SUPPLY CHAIN MANAGEMENT Operations Management. WHAT IS SUPPLY CHAIN?
Class 3-4 Operations & Supply Chain Strategies.ppt 2007
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Transcript of Class 3-4 Operations & Supply Chain Strategies.ppt 2007
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Strategy
What is meant by strategy?
Strategy is the mechanism/process by which anorganisation/business make decisions on how to utilize theirresources
What are the basic factors that determine organisations
strategy?Vision Mission
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Vision
What is meant by Vision of an Organisation?
Defines the desired or intended future state of an organization orenterprise in terms of its fundamental objective and/or strategicdirection.Vision is a long term view It is a source of inspiration.
For example a charity working with the poor might have a visionstatement which read "A world without poverty"
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Vision of Ratan Tata
To provide a safe, all weather, cost effective, andenvironment friendly travel solution for the
Indian/Europian/American families
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M
issionWhat is meant by Mission of an Organisation?Defines the fundamental purpose of an organization or anenterprise, basically describing why it exists and what it does to
achieve its Vision.
What was the Mission that came out of the Vision ofRatanTata?
Tata Nano Vision should significantly stretch the resources and capabilities
of the farm Vision should inspire people in the organization to achievethings they never thought possible Vision should unite people in the organization toward the
pursuit of one common goal
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Vision vs Mission
Does Vision and Mission means the same?
Both are related The vision is more broad and future oriented the goal on thehorizon The mission is more focused how you will get to the horizon
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Sample Vision/Mission Statements
Mc Donalds The vision is to be the worlds best quick service restaurant
experience. Being the best means providing outstanding quality,service, cleanliness, and value, so that we make every customer inevery restaurant smile
PVR Cinemas Our long-term vision is to remain Indias most premium and most
preferred Retail Entertainment Company. To achieve this vision, wecontinue to provide the highest exhibition standards at our cinemasbesides increasing the number of cinemas under operation on apan India basis. We further look forward to bringing allied retailentertainment concepts and complete the entertainment
experience for our customers.
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Top-Down StrategyModelVision
Mission
BusinessStrategy
MarketingFinance
HR
IT
Operations& Supply
Chain
Strategy
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StrategyModel for PVROur long-term vision is to remain Indias most
premium and most preferred Retail EntertainmentCompany.
We continue to provide the highest exhibition standards at our cinemas besides
increasing the number of cinemas under operation on a pan India basis.We further look forward to bringing allied retail entertainment concepts andcomplete the entertainment experience for our customers.
Target customers are high income families, individuals, corporates To expand into 25 cities in the south India by 2010
To bring the latest in entertainment technology To provide customized solution to different customer segment
Operational Strategy PVR uses Aircooled environment instead of Air Conditioning in TierII cities PVR provides samosas instead of hotdogs inTier II cities
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Business Strategy
The strategy that identifies the firms targeted customers and setstime frames and performance objectives for the business.
Strategy determines the utilization of structural and infrastructuralelements of the organisation
Structural elements are tangible resources like buildings, equipment.
Infrastructural elements are the people, policies, decision rules,organisation structure, organisation values.
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FunctionalStrategy Functional strategy translates a business strategy into specific actionsfor the functional areas such as marketing, HR and Finance.
Functional strategies should align with the overall business strategyand with each other.
Eg., Marketing Strategy: PVR Cinemas has tied up with Facebook,Visa Platinum and Amex Card.
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Operations & S
upply Chain Strategy
Operations and supply chain strategy is a functional strategy thatindicates how structural and infrastructural elements within the
operations and supply chain areas will be acquired and developed tosupport the overall business strategy.
Objective To determine the right mix of structural and infrastructural
elements based on the clear understanding of the performancedimensions valued by customers and the trade-off involved The Ops & Supply Chain strategy should be aligned to businessstrategy To support the development of core competency of ops andsupply chain
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Core Competency Core competency are organizational strengths or abilities, developedover a period of time, that customers find valuable and competitorsfind difficult or even impossible to copy.
Amul Core competency is in sourcing high quality milk fromcooperative at low cost
Nokia Core competency is in faster new product development
Dell computers Core competency is in supply chain network
What is the core competency of Maruti Suzuki?
What is the core competency of Microsoft?
What is the core competency of Intel?
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Operations Strategies Engineer-to-Order means customer s specifications require unique engineeringdesign or significant customization. usually customer is highly involved in the product design
Inventory will not normally be purchased until needed bymanufacturing. Delivery lead time is long because it includes not only purchaselead time, but also design lead time.
