© Wiley Chapter 2 Operations Strategy and Competitiveness Operations Management by R. Dan Reid & Nada R. Sanders 2 nd Edition © Wiley 2005 PowerPoint Presentation by R.B. Clough - UNH
MGMT 326 Foundations of Operations Introduction Strategy Quality Assurance Capacity, Facilities, and Work Design Planning & Control Products & Processes
© EJR Operations Strategy - Outline Business mission and strategy Operations strategy and other functional strategies Order qualifiers & order winners How operations helps firms compete Competitive priorities in operations Strategic role of technology
© Wiley Mission Statement Explains What business the organization is in Who the customers are How the company's values will determine what the company does A mission statement explains what the organization will do.
Examples of Mission Statements Levi-Strauss: We will market and distribute the most appealing & widely worn apparel brands. Dell: Dell listens to customers and delivers technology they trust and value. © Wiley 20055
6 Business Strategy Explains how the organization will achieve its mission Long-range plan to compete in the marketplace Explains how the firm will differentiate itself from competitors Sets competitive priorities Basis for functional strategies
© Wiley Three Inputs to a Business Strategy
© Wiley Business Strategy and Functional Strategies
Adapted from Wiley Functional Strategies Marketing Operations Finance Management information systems Human resources management The functional strategies should be consistent with each other and with the business strategy
© Adapted from Wiley, Order Qualifiers & Order Winners Order qualifiers are competitive priorities that must be met for a company to qualify as a competitor in the marketplace. Order winners are competitive priorities that win orders in the marketplace. Both depend on the target market. Both change over time. If most competing firms have a certain competitive priority, it is likely to become an order qualifier.
© Wiley Competitive Priorities Meeting the needs of a target market What are the order qualifiers? What are the order winners? These dictate your competitive priorities.
© Wiley Competitive Priorities in Operations Cost Quality Time Flexibility
Adapted from Wiley Competing on Cost In marketing books, this is called competing on price Low prices require low costs Basic product with acceptable quality
© Wiley Ways to Compete on Product Quality High performance design: Superior features, high durability, and excellent customer service Product or service consistency: Meets customer requirements in its market Product is made according to the design Error free service and delivery
© Wiley Process Quality Designing and operating a process to produce error-free products Essential for firms that compete on quality Reduces operating costs for any firm – "doing it right the first time" reduces costs and keeps customers
© Wiley Ways to Compete on Time Fast delivery or fast service: Reduce time between order placement and delivery of the product or service On-time delivery: Deliver product exactly when needed every time Rapid new product development: Shorten new product development time
© Wiley Ways to Compete on Flexibility Product flexibility: Must be able to easily switch production from one item to another May customize product to customer needs Volume flexibility: Ability to increase or decrease production to match market demands
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© Wiley Strategic Role of Technology Technology should support competitive priorities Product technology: used to create product characteristics and performance. Note the change from the definition in the book. Examples: PDA's, hybrid vehicles, stain-resistant fabric, GPS systems May include information technology Product technology affects costs
© Wiley Strategic Role of Technology (2) Process technology: how goods and services are produced Includes both equipment and methods Often includes information technology Examples: Just-in-time, automation, fast food process, self-service checkout, bar-code scanners Requires capital investment Can reduce variable costs Can be used to produce new goods or services
© Wiley Strategic Role of Technology (3) Information technology: allows users to create, collect, process, store, and transmit information Internet, wireless communication, point of sale systems, management information systems, decision support systems, communication networks