Operations Operations ManagementManagement

Operations Strategy for Operations Strategy for Competitive Advantage Competitive Advantage

in a Global in a Global EnvironmentEnvironment

Reasons to GlobalizeReasons to Globalize

Reduce costs (labor, taxes, tariffs)

Improve supply chain

Provide better goods and services

HLL’s Wheel in response to Nirma

Understand markets

Learn to improve operations

Attract and retain global talent

Vision and MissionVision and Mission

Mission – What an org. does, its action. Provides

boundaries & focus

More functional in nature dealing with pricing, quality, market place and other items of the value chain

Vision – The ultimate result of action What an org.

would like to happen as a result of the action that it does.

Vision and Mission of a Vision and Mission of a hospitalhospital

To make the denizens of kathmandu

healthier

To provide a healing environment with

family-cantered care with compassion,

comfort and respect with best

possible medical facilities available.

Mission/StrategyMission/Strategy

Strategy - how you are going to get there; the action plan to achieve the mission

The answer to the third intrinsic question: Where are we? Where do we want to be? How to achieve?

Mission of OM Mission of OM DepartmentsDepartments

Product Design: To Design products with superb

quality and inherent customer value.

Quality: To be consistent with quality in every

single aspect of production, right from design,

procurement, production etc.

Process Design: To determine and design

production process compatible with low cost, high

quality product.

ContinuedContinued

Location selection: To locate, design, efficient and

economical facilities that will yield high values to the

company.

Layout: To achieve production effectiveness and

efficiency while supporting a high quality of work.

Human Resources: To provide a good quality of work

atmosphere, well designed, safe rewarding jobs, stable

employment, equitable pay in exchange for outstanding

individual contribution from employees at all levels.

ContinuedContinued

Supply Chain: To collaborate with suppliers to

develop innovative products from stable, efficient

and effective sources of supply.

Inventory: To achieve low investments in inventory

consistent with high facility utilizations.

Maintenance: To achieve high utilization of facilities

and equipment by effective preventive maintenance

and prompt repair of facilities and equipment

Strategies & Competitive Strategies & Competitive AdvantageAdvantage

Ability of the firm to outperform its industry i.e. to earn a high rate of profit than the industry norm

Competitive advantage: The creation of a unique advantage over others

To achieve a competitive advantage, a firm must create more value than its competitors Differentiation Cost leadership Quick response

Competing on Competing on DifferentiationDifferentiation

Create unique bundles of products/services that will be highly valued by customers

Differentiation should be thought of going beyond the physical characteristics and service attributes to encompass everything about the product or service that will influence the potential customer.

Experience Differentiation: selling experience

Eg.; Disney does this where people get immersed surrounded by a dynamic visual and sound experience

Can encompass everything related to product or service that influences value

Broad Product Line

Product features

Product Services

Status Symbol

Technical Innovation

Competing on CostCompeting on Cost

Maximize value as defined by customers

Does not mean low quality

Establishing a low cost position relative to

competitors through

Optimum utilization of resources

Economies of scale

Coverage of variable costs and a lesser

proportion of fixed costs (Dumping by the

Chinese)

Competing on Competing on ResponseResponse

Including the values related to timely product development and delivery, as well as reliable scheduling and flexible performance.

Flexibility – ability to match changes in marketplace. Volumes and Designs changes

Reliability – scheduling. Communicated to the customer so that he/she can rely on.

Timeliness – design, production, delivery

OM’s Contribution to OM’s Contribution to StrategyStrategy

Response(Faster)

Quality

Product

Process

Location

Layout

Human Resource

Supply Chain

Inventory

Scheduling

Maintenance

HP’s ability to follow the laptop market

Differentiation(Better)

Cost leadership(Cheaper)

Southwest Airlines No-frills service

Sony’s constant innovation of new products

Pizza Hut’s five-minute guarantee at lunchtimeFederal Express’s “absolutely, positively on time”

Motorola’s automotive products ignition systemsSpice Nepal’s network

IBM’s after-sale service on mainframe computers

Fidelity Security’s broad line of mutual funds

FLEXIBILITY

DesignVolume

LOW COST

DELIVERY

SpeedDependability

QUALITY

ConformancePerformance

AFTER-SALE SERVICE

BROAD PRODUCT LINE

Operations Decisions Examples Specific

Strategy UsedCompetitive Advantage