Operations Performance Chapter 2. ContentsDefinition? The Reality Check Operations Strategy Vs...

Operations Operations PerformancePerformance

Chapter 2Chapter 2

ContentsContentsDefinition?Definition?

The Reality CheckThe Reality Check

Operations Strategy Vs Operations ManagementOperations Strategy Vs Operations Management

Strategic FitStrategic Fit

Categories of Business StrategiesCategories of Business Strategies

Strategy FormulationStrategy Formulation

Primary Task, Core Competencies, Order Primary Task, Core Competencies, Order winners/qualifiers, competitive priorities, winners/qualifiers, competitive priorities, Process strategy matrix, policy deploymentProcess strategy matrix, policy deployment

Definition?Definition?

The Reality CheckThe Reality Check

Operations Strategy Vs Operations ManagementOperations Strategy Vs Operations Management

Strategic FitStrategic Fit

Categories of Business StrategiesCategories of Business Strategies


Primary Task, Core Competencies, Order Primary Task, Core Competencies, Order winners/qualifiers, competitive priorities, winners/qualifiers, competitive priorities, Process strategy matrix, policy deploymentProcess strategy matrix, policy deployment

Operations Strategy: Operations Strategy:

DefinitionDefinition

Operations StrategyOperations Strategy

‘… ‘… the decisions which shape the the decisions which shape the long-term capabilitieslong-term capabilities of of

the company’sthe company’s operation operationss and their contribution to overall and their contribution to overall

strategy through the on-going strategy through the on-going reconciliationreconciliation of market of market

requirementsrequirements and operations and operations resourcesresources …’ …’

The Reality Check:The Reality Check:Why Strategic Perspective in OperationsWhy Strategic Perspective in Operations

Co

mp

etit

iven

ess

Today’s market demands…

Quality Being RIGHT

Speed Being FAST

Dependability Being ON TIME

Cost Being PRODUCTIVE

Being ABLE TO CHANGEFlexibility

The relative importance of the market requirements and operations resource perspectives change over time,

how performance objectives trade-offs between each other andoperations focus can lead to exceptional performance

TRADE-OFFS

Performance objective A

Per

form

ance

obj

ect

ive

B?

Relative importance of the Operations

Resource perspective

Relative importance of

the Market Requirements perspective

Island

Army 1

Army 2

You are commanding Army 1, the objective is to capture the island. Army 2 has the same objective

Island

Army 1Army 2

Burn

Island

Army 1Army 2

Do not Burn

Broad strategic objectives for a parcel delivery operation applied to stakeholder groups

SocietyIncrease employmentEnhance community well-beingProduce sustainable productsEnsure clean environment

CustomersAppropriate product or service specificationConsistent qualityFast deliveryDependable deliveryAcceptable price

SuppliersContinue businessDevelop supplier capabilityProvide transparent information

ShareholdersEconomic value from investmentEthical value from investment

EmployeesContinuous employmentFair payGood working conditionsPersonal development

Three Major Trading Regions

Previously firms classified as domestic, exporters, or internationalPreviously firms classified as domestic, exporters, or internationalNow have global firms, joint ventures, foreign subsidiariesNow have global firms, joint ventures, foreign subsidiaries

International Markets and Producers

Strategy and Issues During a Product’s Life

Ginger HotelsGinger Hotels

No-frillsNo-frills

June 2004June 2004

No room service, travel desk, swimming poolNo room service, travel desk, swimming pool

Wi-fiWi-fi

Two type of room: Rs. 999 and Rs. 1199Two type of room: Rs. 999 and Rs. 1199

Prabhat Pani, CEO, RootsCorporationPrabhat Pani, CEO, RootsCorporation

BillDesk, a property of IndiaIdeas.com Ltd., 2000

Three Arthur Anderson Three Arthur Anderson ExecutivesExecutives

Third-party bill Third-party bill collectioncollection

25 Banks, 100 25 Banks, 100 companiescompanies

Difference betweenDifference betweenOp Strategy and Op Op Strategy and Op

ManagementManagement

‘Installed’ product/service fully

operational

End of coreprocessing

Start of coreprocessing

Request for product/service

Receipt ofinformation

Request forinformation

Awareness of need

MilestoneHospital Software producerPresentation of symptoms

Visit to doctor for advice and tests

Test information confirms diagnosis

Decide on surgery

Enter hospital for surgery

Procedure successfully completed

Patient fully recovered

Installation time

Waiting time

Enquiry time

Core processing time

Customer decision time

Enquiry decision time

Asks for specification and estimates

Receives proposal

Places order

Start of design and coding

Software ‘completed’

