1. Operations Strategy

2. Some Boeing Suppliers (787)
Firm Country Component
Latecoere France Passenger doors
Labinel France Wiring
Dassault France Design and
PLM software
Messier-Bugatti France Electric brakes
Thales France Electrical power
conversion system
and integrated
standby flight display
Messier-Dowty France Landing gear structure
Diehl Germany Interior lighting

3. Some Boeing Suppliers (787)
Firm Country Component
Cobham UK Fuel pumps and valves
Rolls-Royce UK Engines
Smiths Aerospace UK Central computer
system
BAE SYSTEMS UK Electronics
Alenia Aeronautics Italy Upper center
fuselage &
horizontal stabilizer
Toray Industries Japan Carbon fiber for
wing and tail units

4. Some Boeing Suppliers (787)
Firm Country Component
Fuji Heavy Japan Center wing box
Industries
Kawasaki Heavy Japan Forward fuselage,
Industries fixed section of wing,
landing gear well
Teijin Seiki Japan Hydraulic actuators
Mitsubishi Heavy Japan Wing box
Chengdu Aircraft China Rudder
Group
Hafei Aviation China Parts

5. Some Boeing Suppliers (787)
Firm Country Component
Korean Aviation South Wingtips
Korea
Saab Sweden Cargo access doors

6. Strategy Action plan to achieve mission
Functional areas have strategies
Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses

7. Strategies for Competitive Advantage
Differentiation – better, or at least different
Cost leadership – cheaper
Response – rapid response

8. Competing on Differentiation
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

9. Competing on Cost
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 overheads, shrinkage, distribution costs
Franz Colruyt – no bags, low light, no music, doors on freezers

10. Competing on Response
Flexibility is matching market changes in design innovation and volumes
Institutionalization at Hewlett-Packard
Reliability is meeting schedules
German machine industry
Timeliness is quickness in design, production, and delivery
Johnson Electric, Bennigan’s, Motorola

11. OM’s Contribution to Strategy
Operations Specific Competitive
Decisions Examples Strategy Used Advantage
Product
Quality
Process
Location
Layout
Human resource
Supply chain
Inventory
Scheduling
Maintenance
FLEXIBILITY:
Sony’s constant innovation
of new products………………………………....Design
HP’s ability to lead
the printer market………………………………Volume
Southwest Airlines No-frills service……..…..LOW COST
DELIVERY:
Pizza Hut’s 5-minute guarantee
at lunchtime…………………..…..………………….Speed
Federal Express’s “absolutely,
positively on time”………………………..….Dependability
QUALITY:
Motorola’s HDTV converters….…… Conformance
Motorola’s pagers………………………..….Performance
Caterpillar’s after-sale service
on heavy equipment……………....AFTER-SALE SERVICE
Fidelity Security’s broad
line of mutual funds………….BROAD PRODUCT LINE
Response
(Faster)
Cost leadership
(Cheaper)
Differentiation
(Better)
Figure 2.4

12. 10 Strategic OM Decisions
Goods and service design
Quality
Process and capacity design
Location selection
Layout design
Human resources and job design
Supply chain management
Inventory
Scheduling
Maintenance

13. Goods and Services and the 10 OM Decisions
Operations Decisions
Goods
Services
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

14. Goods and Services and the 10 OM Decisions
Operations Decisions
Goods
Services
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

15. Goods and Services and the 10 OM Decisions
Operations Decisions
Goods
Services
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

16. Goods and Services and the 10 OM Decisions
Operations Decisions
Goods
Services
Maintenance
Often preventive and takes place at production site
Often “repair” and takes place at customer’s site
Table 2.1

17. The Vital Role of Strategy

18. Strategic from Tactical Decisions
Four Characteristics that Tend to Distinguish
Strategic from Tactical Decisions

19. Role of Senior Management
We can say that strategy formulation tends to be the prerogative of senior managers within the firm and the final decisions regarding the direction of the firm will rest with these senior-level managers. However, other levels of the firm may also be involved in the development of strategic plans and these other levels will certainly be involved in their implementation (for a good discussion on strategic formulation, see Johnson and Scholes, 2003).

20. Creating Competitive Advantage
Strategic decisions are intended to create competitive advantage for the firm or, at the very least, to allow the firm to continue to compete in its chosen markets. The term ‘strategy’, as used in the ‘business strategy’ sense, originated in military terminology. This analogy is not liked by some writers (for example, see Kay, 1993) because strategy is not always about obliterating the competition. However, it should fall under the realm of strategists within the firm to determine and exploit opportunities and, at the same time, to be aware of, and diffuse, potential threats from other players.

21. The Profound Consequences of Strategic Decisions
A strategic decision can profoundly alter, and have major consequences for, the firm.
An operations strategy concerned with supply may lead to a reshaping of the organization, including outsourcing and in-sourcing operations, and configuring an internal supply chain, thus profoundly altering its nature.

22. Long-Term Horizons
Strategic decisions can have long-term implications for the firm and hence the factor of time is an important one for strategists (Das, 1991; Itami and Numagami, 1992). It is important to note that strategic planning is not simply crystal-ball gazing into the far future; for strategy to be effective, it also needs to have a sense of timing and urgency in its implementation.

23. Tactical and strategic concerns in manufacturing operations

24. Understanding Manufacturing and Operations Strategy

25. Manufacturing strategy was the forerunner of the wider aspects of operations strategy.
For manufacturing strategy to be useful, it needs to have consistency among decisions that affect business-level strategy, competitive priorities and manufacturing infrastructure.

26. Much of the degree to which manufacturing strategy will be effective relies on the internal consistency of manufacturing strategy, manufacturing capabilities, marketing – manufacturing congruence, and their effects on manufacturing performance

27. Hayes and Wheelwright’s Four Stages of Strategy

28. The scope of structural/infrastructure areas that can form part of manufacturing strategy is wide-ranging and can include quality capabilities (including quality requirements that a plant might demand from its supplier base), manufacturing processes, investment requirements, skills audits, capacity requirements, inventory management throughout the supply chain and new product innovation.

29. Manufacturing strategy is concerned with combining responsibility for resource management (internal factors) as well as achieving business (external) requirements.
Manufacturing strategy is viewed as the effective use of manufacturing strengths as a competitive weapon for the achievement of business and corporate goals.