), produce score 0-10 submit the score of each member and test sheets once amonth

Any group submitting wrong score gets F grade Share knowledge of studying English.

Memorize two sentences everyday Every morning print two sentences Memorize sentences while you are walking or you are on a

bus

Write down your name in the seat sheet


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IKEAs Bang mug

IKEA: Swedish furniture retailer

Success factor: Good quality at a low price

Redesign ofBang mug

3 times so far

Not because of its design

But for storage amount # of mugs on a pallet: 864 -> 2024

60% of shipping cost has been saved
http://cebas.ikea.com.au/Template3.asp?page_id=66963300091006&site_id=30009&se_id=4http://cebas.ikea.com.au/Template3.asp?page_id=66963300091006&site_id=30009&se_id=4


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OSM

OSM is Doing work which has value to customers (e.g.

works relevant to producing goods sellable tocustomers)

about getting work done

quickly, efficiently, without error, at low cost with lower inventory.

Operations: the processes that are used totransform resources into products and services

Supply: how materials and services are movedto and from the processes


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OM vs. OSM


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Topics in OSM

Transformation processes (design, types,capacity, quality) in various productionand service industries

How the operations are supplied

Input side: parts and raw materials supply

Output (or customer) side: finished good

distribution

Related topics: Location, Sourcing andoutsourcing, Managing the supply inventories


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Importance of OSM

Saving $1 results in extra $1 profit! Providing services and products at low

cost and at a customers expected quality

level is essential for business success.

IKEA is a good model of operations and

supply efficiency.


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Progressive Insurance

An automobile insurance company

11-fold growth in over a decade

3rd largest insurer

Combined ratio around 96 percent

Secret of success

Out-operated its competitors with lowerprices and better services

Immediate Response claims handling

Compare rates via phone and Web


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Efficiency and Effectiveness

Efficiency: doing something at the lowestpossible cost

Effectiveness: doing the right things to

create the most value for the company

Trade-off between efficiency and

effectiveness


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Value

Value: can be defined as quality dividedby price

Increasing value Better quality at the same price

Lower price at the same quality


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Why study OSM?

Complete BusinessEducation

Systematic Approachto Org. Processes

Career Opportunities

Cross-FunctionalApplications

OperationsAnd Supply

Management


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America Westsnew boarding system


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OSM definition

OSM: the design, operation, andimprovement of the systems that createand deliver the firms primary products

and services.

OSM is a field of management


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Scope of OSM

OSM is concerned with the management of the entire system.

OSM is concerned with managing all of these individual processes as efficiently andeffectively as possible


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Operations and Supply Strategy

Operations and supply strategy isconcerned with

setting broad policies and plans

for using the resources of a firm to best support its long-term competitive

strategy


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Strategy and OSS

OSS is comprehensive through its integrationwith corporate strategy

OSS involves decisions about

the design of a process Selecting technology

Sizing the process over time

Role of inventory in the process

Locating the process

the infrastructure Planning and control system logics

Quality assurance and control

Work payment structures

Organization of the operations function


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OSS in Strategy Process

ExampleStrategy ProcessCustomer Needs

Corporate Strategy

Operations andSupply Strategy

Decisions on Processes

and Infrastructure

More Product

Increase Org. Size

Increase Production Capacity

Build New Factory


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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 Criteria: Support It


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Trade-offs

Operation cannot excel on all dimensionssimultaneously.

Delivery speed Flexibility

Low-cost Delivery speed, Flexibility, Highquality

A strategic position is not sustainableunless there are compromises with otherpositions


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Straddling

Straddling occurs when a company seeksto match the benefits of a successfulposition while maintaining its existing

position Continental Airlines failure

Launching new service Continental Lite while

maintaining a full-service airline.


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Order Winners & Order QualifiersThe Marketing-Operations Link

Order Winners: the criteria that differentiatesthe products and services of one firm fromanother

Order Qualifiers: the basic criteria that permitthe firms products to be considered ascandidates for purchase by customers

Order Winners and Order Qualifiers may changeover time

Terry Hill


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Strategic Fit:Fitting Operational Activities To Strategy

A combination of operational activitiesaffects a companys strategy.

Need to find connections betweenoperational activities and strategicpositions of a company

Activity-system maps Can be useful in understanding how good the fit

is


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Strategic Fit:Fitting Operational Activities To Strategy


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A FrameworkFor Operations and Supply Strategy


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The Strategic Vision

Target market A target market must be chosen

Core capabilities

Skills that differentiate the service ormanufacturing firm from its competitors


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Evaluating Operational Performance


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Summary

OSM (Operations and Supply Management) Definition

Importance (success of the firm)

OSS (Operations and Supply Strategy)

Strategy of the firm and OSS

Operational competitive dimensions

Order winners and qualifiers

Strategic fit between operations and supplyactivities & competitive priorities of the firm


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Summary

IKEA New integrated process

Progressive

Internet and mobile network

Harley-Davidson

Offering many options


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Summary

For a firm to remain competitive, all of theoperational activities must buttress the firmsstrategy.

Companies that are strong operationally areable to generate more profit for each dollar ofsales, thus making them attractive investments.

Documents

Lecture 1_2 1.OS Strategy 1_2 English