2 - 1. 2 - 2 What Is Operations Management? Organizing to Produce Goods and Services Why Study...
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Transcript of 2 - 1. 2 - 2 What Is Operations Management? Organizing to Produce Goods and Services Why Study...
2 - 1
2 - 2
What Is Operations Management?
Organizing to Produce Goods and Services
Why Study OM?
What Operations Managers Do
The Heritage of Operations Management
Operations in the Service Sector
Differences between Goods and Services
Growth of Services
Exciting New Trends in Operations Management
Previous Presentation Summary (1/2)
2 - 3
The Productivity Challenge
Productivity Measurement
Productivity Variables
Productivity and the Service Sector
Ethics and Social Responsibility
Previous Presentation Summary (2/2)
2 - 4
Chapter 2: Operations Strategy in a Global Environment
Chapter 2: Operations Strategy in a Global Environment
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OutlineOutline
A Global View of Operations
Developing Missions And Strategies
Mission
Strategy
Achieving Competitive Advantage Through Operations
Competing On Differentiation
Competing On Cost
Competing On Response
Ten Strategic OM Decisions
Strategy Development Issues
2 - 6
Outline Outline –– Continued Continued
Strategy development and implimentation
Global Operations Strategy Options
International Strategy
Multi domestic Strategy
Global Strategy
Transnational Strategy
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35 –
30 –
25 –
20 –
15 –
10 –
5 –
0 –| | | | | | | | | | |
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 (est*)
Year
Per
cen
t
Growth of World TradeGrowth of World Trade
Figure 2.1
Collapse of the Berlin Wall
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Some Multinational CorporationsSome Multinational Corporations
% Sales % AssetsOutside Outside
Home Home Home % ForeignCompany Country Country Country Workforce
Citicorp USA 34 46 NA
Colgate- USA 72 63 NAPalmolive
Dow USA 60 50 NAChemical
Gillette USA 62 53 NA
Honda Japan 63 36 NA
IBM USA 57 47 51
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Some Multinational CorporationsSome Multinational Corporations
% Sales % AssetsOutside Outside
Home Home Home % ForeignCompany Country Country Country Workforce
ICI Britain 78 50 NA
Nestle Switzerland 98 95 97
Philips Netherlands 94 85 82Electronics
Siemens Germany 51 NA 38
Unilever Britain & 95 70 64Netherlands
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Reasons to GlobalizeReasons to Globalize
Reasons to GlobalizeReasons to Globalize
1. Reduce costs (labor, taxes, tariffs, etc.)2. Improve supply chain3. Provide better goods and services4. Understand markets5. Learn to improve operations6. Attract and retain global talent
Tangible Reasons
Intangible Reasons
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Reduce Costs (1/6)Reduce Costs (1/6)
Foreign locations with lower wage rates can lower direct and indirect costs
World Trade Organization (WTO)
North American Free Trade Agreement (NAFTA)
European Union (EU)
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Improve the Supply Chain (2/6)Improve the Supply Chain (2/6)
Locating facilities closer to unique resources
Auto design to California
Athletic shoe production to China
Perfume manufacturing in France
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Provide Better Goods Provide Better Goods and Services (3/6)and Services (3/6)
Objective and subjective characteristics of goods and services
On-time deliveries (objective characteristic)
Cultural variables (subjective characteristic)
Improved customer service
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Understand Markets (4/6)Understand Markets (4/6)
Interacting with foreign customers and suppliers can lead to new opportunities Cell phone design from Europe Extend the product life cycle
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Learn to Improve Operations (5/6)Learn to Improve Operations (5/6)
Remain open to the free flow of ideas
General Motors partnered with a Japanese auto manufacturer to learn new approaches to production and inventory control
Equipment and layout have been improved using Scandinavian ergonomic competence
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Attract and Retain Global Talent (6/6)Attract and Retain Global Talent (6/6)
Offer better employment opportunities
Better growth opportunities and insulation against unemployment
Relocate unneeded personnel to more prosperous locations
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Companies Want To ConsiderCompanies Want To Consider
National literacy rate
Rate of innovation
Rate of technology change
Number of skilled workers
Political stability
Product liability laws
Export restrictions
Variations in language
Work ethic
Tax rates
Inflation
Availability of raw materials
Interest rates
Population
Number of miles of highway
Phone system
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Developing Missions and StrategiesDeveloping Missions and Strategies
MissionMission statements tell an organization where it is going
The StrategyStrategy tells the organization how to get there
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MissionMission
Mission - where are you going?