Software fully debugged and working

Customer decides new software is needed

Significant ‘milestone’ times for the delivery of two products/services

First/Business-class cabin,airport lounges, pick-up service

Economy cabin

Wealthy people, businesspeople, VIPs

Travellers (friends and family), vacation takers, cost-sensitive business travel

Wide range, may need to be customised

Standardised cabin

Relatively high Relatively low

Relatively low volume Relatively high volume

Medium to high Low to medium

First/Business class Economy class

Customisation, extra service, comfort features, convenience

Quality (specification andconformance), Flexibility, Speed

Price, acceptable service

Cost, Quality (conformance)

Services

Customers

Service range

Rate of service innovation

Volume of activity

Profit margins

Main competitive factors

Performance objectives

Different product groups require different performance objectives

Operations strategy is different from operations management

Example: capacity decisions

Time scaleTime scaleShort-termShort-term

capacity decisionscapacity decisions

1–12 months1–12 months

Dem

and

Dem

and

Long-termLong-termcapacity decisionscapacity decisions

1–-10 years1–-10 years

Dem

and

Dem

and

Operations managementOperations management Operations strategyOperations strategy


Level of Level of analysisanalysis


MicroMicrolevel of the processlevel of the process

MacroMacrolevel of the total operationlevel of the total operation


Level of Level of aggregationaggregation


DetailedDetailed

For exampleFor example

““Can we give tax services Can we give tax services to the small business to the small business market in Antwerp?”market in Antwerp?”

AggregatedAggregated


““What is our overall What is our overall business advice capability business advice capability

compared with other compared with other capabilities?”capabilities?”


Level of Level of abstractionabstraction


ConcreteConcrete


““How do we improve our How do we improve our purchasing procedures?”purchasing procedures?”

PhilosophicalPhilosophical


““Should we develop Should we develop strategic alliances with strategic alliances with

suppliers?”suppliers?”

Strategic Fit for Strategic Fit for

reconciliationreconciliation

Operations resources

Market requirements

Strategic reconciliation

Operations strategy reconciles the requirements of the market with the capabilities of operations resources

OPERATIONS STRATEGY

Market requirements and operations resources perspectives of operations strategy

What you HAVE

in terms of operations capabilities

What you NEEDNEED

to ‘compete’ in the market


Market requirements

What you WANT

from your operations to

help you ‘compete’

What you DO

to maintain your

capabilities and satisfy markets


Continuous improvement at a strategic level

Market requirementsOperations resources

Intended competitive

position in the market place

DEPLOY operation’s contribution by exploiting superior capabilities Potential

competitive position in the market place

MARKET STRATEGY

DEVELOP operations capabilities through learning

The operation’s capabilities

and performance

Getting the fit right

The operation’s resources and

processes

DIRECT performance

getting the fit right

‘Fit’ means that the operation’s resources and processes are aligned with the requirements of its markets.

Line of fit

Mar

ket

requ

irem

ents

Operation’s resource capability

Deviations?

Line of fit

Mar

ket

requ

irem

ents

Operation’s resource capability

Top-down Top-down perspectiveperspective

What the What the business wants business wants operations to dooperations to do

Operations Operations resources resources

perspectiveperspective

What operations What operations resources can doresources can do

What day-to-day What day-to-day experience suggests experience suggests

operations should operations should dodo

Bottom-up Bottom-up perspectiveperspective

Market Market requiremenrequirement t pperspectiveerspective

What the market What the market position requires position requires operations to dooperations to do

Operations Operations strategystrategy

The four perspectives on operations strategy

Corporate strategy

Business strategy

Emergent sense of what the strategy should be

Operational experience

Top-down and bottom-up perspectives of strategy

Operations strategy

The strategy hierarchyThe strategy hierarchy

Key strategic Key strategic decisions decisions

Influences on Influences on decision makingdecision making

Business Business strategystrategy

What is the mission?What are the strategic

objectives of the firm?How to compete?

