CHapter 2 Operation Strategy

Manajemen Operasi Strategi Operasi dalam Lingkungan Global Chapter 2

Outline PROFIL PERUSAHAAN GLOBAL: BOEINGPENGEMBANGAN MISI DAN STRATEGIMiSiStrategiMENCAPAI KEUNGGULAN BERSAING MELALUI STRATEGI OPERASIBERSAING PADA PERBEDAANBERSAING DGN BIAYABERSAING PADA RESPONSEPULUH KEPUTUSAN STRATEGI MO

Outline - ContinuedPermasalah dalam strategi OperasiResearch (Penelitian)Preconditions (Prasyarat)Dynamics (dinamis)Pengembangan dan penerapan StrategiMengidentifikasi faktor Penentu KeberhasilanMembanguan dan Mengisi OrganisasiMemadukan MO dengan aktivitas lain Pandangan global dari permasalahan budaya dan etika operasi

Outline - ContinuedPilihan Strategi Operasi GlobalInternational Strategy (Strategi Internasional)Multidomestic Strategy(Strategi Multidomestik)Global Strategy (Strategi global)Transnational Strategy( Strategi Transnasional)

Learning Objectives (Sasaran Belajar)When you complete this chapter, you should be able to (Selesai kuliah ini, diharapkan mhs dapat):Identify or Define (Mengidentifikasi dan Mendefinisikan) :Mission (Misi)Strategy (strategi)Ten Decisions of OM (Sepuluh Keputusan MO)Multinational Corporations (Perusahaan Multinasional)

Sasaran Belajar - kontinuDescribe or Explain (Menggambarkan dan menerangkan):Specific approaches used by OM to achieve strategies (Pendekatan spesifik digunakan oleh MO utk mencapai strategi)Differentiation (Perbedaan)Low Cost (Biaya rendah)Response (respon)Four Global Operations Strategies (Empat strategi Operasi Global)Why Global Issues are Important (Kenapa Permasalahan Global Penting)

Examples of Global StrategiesBoeing both sales and production are worldwide.Benetton moves inventory to stores around the world faster than its competitor by building flexibility into design, production, and distributionSony purchases components from suppliers in Thailand, Malaysia, and around the worldGM is building four similar plants in Argentina, Poland, China, and Thailand

Boeing Suppliers (777)

2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Pandangan Global OperasiPowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074582-*Mengurangi Biaya (upah pekerja, pajak, tarif,dll)Memperbaiki Rantai Pasok (supply chain)Menyediakan barang dan jasa yang lebih baikMendapatkan pasar baruBelajar untuk memperbaiki operasiMendapatkan dan mempertahankan bakat global


The Role ofMaquiladoras (Zona perdagangan Bebas)World Trade Organization (WTC)North American Free Trade Agreement (NAFTA)European Union (EU)

Management Issues in Global OperationsGlobal Strategic ContextDifferentiationCost leadershipResponseLogistics Management

Location Decisions

Supply Chain Management

Supply-Chain ManagementSourcingVertical integrationMake-or-buy decisionsPartnering

Location DecisionsCountry-related issuesProduct-related issuesGovernment policy/political riskOrganizational issues

Materials ManagementFlow of materialsTransportation options and speedInventory levelsPackagingStorage

Mission

Mission of FedExFedEx is committed to our People-Service-Profit philosophy. We will produce outstanding financial returns by providing total reliable, competitively superior, global air-ground transportation of high priority goods and documents that require rapid, time-certain delivery. Equally important, positive control of each package will be maintained using real time electronic tracking and tracing systems. A complete record of each shipment and delivery will be presented with our request for payment. We will be helpful, courteous, and professional to each other and the public. We will strive to have a completely satisfied customer at the end of each transaction.

Sample Mission - MerckThe mission of Merck is to provide society with superior products and services - innovations and solutions that improve the quality of life and satisfy customer needs - to provide employees with meaningful work and advancement opportunities and investors with a superior rate of return

Mission of the Hard Rock CafTo spread the spirit of Rock n Roll by delivering an exceptional entertainment and dining experience. We are committed to being an important, contributing member of our community and offering the Hard Rock family a fun, healthy, and nurturing work environment while ensuring our long-term success.

