1. Introduction-Operation Strategy - Competitive Advantage

Introduction to POM

Sift Marketing Pvt Ltd 2

Purpose of Business

What is the goal / purpose of any business?

To make money

now and in future


Success factors for any business

• Innovation

• Product Performance

• Technology Leadership

• Product Mix

• Delivery Service

• Access to key decision makers (e.g Kirloskar)


Management

Management – Doing things effectively & efficiently

Management Functions

• Marketing

• Finance

• Human Resource

• Operations


Cross-Functional Decision Making

• Marketing

Who is the customer? What does the customer need?o Quality management

Market size?o Capacity, Type of processes

Distribution channel?o Inventory, Where to stock

New product development?o Cross-functional teams



• Finance and Accounting

Capitalo Capacity, Automation, Process selection, Inventory

Efficiencyo Process selection, Value-added

Cash Flowo Inventory

Performance Measuremento Costing system



• Human Resources

Skill level of employeeso Process type selection, Automation

Number of employeeso Capacity, Scheduling decisions

Job designo Process, Technology choice



• Information Systems

Software Developmento Forecasting, Capacity, Quality, Inventory control, Scheduling,

Material Accounting

Hardware Acquisitiono Automation support, Software operation


What is a Product?

Solution to customer problems

• Commodity • Product • Brand

• Potential Customers judge product offerings according to three elements

Product Features & Quality Services Matrix & Quality Value-based prices


Forms of Product

•Physical Goods

•Services

•Experiences

•Events

•Persons

•Places

•Properties

•Organisations

•Information

•Ideas


Outputs

Pure Goods Pure Services

Crude oil production

Specialist machines manufacturer

Fast food restaurant

Computer systems

Auto maintenance

Haircut

Management consultancy

Psychotherapy clinic


Outputs

Pure Goods Pure Services

Tangible Intangible

Output can be stored Output cannot be stored

Output can be resold No resale possible

Output can be transported Cannot be transported

Production precedes usage Simultaneous usage

Low customer contact High customer contact

Output can be demonstrated Output does not exist

Quality is evident Quality is judged

Capital intensive Labour intensive


Characteristics of Outputs (Product & Service)

• Volume

• Variety

• Variation in demand

• Degree of customer contact


Production Process

Production – conversion of one form of material into another

Production Process


Operations as a System

Operation Inputs Outputs

Bank Tellers, Staff, Equipment, Facilities

Loans, Deposits, Safekeeping

Restaurant Cooks, Waiters, Equipment, Food, Facilities

Meals, Entertainment, Satisfied Customers

Hospital Doctors, Nurses, Staff, Equipment, Facilities

Health Services, Healthy Patients

Airline Planes, Facilities, Pilots, Attendants, Maint Staff, Energy

Transportation of People and Goods

University Faculty, Staff, Library, Equipment

Educated Students, Research


Operations as a System

Mktg Engg

HR

Finance

Accounts MIS

Transformation System

Suppliers

Customers

CompetitorsGovernment

Society


The Role of Operations Function

• As the implementer of business strategy• As a support to business strategy• As the driver of business strategy


Judging Operation’s Contribution

Stop holding the organisation back

Be as good as competitors

Be the Best in the industry

Redefine industry’s expectations

Externallysupportive

Internallysupportive

Externallyneutral

Internallyneutral

Stage 1 Stage 2 Stage 3 Stage 4 Implementer Supporter Driver

Operations Advantage

LinkStrategy

Adopt Bestpractices

Correct worstproblems


Hayes-Wheelwright 4-Stage Model

• Stage 1 : Internal neutrality Inward looking, reactive No originality, flair, competitive drive Avoiding bigger mistakes Necessary evil

• Stage 2 : External neutrality Begin comparing itself Not yet creative Not holding the company back


Hayes-Wheelwright 4-Stage Model

• Stage 3 : Internally supportive Broadly up with the Best Aspire to be the Best Organise and develop resources to excel and compete

• Stage 4 : Externally supportive “One step ahead” of competitors Creative and proactive Capable of adaptation as markets change


Basic in POM

1 2 3 4

t-01 t-04t-03t-02

t - cycleT-O

CT

Lead Time (LT) = Commitment made to customer

Cycle Time / Flow Time (CT) = Actual time taken to meet the customer requirement

Raw Material Process Time (T-O) = sum(t-oi)

If CT > LT, On Time delivery (OTD) is impossible


Production & Operations Management (POM)

Production & Operations management

Managing resources to convert inputs to outputs, when delivered satisfies consumer (customer) needs, attaining organisational goals

Why POM ? ? Consumerism Transition - product centric to customer centric Competitive Advantage (USP) Product – Service combination (e.g Consumer durables &

Telecommunication) Outsourcing (e.g Back office of American bank in India)


Historical Summary of OM

• 1910s : Principles of Scientific Management – Taylor, Gilbreth, Ford

• 1930s : Quality Control – Shewart Hawthorne Studies – Mayo

• 1950s : Operations Research – Many researchers• 1970s : Use of Computers in business – IBM• 1980s : JIT – Ohno

Quality Circles – JUSE TQM – Deming, Juran, Crosby FMS, CAD/CAM/Automation – US, Europe OPT – Goldratt

• 1990s : TQM, ISO, Kaizen, QFD – Many practitioners BPR – Hammel Electronic Enterprise – Microsoft, Netscape SCM – SAP, Oracle


Attributes of POM

5 P’s Product – performance, quality, quantity, cost Plant – demand, reliability, safety, environment Process – job, batch, flow, group Programmes – purchase, cash flow, storage, transportation People – salary, training, motivation, communication

5 M’s Men – Labour performing operations Materials – To be transformed Machines – Conversion / Transformation tool Methods – Way of transformation Money – Generated & saved


Objectives of POM

• Customer satisfaction o Good qualityo Acceptable priceo On time

• Effectivenesso Innovationo Cost of productiono Improved quality

• Efficiencyo Optimum utilisation of resourceso Remove unwanted processes (Lean Production)o Improved processes


Decisions of POM

• Long termo Product & process designo Quality policyo Technology

• Intermediateo Forecastingo Inventoryo Health & safety

• Short termo Allocationo Maintenanceo Scheduling


Role of Operations Manager

Oversee the work of people and machinery to convert inputs (materials and resources) into finished goods and services

Functions of Operations Manager1. Planning the production process

o Begins by choosing what goods or services to offer customerso Convert original product ideas into final specificationso Design the most efficient facilities to produce those products

2. Implementing the Production Plano Determining the facility layouto Make, Buy or Lease Decisionso Selection of men, machine, materials & methods


Role of Operations Manager . . . contd

3. Directing (Leading)o Work towards organisational goalso Training & motivationo Business Innovation

4. Control & Monitoro Plans are executed as decidedo Unwanted processeso Quality and time schedules


Results of effective POM

Effective production and operations management can:• Generate money • Lower a firm’s costs of production• Boost the quality of its goods and services• Allow it to respond dependably to customer demands• Enable it to renew itself by providing new products• Capacity utilisation

1. Introduction-Operation Strategy - Competitive Advantage

Documents

Transcript of 1. Introduction-Operation Strategy - Competitive Advantage