Organization’s purpose for being
Answers ‘What do we provide society?’
Provides boundaries and focus
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Benefit to Society
Mission
Factors Affecting MissionFactors Affecting Mission
Philosophy and Values
Profitability and GrowthEnvironment
Customers Public Image
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Strategic ProcessStrategic Process
Marketing OperationsFinance/
Accounting
Functional Area Missions
Organization’s Mission
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StrategyStrategy
Action plan to achieve mission
Functional areas have strategies
Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses
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Strategies for Competitive AdvantageStrategies for Competitive Advantage
Differentiation – better, or at least different
Cost leadership – cheaper
Response – rapid response
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Competing on Differentiation (1/3)Competing on Differentiation (1/3)
Uniqueness can go beyond both the physical characteristics and service attributes to encompass
everything that impacts customer’s perception of value
Safeskin gloves – leading edge products
Walt Disney Magic Kingdom – experience differentiation
Hard Rock Cafe – dining experience
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Competing on Cost (2/3)Competing on Cost (2/3)
Provide the maximum value as perceived by customer. Does not imply low quality.
Southwest Airlines – secondary airports, no frills service, efficient utilization of equipment
Wal-Mart – small overhead, shrinkage (loss of inventory), distribution costs
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Competing on Response (3/3)Competing on Response (3/3)
Flexibility is matching market changes in design innovation and volumes
A way of life at Hewlett-Packard
Reliability is meeting schedules
German machine industry
Timeliness is quickness in design, production, and delivery
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Goods and Services and Goods and Services and the 10 OM Decisions (1/4)the 10 OM Decisions (1/4)
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServices
Goods and service design
Product is usually tangible
Product is not tangible
Quality Many objective standards
Many subjective standards
Process and capacity design
Customers not involved
Customer may be directly involved
Capacity must match demand
Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisions (2/4)the 10 OM Decisions (2/4)
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServices
Location selection
Near raw materials and labor
Near customers
Layout design Production efficiency Enhances product and production
Human resources and job design
Technical skills, consistent labor standards, output based wages
Interact with customers, labor standards vary
Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisions (3/4)the 10 OM Decisions (3/4)
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServices
Supply chain Relationship critical to final product
Important, but may not be critical
Inventory Raw materials, work-in-process, and finished goods may be held
Cannot be stored
Scheduling Level schedules possible
Meet immediate customer demand
Table 2.1
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Goods and Services and Goods and Services and the 10 OM Decisions (4/4)the 10 OM Decisions (4/4)
OperationsOperationsDecisionsDecisions GoodsGoods ServicesServices
Maintenance Often preventive and takes place at production site
Often “repair” and takes place at customer’s site
Table 2.1
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Managing Global Service and Manufacturing Managing Global Service and Manufacturing OperationsOperations
Capacity planning
Location planning
Facilities design and layout
Scheduling
Requires a different perspective on:Requires a different perspective on:
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Process DesignProcess Design
Low Moderate HighVolume
High
Moderate
Low
Var
iety
of
Pro
du
cts
Process-focusedJOB SHOPS
(Print shop, emergency room, machine shop,
fine-diningrestaurant)
Repetitive (modular) focus
ASSEMBLY LINE(Cars, appliances,
TVs, fast-food restaurants) Product focused
CONTINUOUS(Steel, paper,
bread, petroleum product, chemical
production)
Mass CustomizationCustomization at high
Volume(Dell Computer’s PC,
cafeteria)
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Summary of Today's PresentationSummary of Today's Presentation
A Global View of Operations
Developing Missions And Strategies
Mission
Strategy
Achieving Competitive Advantage Through Operations
Competing On Differentiation
Competing On Cost
Competing On Response
Ten Strategic OM Decisions
Strategy Development Issues
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End of PresentationEnd of Presentation