Customer/market dynamicsCompetitor activityCore technology dynamicsFinancial constraints

Corporate Corporate strategystrategy

What business to be in?What to acquire?What to divest?How to allocate cash?

Economic environmentSocial environmentPolitical environmentCompany values and ethics

Functional strategy

How to contribute to the strategic objectives?

How to manage the function’s resources?

Skills of function’s staffCurrent technologyRecent performance of the

function

Trade-offsTrade-offs

““Do you want it good, or do you want it Tuesday?”Do you want it good, or do you want it Tuesday?”

““No such thing as a free lunch.”No such thing as a free lunch.”

““You can’t have an aircraft which flies at the speed of You can’t have an aircraft which flies at the speed of

sound, carries 400 passengers and lands on an aircraft sound, carries 400 passengers and lands on an aircraft

carrier. Operations are just the same.” (Skinner)carrier. Operations are just the same.” (Skinner)

““Trade-offs in operations are the way we are willing Trade-offs in operations are the way we are willing

to sacrifice one performance objective to achieve to sacrifice one performance objective to achieve

excellence in another.”excellence in another.”

1946–1951Implementing

strategy

Building up capacity and capability Simple design

Standardised design

Systemisation of resources andprocess

Emerging, any working

vehicle

Maturing, simple robust vehicle

Minor reconfiguration for new model

Maturing, sophisticated performance, quality

New 1500 model


Market requirements

1952–1958Continuity of

strategy

1959–1964Minor change and continuity


Market requirements, operations resources and strategic reconciliation at VW over 70 years

1965–1970Search for

viable strategy

Fragmented acquisition of new resources

Multiple new designs

Defined rangeAdapt best practices from enlarged group

Uncertain rejection of VW traditional

products

Clarifying around style, quality and

variety

Accommodate new models and acquisitions

Segmentation around performance, style and

variety

Product development

paths


Market requirements

1971–1975Emergent strategy

1976–1979Continuing with minor changes



1990–1996Major change

(internal)

Drastic reconfiguration to increase efficiency, reduce costs

Design for low- cost manufacture

Common product platforms

Continuous process improvement and cost reduction

Increasingly competitive

around price

Branding with price, quality, and

style

Lean process improvement and more low-cost locations

Increasingly competitive around price and

innovationModular design


Market requirements


strategy


strategy



Categories of Categories of

Business StrategiesBusiness Strategies

First-to-Market StrategyFirst-to-Market Strategy

Products available Products available beforebefore competition competition

Strong Strong applied researchapplied research capability capability

neededneeded

Can set high price to Can set high price to skimskim market or market or

set lower price to gain market shareset lower price to gain market share

Second-to-Market StrategySecond-to-Market Strategy

Quick Quick imitationimitation of first-to-market of first-to-market

companiescompanies

Less emphasis on applied research and Less emphasis on applied research and

more emphasis on more emphasis on developmentdevelopment

Learn from first-to-market’s Learn from first-to-market’s mistakesmistakes

Cost Minimization orLate-to-Market Strategy

Wait until market becomes Wait until market becomes standardizedstandardized and and largelarge volumes demanded volumes demanded

Compete on basis of Compete on basis of costscosts instead of instead of product featuresproduct features

Research efforts focus on Research efforts focus on processprocess development versus product developmentdevelopment versus product development

Five Steps for Strategy Formulation

Defining a primary taskDefining a primary task What is the firm in the business of doing?What is the firm in the business of doing?

Assessing core competenciesAssessing core competencies What does the firm do better than anyone else?What does the firm do better than anyone else?

