Post on 07-Apr-2018
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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=48/3/2019 Lecture 1_2 1.OS Strategy 1_2 English
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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.