Example Ship buildingAircraft Luxury goods
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Operations Strategies Make-to-Order means that the manufacturer does not start to make the productuntil a customers order is received. usually made from standard items but may include custom-
designed components as well. Delivery lead time is reduced because there is little design timerequired and inventory is held as raw material
Example
Furniture Restaurant
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Operations Strategies
Assemble-to-order means that the product is made from standard components thatthe manufacturer can inventory and assemble according to acustomer order.
Delivery lead time is reduced further because there is no designtime needed Inventory is held ready for assembly
Example
Luxury cars Desktop computers/laptops Restaurant
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Operations Strategies Make-to-stock means the supplier manufactures the goods and sells fromfinished goods inventory. Delivery lead time is shortest
Example Cars FMCG
Consumer Electronics
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Impact of
Ops & SC
M
Strategy Structural Elements
Capacity Outsource/Sub-contractingWarehouses
Distribution Centres Technology Transportation Computer Systems
Infrastructural ElementsOrganisation structure, manpower Forecasting techniques Supplier selection process, criteria
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PerformanceDimensions
Quality
Time
Flexibility
Cost
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Qual
ity
Quality is defined as the characteristics of a product or service that bearon its ability to satisfy stated or implied needs.
Sub dimension of Quality PerformanceQuality:
What are the basic operating characteristics of the product orservice? Eg: comfartable ride in Honda City car
ConformanceQuality:
Was the product or service performed to specifications? EgHonda is expected to give mileage of 15kmpl, maintenance freeReliabilityQuality:
Will the product work for a long time without failing orrequiring maintanence? Eg: Chinese goods are known for lowreliability
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Time Time has two basic characteristics: speed and reliability.
Sub dimension of Time Delivery Speed:
How quickly the operations or supply chain function can fulfill a
need, once it has been identified. Eg., Dominos Pizza in 30 mins Delivery Reliability:
Ability to deliver products and services when promised. Measured by percentage of orders delivered by promised timevery crucial for supply chain of perishable items like food, meat,flowers
reliability in terms of supply of correct order, no shortage/excess Delivery window is the acceptable time range in which deliveries canbe made.
A firm can have long lead times and still have high degree of delivery
reliability. Public Provident Fund versus Investment in private banks
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Flex
ibility
Flexibility How quickly operations and supply chains can respond to theunique needs of customers.
Sub dimension of Flexibility Mix Flexibility:
ability to produce wide range of products or service Eg.,Dominos Pizza, Pizza Hut, Subway, Tata Motors, Maruti
Changeover Flexibility:
ability to provide new product with minimal delayVolume Flexibility:
ability to produce what ever volume the customer needs
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Cost
Direct Cost like Raw Material, machine, people
Indirect Cost like administration, marketing
Overheads like water, security
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Trade-Off Among PerformanceDimensions
Can we have superior quality of product at low price?
We will have to trade-off the one performance dimension with the
other based on the business strategy, target customer
KingFisher & KingFisher Red Airlines - what is the difference?
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How to evaluatetwo competingproducts
Value Index
Dimension
Importance in a scaleof (1-5)
Performance Value Index
Indica V2 Honda Jazz Indica V2 Honda Jazz
PerformanceQuality (Mileage,Comfort, Maintanence)
3 2 5 6 15
Delivery Speed 1 5 5 5 5
After-Sales Support 2 3 4 6 8
Cost 4 5 2 20 8
37 36
As per the Value Index arrived, we will select Indica. But we willhave to go beyond the cumulative figure many times as it maymislead us many times
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OrderQualifiers & Order Winners
OrderQualifiers are performance dimensions on whichcustomers expect a minimum level of performance.
Superior performance on an order qualifier will not, byitself give a company a competitive advantage
Example: Quality of the product
Order Winners are performance dimensions that
differentiate a companys products and services fromcompetitiors
Cost, delivery speed, flexibility Example: People go to Big Bazaar to buy the brandedgoods are they provide the same at the lowest price
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Assignmenty Case Study : Catherines Confectionaries
y Book : Introduction to Operations & Supply Chain
Management - Cecil C.Bozarth & Robert .Handfieldy Pg No : 40
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Marks Allotmenty Internals 35 marks
MidtermTest 10 marks
Case Presentation 5 marks
Quiz/Assignment 20 marks
o Externals 65 marks
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