Determining order winners and order qualifiersDetermining order winners and order qualifiers What wins the order? What wins the order? What qualifies an item to be considered for purchase?What qualifies an item to be considered for purchase?

Positioning the firmPositioning the firm How will the firm compete?How will the firm compete?

Deploying StrategyDeploying Strategy How corporate strategies will be translated into measurable objectives?How corporate strategies will be translated into measurable objectives?

01. Primary Task

Mission statementsMission statements express express organization’s primary task: What organization’s primary task: What

business a company is in?business a company is in?

Constitution, The Corporate directivesConstitution, The Corporate directives

02. Assessing Core Competencies

CollectiveCollective knowledge and skills an organization has that knowledge and skills an organization has that

distinguish it from the competition.distinguish it from the competition.

Typically Typically center oncenter on an organization’s an organization’s abilityability to integrate a variety of to integrate a variety of

specific technologies and skills in the development of new specific technologies and skills in the development of new

products and services.products and services.

Building Building blocksblocks of core capabilities. of core capabilities.

Are Are basisbasis on which new outputs are developed. on which new outputs are developed.

Better to think of organization in terms of its Better to think of organization in terms of its portfolioportfolio of core of core competencies than as a portfolio of products.competencies than as a portfolio of products.

IdentifyingIdentifying and and developingdeveloping core competencies is one of top core competencies is one of top management’s most important roles.management’s most important roles.

Examples of Core Competencies

Sony - miniaturization3M- knowledge of substrates, coatings and

adhesivesHonda - engines and power trains

CannonCannoncore competencies in optics, imaging, and electronic controlscore competencies in optics, imaging, and electronic controlsProducts include copiers, laser printers, cameras, and image scanners.Products include copiers, laser printers, cameras, and image scanners.

BoeingBoeingintegrating large scale systemsintegrating large scale systemscommercial jetliners, space stations, missilescommercial jetliners, space stations, missiles

Core Competencies Used to Gain Access to Variety of Markets

Competitive PrioritiesCompetitive PrioritiesCorporate strategy• goals• core competencies• environmental responses• new products/services• global strategies


Market analysis• segmentation• needs assessment



Competitive prioritiesOperations Marketing• cost• quality Finance• time• flexibility Others



Cost 1. Low-cost operationsQuality 2. High-performance design

3. Consistent qualityTime 4. Fast delivery

5. On-time delivery6. Development speed

Flexibility 7. Customization8. Volume flexibility




Functional area strategies• finance• marketing• operations• others

Competitive PrioritiesCompetitive Priorities

Capabilities• current• needed• plans

Corporate strategy• goals• core competencies• environmental responses• new products/services• global strategies



Functional area strategies• finance• marketing• operations• others

Strategy and DecisionsStrategy and DecisionsCorporate strategy

Strategy and DecisionsStrategy and Decisions

Market analysis

Corporate strategy


Market analysis

Competitive priorities

Corporate strategy


Operations strategy

Market analysis


Corporate strategy


Operations strategy

Market analysis


Corporate strategy

Services Manufacturing• Standardized services• Assemble-to-order• Customized services

• Make-to-stock• Assemble-to-order• Make-to-order


Operations strategy

Market analysis


Corporate strategy



• Process decisions• Quality decisions• Capacity, location, and layout decisions• Operating decisions


Operations strategy


Market analysis


Corporate strategy




Operations strategy


Market analysis


Corporate strategy



Capabilities

Competitive Strategy: The Positioning View

Options for firm positioning:Cost leadershipDifferentiationFocus

And, within each of the three:Variety-basedNeeds-basedAccess-based

Competitive Strategy: The Resource-Based View

Types of capabilitiesProcess-based

e.g., McDonald’sSystems- or coordination-based

e.g., Ritz-Carltone.g., Southwest Airlines

Organization-basede.g., Nucor Steel

Network-basede.g., Dell

Competitive Strategy: Integrating the Positioning and Resource-Based Views

How Strategy Is Made

Levels of Strategy-Making

Business Strategy: Focus on the Customer

Types of customer needsMust havesLinear satisfiersDelightersNeutral

Strategy-Making in Context

Strategy-Making: Cross-Functional Participation

Operations Strategy: Decision Categories

Structural decisions Vertical integration Process technology Capacity Facilities

Infrastructural decisions Sourcing Information technology Supply chain

coordination Business processes and

policies Capabilities development

Lean operation Quality Flexibility

Integrated Strategy-Making Framework

03. Determining 03. Determining

Order Winners / Order Order Winners / Order

QualifiersQualifiers

Distinguish Order Qualifiers from Order Winners

Order Qualifiers:Competitive priorities that a product must

meet to even be considered for purchaseGenerally, represented by features shared by