Factors Affecting MissionMissionPhilosophy &ValuesProfitability& GrowthEnvironmentCustomersPublic ImageBenefit toSociety

Mission/StrategyMission - where you are going

Strategy - how you are going to get there; an action plan

Strategy

Strategy Process

Strategies for Competitive AdvantageDifferentiation (Perbedaan)

Cost leadership (Kepemimpinan biaya rendah)

Quick response (Respon yang cepat)

Competing on DifferentiationUniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customers perception of value (keunikan dpt melampaui ciri fisik dan atribut mencakupi segala sesuatu mempengaruhi nilai persepsi pelanggan)

Competing on CostProvide the maximum value as perceived by customer ( Mencapai nilai maksimum sebagaimana diinginkan pelanggan)

Does not imply low value or low quality (Tidak berarti nilai dan kualitas barang menjadi rendah)

Competing on ResponseFlexibility (Kinerja yg Fleksibel)Reliability (Penjadualan yg dapat diandalkan)Timeliness

Requires institutionalization within the firm of the ability to respond

Competing, Regardless of the Basis,Requires the institutionalization within the firm of the ability to change, and to adapt

OMs Contribution to StrategyResponse(Faster)

10 Strategic OM DecisionsGoods & service design Quality Process & capacity design Location selection Layout design Human resource and job design Supply-chain management Inventory Scheduling Maintenance

Goods & Services and the 10 OM Decisions


Operations Decisions

Goods

Services

Goods & services decisions

Product is usually tangible

Product is usually intangible

Quality

Objective quality standards

Subjective quality standards

Process and capacity design

Customer not involved in most of process

Customer may be directly involved in process.

Capacity must match demand to avoid lost sales

Goods & Services and the 10 OM Decisions Continued



Goods

Services

Location Selection

May need to be near raw materials or labor force

Product is usually intangible

Layout Design

Layout can enhance production efficiency

Subjective quality standards

Human Resources and Job Design

Workforce focused on technical skills.

Labor standards consistent.

Output-based wage system.

Customer may be directly involved in process.

Capacity matches demand to avoid lost sales




Goods

Services

Supply chain management

Supply-chain relationships critical to final product

Supply-chain relationships important, not necessarily critical

Inventory

Raw materials, work-in-process, and finished goods

Most services cannot be stored

Scheduling

Ability to convert inventory may allow leveling of production rates

Primarily concerned with meeting the customer's immediate schedule




Goods

Services

Maintenance

Maintenance is often preventive and takes place at the production site

Maintenance is often "repair" and takes place at the customer's site

Process Design

Operations Strategies for Two Drug Companies

Brand Name Drugs, Inc.

Generic Drug Corp.

Product Selection and Design

Heavy R & D; Extensive labs; focus on development in broad range of \drug categories

Low R & D investment; focus on development of generic drugs

Quality

Quality is a major priority;

Standards exceed regulatory requirements

Meets regulatory requirements on a country-by-country basis as necessary

Operations Strategies for Two Drug Companies - Continued


Generic Drug Corp.

Process

Product & modular production processes

Long product runs in specialized facilities

Build capacity ahead of demand

Process focused

General production processes;

Job Shop approach, short run;

Focus on high utilization

Location

Still located in city in which it was founded

Recently moved to low tax, low labor cost environment

Scheduling

Central production planning

Many short run products complicate scheduling



Generic Drug Corp.

Human Resources

Hires the best; nation-wide searches

Very experienced top executives provide direction; other personnel paid below average

Supply Chain

Long term supplier relationship

Tends to purchase competitively to find bargains

Inventory

Maintains high finished goods inventory, primarily to ensure all demands are met

Process focus drives up WIP inventory.

Finished goods inventory tends to be low



Generic Drug Corp.

Maintenance

Highly trained staff;

Extensive parts inventory

Highly trained staff to meet challenging demands

Characteristics of High ROI Firms (Karakteristik perusahaan dgn tingkat pengembalian modal yg tinggi)High quality product (Kualitas produk yg tinggi)High capacity utilization (Penggunaan kapasitas yg tinggi)High operating effectiveness (Efektivitas operasi yg tinggi)Low investment intensity (Intensitas investasi yg rendah)Low direct cost per unit (Biaya langsung per unit yg rendah)From the PIMS study of the Strategic Planning Institute

Strategic Options Managers Use to Gain Competitive Advantage28% - Operations Management18% - Marketing/distribution17% - Momentum/name recognition16% - Quality/service14% - Good management 4% - Financial resources 3% - Other

Strategic Options Managers Use to Gain Competitive Advantage28% Operations ManagementLow- cost productProduct-line breadthTechnical superiorityProduct characteristics/differentiationContinuing product innovationLow-price/high-value offeringsEfficient, flexible operations adaptable to consumersEngineering research developmentLocationScheduling

Preconditions -To Implement a StrategyOne must understand:Strengths & weaknesses of competitors and new entrants into the marketCurrent and prospective environmental, legal, and economic issuesThe notion of product life cycleResources available with the firm and within the OM functionIntegration of OM strategy with company strategy and with other functions.

