Operations Management Productivity & Competitive Advantage

Report
Operations
Management
Productivity & Competitive
Advantage
Growth rate
Stages in the Product Life
Cycle
Introduction
Floppy
Disks
Growth
mp4 players
iphone
mp3 players
DVD’s
CD players
Maturity
cassette
players
Fax
Machine
Decline
Strategy & Issues During Product Life
Introduction
 Company
Strategy &
Issues
 OM
Strategy &
Issues
 Best period to increase market share
 R&D engineering are critical






Product design and development are critical
Frequent product and process design changes
Short production runs
High production costs
Utmost attention to quality
Quick elimination of market-revealed design
defects
Strategy & Issues During Product Life
Growth
 Company
Strategy &
Issues
 OM Strategy
& Issues
 Sensitive to Changes in price or quality
 Marketing is critical
 Strengthen niche
 Forecasting is critical
 Product and process reliability
 Competitive product improvements and
options
 Enhance distribution
Strategy & Issues During Product Life
Maturity
 Company
Strategy &
Issues
 OM Strategy
& Issues




Poor time to increase market share
Competitive costs become critical
Usually poor time to change quality or price
Defend position via fresh promotional and
distribution approaches
 Standardization - Increasing stability of
manufacturing process
 Less rapid product changes and more minor annual
model changes
 Optimum capacity
 Long production runs
 Re-examination of necessity of design changes
Strategy & Issues During Product
Life
Decline
 Company
Strategy &
Issues
 OM Strategy
& Issues
 Cost control critical to market share




Little product differentiation
Cost minimization
Overcapacity in the industry
Prune line to eliminate items not
returning a good margin
 Reduce capacity
Strategy Development and
Implementation
 Understand issues – research, preconditions,
dynamics
 Research

High return on investment

High product quality (relative to competition)

High capacity utilization

High operating efficiency

High capital turnover
Strategy Development and
Implementation
 Understand issues – Preconditions

Strengths and Weaknesses of competitors as well as new entrants
into the market, substitutes

Current and prospective environmental, technological, legal and
economic issues.

Product life cycle

Resources available within the firm and within the OM functions

Integration of OM strategy with the company’s strategy and other
functional areas.
Strategy Development and
Implementation
Understand issues – Dynamics
Strategic changes due to two reasons:

Changes within the org.


Personnel, finance, product life
Changes in the environment
Strategy Development and
Implementation
Form a strategy for competitive advantage
Identify critical success factors Critical success
factors are the factors that are key to
achieving competitive advantage.
Build and staff the organization
Integrate OM with other activities.
Identifying
Critical Success Factors
Marketing
Finance/Accounting
Service
Distribution
Promotion
Channels of distribution
Product positioning
(image, functions)
Leverage
Cost of capital
Working capital
Receivables
Payables
Financial control
Lines of credit
Production/Operations
Decisions
Sample Option
Product
Quality
Process
Location
Layout
Human resource
Supply chain
Inventory
Schedule
Maintenance
Customized, or standardized
Define customer expectations and how to achieve them
Facility size, technology, capacity
Near supplier or customer
Work cells or assembly line
Specialized or enriched jobs
Single or multiple source suppliers
When to reorder, how much to keep on hand
Stable or fluctuating productions rate
Repair as required or preventive maintenance
CSF’s of Microsoft
It focuses on one business – software
It thinks globally – operates and sells
Senior management involved in product
development process
It recruits and retains top people in its field
Emphasizes on speed to market
Southwest Airline’s Low Cost Competitive
Advantage CSF’s
Courteous, but limited
passenger service
Lean, productive
employees
High aircraft
utilization
Competitive Advantage:
Low Cost
Standardized fleet of
Boeing 737 aircraft
Short haul, point-to-point
routes, often to secondary
airports
Frequent, reliable
schedules

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