all competitors in a given market niche

Order Winners:Competitive priorities that distinguish the

firm’s offerings from competitors & ultimately win the customer’s order

NeutralNeutral

+ve

–ve

PerformancePerformance

Competitive benefit Order-winning factorsOrder-winning factors

NeutralNeutral

+ve

–ve

PerformancePerformance

Competitive Competitive benefitbenefit

Qualifying Qualifying levellevel

Order-Qualifying factors

Delights become Order winners and Order winners become Qualifiers

Adding Delights

Order Winners gain more business the better you are

Low HighNegative

Positive

Neutral

Achieved performance

Com

petit

ive

bene

fit

Time

Delights

Order winners

Qualifiers

Qualifiers are the ‘givens’ of doing business

What performance objectives are Qualifiers, Order Winners and Delights ?

Delights

Order winners

Qualifiers

Today Tomorrow

… and in the future ?

???

What is the operation doing today to develop the capabilities which will provide the ‘Delights’ of the future ?

04. Positioning The 04. Positioning The

Firm:Firm:

Competitive Competitive

prioritiespriorities

Competitive Priorities

CostCostQualityQualityFlexibilityFlexibilitySpeedSpeed

Which enables you to Which enables you to do things cheaply do things cheaply (cost advantage)?(cost advantage)? Which enables you to Which enables you to

change what you do change what you do

(flexibility advantage)?(flexibility advantage)?

Which enables you to Which enables you to do things quickly do things quickly

(speed advantage)?(speed advantage)?

Which enables you to do Which enables you to do things on time things on time

(dependability advantage)?(dependability advantage)?Which enables you to Which enables you to

do things rightdo things right(quality advantage)?(quality advantage)?

Competing on Cost

Eliminate all wasteEliminate all waste Invest inInvest in

Updated facilities & equipmentUpdated facilities & equipment Streamlining operationsStreamlining operations Training & developmentTraining & development

Competing on Quality

Please the customerPlease the customer Understand customer Understand customer

attitudes toward and attitudes toward and expectations of quality expectations of quality

Competing on Flexibility

Produce wide variety of Produce wide variety of productsproducts

Introduce new productsIntroduce new products Modify existing products Modify existing products

quicklyquickly Respond to customer Respond to customer

needsneeds

Competing on Speed

Fast movesFast moves Fast adaptationsFast adaptations Tight linkagesTight linkages

Product / Service Product / Service

Design StrategiesDesign Strategies

Operations Strategy: Products and Services

Make-to-orderMake-to-orderproducts and services are made to customer products and services are made to customer

specifications after an order has been receivedspecifications after an order has been received

Make-to-stockMake-to-stockproducts and services are made in anticipation of products and services are made in anticipation of

demanddemand

Assemble-to-orderAssemble-to-orderproducts and services add options according to customer products and services add options according to customer

specificationsspecifications


Operations strategy

Market analysis


Corporate strategy



Market Orientation and Customer Experienced Lead Time

Process StrategyProcess Strategy

MatrixMatrix

Product-Process Matrix

Source: Robert Hayes and Steven Wheelwright, Restoring the Competitive Edge: Competing Through Manufacturing (New York: John Wiley & Sons, 1984), p. 209

Mor

e Sta

ndar

dize

d –

Hig

her V

olum

e

Mor

e Sta

ndar

dize

d –

Hig

her V

olum

e

ProjectConstruction of the aircraft carrier USS Nimitz was a huge project that took almost 10 years to complete.

