operman chptr 2

8/6/2019 operman chptr 2

http://slidepdf.com/reader/full/operman-chptr-2 1/29

-Operations Strategy-ERP ± The Power of Information

COB 300C

Dr. Mike BusingFall 2002



COB 300C

Operations Strategy

Dr. BusingFall 2002



StrategyDefinition:



StrategyDefinition: the science or art of militarycommand as applied to the overall planningand conduct of large-scale combatoperations. ( Th e American H eritage

D ictionary)



El ements of Strategy from a

Bu siness U nit P erspective



C orporate M issionis a set of long-range goals unique to eachorganization.I ncludes statements about: ± kind of business the company wants to be in ± who its customers are ± its beliefs about business ± its goals of survival, growth, and profitability



Bu siness Strategylong-range game plan for the theorganization.

provides road-map of how to achieve thecorporate mission given: ± global business conditions ± distinctive competencies/weaknesses (anything

that helps the firm to capture market share)



C om petitive P rioritiesL ow production costsH

igh qual ity products and services

Fast/on-time de l iveryCustomer service and f l exibi l ity

Speed



O perations Strategylong-range game plan for the production of a company¶s products and services. I t

provides a road map for what operationsmust do if business strategies are to beachieved.





El ements of O perations Strategy I. P ositioning t h e O perations System

T ype of product design ± custom products ± standardized products



El ements of O perations Strategy I. P ositioning t

he O perations System

T ype of product design ± custom products ± standardized productsT ype of production processing system ± product focused or line flow (good for low

variety high volume) ± process focused (good for high variety

(custom), low volume)




T ype of finished-goods inventory policy ± produce to stock (aka: make to stock) ± produce to order (aka: make to order)






El ements of O perations Strategy II. F ocu s of P rod uction

Without economies of scale, it may be beneficial to focus on a narrow product mixfor a particular niche. Otherwise thefactory/service facility may becomevulnerable to smaller and more specialized

competitors who can provide better cost,delivery, quality, and/or service.



El ements of O perations Strategy III. P rod uct/Service P

l ans

I ntroduction: production and marketingdeveloping and profit is negative.Growth: sales grow dramatically,marketing efforts intensify, productionconcentrates on expanding capacity fastenough to keep up with demand and profits

begin.



El ements of O perations Strategy III. P rod uct/Service P

l ans

Ma turity: production concentrates on highvolume, efficiency, and low costs;marketing uses competitive sales promotionaimed at increasing or maintaining marketshare. Profits at peak

Decline: product may be dropped by thefirm or replaced by improved products dueto declining profits and sales.



El ements of O perations Strategy IV. P rod uction P rocess and

T ec

hno

l ogy P

l ans

Matching high volume/low variety productline with product focused productiontechnologyMatching low volume/high variety productline with process focused productiontechnologyI ntermediate case??



El ements of O perations StrategyV. A

ll ocation of Reso urces to Strategic A

l ternatives

R esources are scarce ± e.g., product mix problem and other

optimization problems



El ements of O perations StrategyVI. F aci

l ity P

l ans

Capacity, location, and layout decisions ± T he internal arrangement of workers,

production processes, and departments withinthe facilities can affect the ability to providedesired volume, quality, and cost of products.

± Walker manufacturing example.



P ositioning Strategies for

ServicesT ype of Service Design: (i.e., standard or custom product, amount of customer contact, mix of physical goods andintangible services)T ype of Production Process: (i.e., quasimanufacturing, customer as participant,customer as product)



C o m

e t i t i v e ¡ r i o r i t y

L o ¢ p r o d u c t i o n c o s t s

£

e l i v e r y p e r ¤ o r m a n c e

H i g h - q u a l i t y p r o d u c t s / s e r v i c e s

¥ u s t o m e r s e r v i c ea n d ¤ l e x i b i l i t y





E RP

E nterpriseR

esourcePlanning



E RP ± K ey P oint

Common Database

benefits?



E RP B enefits

I ntegration of Financial Data

Standardization of Manufacturing ProcessStandardization of HR I nformation



Issues to C onsider ER P package will most likely not match current

business process.Cost is significant (average T CO = $15MM).I mplementation T ime can be long (1-3 years istypical).

No payback is typical until 8 months after installation is complete.A verage payback is $1.6MM/yr.



P robl em s and Budget Overr uns

T raining (including business process)I ntegration/ T esting (add-on packages)Data ConversionData A nalysis (data warehousing)Consultants (staff training)R

eplacing your best and brightestI mplementation teams never stopWaiting for R OI

Post ER P Depression (productivity drop)



Documents

operman chptr 2