Batch ProductionAt Martin Guitars bindings on the guitar frame are installed by hand and are wrapped with a cloth webbing until glue is dried.

Mass Production Here in a clean room a worker performs quality checks on a computer assembly line.

Continuous ProductionA paper manufacturer produces a continuous sheet paper from wood pulp slurry, which is mixed, pressed, dried, and wound onto reels.

Service-Process Matrix

Source: Adapted from Roger Schmenner, “How Can Service Businesses Survive and Prosper?” Sloan Management Review 27(3):29

Professional ServiceA doctor provides personal service to each patient based on extensive training in medicine.

Service ShopAlthough a lecture may be prepared in advance, its delivery is affected by students in each class.

Mass ServiceA retail store provides a standard array of products from which customers may choose.

Service FactoryElectricity is a commodity available continuously to customers.

Less

Cus

tom

ized

-Les

s La

bor I

nten

sive

Less

Cus

tom

ized

-Les

s La

bor I

nten

sive

X

Cost efficiency

Var

iety

A

C

D

B

The ‘efficient frontier’ A

X C

D

Cost efficiencyV

arie

ty

B

The new ‘efficient frontier’

B1

The ‘efficient frontier’ view

Deploying StrategyDeploying Strategy

Policy Deployment

Hoshin KanriHoshin Kanri Focuses employees on common Focuses employees on common

goals & prioritiesgoals & priorities Translates strategy into measurable Translates strategy into measurable

objectivesobjectives Aligns day-to-day decisions with Aligns day-to-day decisions with

strategic planstrategic plan

Balanced Scorecard

FinanceFinance — — How should we look to How should we look to our shareholders?our shareholders?

CustomerCustomer — — How should we look How should we look to our customers?to our customers?

ProcessesProcesses — — At which business At which business processes must we excel?processes must we excel?

Learning and Growing Learning and Growing — — How How will we sustain our ability to will we sustain our ability to change and improve?change and improve?

Key Performance

Indicators

Source: Source: Robert Kaplan and DavidRobert Kaplan and DavidNorton, Norton, Strategy Maps:Strategy Maps:Converting IntangibleConverting IntangibleAssets into TangibleAssets into TangibleOutcomes Outcomes (Boston:(Boston:Harvard Business SchoolHarvard Business SchoolPress, 2004), Figure 3-2,Press, 2004), Figure 3-2,p. 67p. 67

Strategic Decisions in Strategic Decisions in

OMOM

Operations Strategy:Capacity and Facility

Capacity strategic decisions includeCapacity strategic decisions include: : WhenWhen, , how muchhow much, and in , and in what what form to alter capacityform to alter capacity

Facility strategic decisions include: Facility strategic decisions include: whether demand should be met with a few large facilities or whether demand should be met with a few large facilities or

with several smaller oneswith several smaller ones

whether facilities should focus on serving certain geographic whether facilities should focus on serving certain geographic regions, product lines, or customersregions, product lines, or customers

facility location can also be a strategic decisionfacility location can also be a strategic decision

Operations Strategy: Human Resources

What is What is skill levelsskill levels and and degree of autonomydegree of autonomy required to required to operate production system?operate production system?

What are What are training requirementstraining requirements and selection criteria? and selection criteria?

What are policies on What are policies on performanceperformance evaluationsevaluations, , compensation, and incentives?compensation, and incentives?

Will workers be salaried, paid an hourly rate, or paid a piece Will workers be salaried, paid an hourly rate, or paid a piece rate?rate?

Will Will profit sharingprofit sharing be allowed, and if so, on what criteria? be allowed, and if so, on what criteria?

Operations Strategy: Human Resources

Will workers perform individual tasks or work in Will workers perform individual tasks or work in teamsteams??

Will they have supervisors or work in Will they have supervisors or work in self-managedself-managed work work groups?groups?

How many How many levelslevels of management will be required? of management will be required?

Will Will extensiveextensive worker training be necessary? worker training be necessary?

Should workforce be Should workforce be cross-trainedcross-trained??

What efforts will be made in terms of What efforts will be made in terms of retentionretention??

Operations Strategy: Quality

What is What is targettarget level of quality for our products and level of quality for our products and services?services?

How will it be How will it be measuredmeasured? ?

How will employees be How will employees be involvedinvolved with quality? with quality?

What will be the What will be the responsibilitiesresponsibilities of the quality of the quality department? department?

Operations Strategy: Quality (cont.)

What types of What types of systemssystems will be set up to ensure quality? will be set up to ensure quality?

How will quality How will quality awarenessawareness be maintained? be maintained?

How will quality How will quality effortsefforts be evaluated? be evaluated?

How will How will customer perceptionscustomer perceptions of quality be of quality be determined? determined?

How will decisions in How will decisions in otherother functional areas affect functional areas affect quality?quality?

Operations Strategy: Sourcing

Vertical integrationVertical integration

degree to which a firm produces parts that go into its degree to which a firm produces parts that go into its productsproducts

Strategic DecisionsStrategic Decisions

How much of work should be done outside the firm? How much of work should be done outside the firm?

On what basis should particular items be made in-house?On what basis should particular items be made in-house?

When should items be outsourced?When should items be outsourced?

How should suppliers be selected?How should suppliers be selected?

Operations Strategy: Sourcing (cont.)

What type of relationship should be maintained What type of relationship should be maintained with suppliers?with suppliers?

What is expected from suppliers?What is expected from suppliers?

How many suppliers should be used?How many suppliers should be used?

How can quality and dependability of suppliers How can quality and dependability of suppliers be ensured?be ensured?

How can suppliers be encouraged to How can suppliers be encouraged to collaborate?collaborate?

Operations Strategy: Operating Systems

How will operating systems execute strategic decisions?How will operating systems execute strategic decisions?

How to align information technology and operations strategic How to align information technology and operations strategic goals?goals?

How information technology supports both customer and worker How information technology supports both customer and worker demands for rapid access, storage, and retrieval of information?demands for rapid access, storage, and retrieval of information?

How information technology support decisions making process How information technology support decisions making process related to inventory levels, scheduling priorities, and reward related to inventory levels, scheduling priorities, and reward systems?systems?

Changing CorporationSource:: John Byrne, “Management by Web,” John Byrne, “Management by Web,” Business Week Business Week (August 28, 2000), p. 87 by special permission, copyright 2000 by The McGraw-Hill Companies, Inc.(August 28, 2000), p. 87 by special permission, copyright 2000 by The McGraw-Hill Companies, Inc.

Characteristic 20th-Century

Corporation

21st-Century

Corporation

OrganizationOrganization

FocusFocus

StyleStyle

Source of strengthSource of strength

StructureStructure

ResourcesResources

LeadershipLeadership

WorkersWorkers

Job expectationsJob expectations

PyramidPyramid

InternalInternal

StructuresStructures

StabilityStability

Self-sufficiencySelf-sufficiency

Physical assetsPhysical assets

DogmaticDogmatic

EmployeesEmployees

SecuritySecurity

WebWeb

ExternalExternal

FlexibleFlexible

ChangeChange

InterdependenciesInterdependencies

InformationInformation

InspirationalInspirational

Free agentsFree agents

Personal growthPersonal growth

Changing Corporation

Characteristic 20th-Century

Corporation

21st-Century

Corporation

OperationsOperations

ProductsProducts

ReachReach

FinancialsFinancials

InventoriesInventories

StrategyStrategy

MotivationMotivation

ImprovementsImprovements

QualityQuality

Vertical integrationVertical integration

Mass productionMass production

DomesticDomestic

QuarterlyQuarterly

MonthsMonths

Top-downTop-down

To competeTo compete

IncrementalIncremental

Affordable bestAffordable best

Virtual integrationVirtual integration

Mass customizationMass customization

GlobalGlobal

Real-timeReal-time

HoursHours

Bottom-upBottom-up

To buildTo build

RevolutionaryRevolutionary

No compromiseNo compromise

Operations Performance Chapter 2. ContentsDefinition? The Reality Check Operations Strategy Vs...

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