Impetus for Strategy ChangeChanges in the organizationStages in the product life cycleChanges in the environment

Stages in the Product Life Cycle

Best period to increase market shareR&D engineering are critical

Product design and development are criticalFrequent product and process design changesOver-capacityShort production runsHigh skilled-labor contentHigh production costsLimited number of modelsUtmost attentions to qualityQuick elimination of market-revealed design defectsIntroductionStrategy & Issues During Product LifeCompany Strategy & Issues

OM Strategy & Issues

Strategy & Issues During Product LifeCompany Strategy & Issues

OM Strategy & IssuesPractical to change prices or quality imageMarketing is criticalStrengthen niche

Forecasting is criticalProduct and process reliabilityCompetitive product improvements and optionsShift toward product orientedEnhance distribution

Growth


OM Strategy & IssuesPoor time to increase market shareCompetitive costs become criticalPoor time to change price, image, or qualityDefend position via fresh promotional and distribution approaches

StandardizationLess rapid product changes and more minor annual model changesOptimum capacityIncreasing stability of manufacturing processLower labor skillsLong production runsAttention to product improvement and cost cuttingRe-examination of necessity of design compromises Maturity


OM Strategy & IssuesCost control critical to market share

Little product differentiationCost minimizationOvercapacity in the industryPrune line to eliminate items not returningGood marginReduce capacityDecline

Strategy and Issues During a Products Life

Strategy Development and ImplementationIdentify critical success factorsBuild and staff the organization

SWOT Analysis ProcessEnvironmental AnalysisDetermine Corporate MissionForm a Strategy

SWOT Analysis to Strategy FormulationStrategyMissionExternalOpportunitiesInternalStrengthsInternalWeaknessesExternalThreatsCompetitiveAdvantage

Identifying Critical Success FactorsDecisionsSample Option ChapterProductCustomized, or standardized 5QualityDefine customer expectations and how to achieve them 6, S6ProcessFacility size, technology, capacity 7, S7LocationNear supplier or customer 8LayoutWork cells or assembly line 9Human resourceSpecialized or enriched jobs 10, S10Supply chain Single or multiple source suppliers 11, S11InventoryWhen to reorder, how much to keep on hand 12, 14,16ScheduleStable or fluctuating productions rate 13, 15Maintenance Repair as required or preventive maintenance 17MarketingServiceDistributionPromotionChannels of distributionProduct positioning (image, functions)Finance/AccountingLeverageCost of capitalWorking capitalReceivablesPayablesFinancial controlLines of creditProduction/Operations

Activity Mapping: Southwest Airlines Low Cost Competitive Advantage

Southwest Airlines Low Cost Competitive Advantage

Vanguards Activity System

How It Works

Four International Operations Strategies

Multidomestic StrategyOperating decisions are decentralized to each country to enhance local responsiveness

Global StrategyOperating decisions are centralized and headquarters coordinates the standardization and learning between facilities

Transnational StrategiesCombines the benefits of global-scale efficiencies with the benefits of local responsiveness

International StrategyGlobal markets are penetrated using exports and licenses

**You might begin the the thread of a discussion about mission and strategies forming the context for decision making within the company. This discussion can be continued throughout the chapter.******This slide can be used to begin a discussion of the benefits and risks of going global. Students should be asked how risk is affected when there is a localized economic downturn such as that in Asia (particularly Japan) in early 1998.

Students should also be asked to discuss the role of paperless design in such a global arrangement.**This slide frames the discussion of management issues in global operations.Subsequent slides expand on the issues in Supply-Chain Management, Location Decisions, and Logistics Management.Students should not only understand these issues, but should also have some concept as to why there are significant differences between global and domestic (or national) operations.****You might ask students to prepare for class by visiting several company web sites, and, for each company: locating the company mission, and printing a copy of the mission to bring to class. The students should also be asked to, if possible, determine the strategy used by the company to achieve its avowed mission. You might even ask that a student finding a mission statement that they believe of special interest, bring a copy of the statement on a transparency.You might begin the class by asking students why a companys mission is so important. Does it really convey important information, or is it, as some cynics might claim, simply an expression of wishful thinking?Among other benefits, the mission provides an umbrella under which decisions should be made. This may be especially useful for a global enterprise.

If the students have obtained the mission statements of companies with which they are familiar, you might ask if their perception of the company suggests that it is fulfilling it published mission. If the answer is No, ask what suggests otherwise.

**Ask the students to compare the mission of Circle K with this of Merck (and with those they have located). What does the recognition of employees and investors signify? Is it reasonable to suggest that employees and investors should be recognized in all mission statements? Does such recognition have any significance with regard to employee working conditions, corporate decision making, or corporate attitude toward risk?**One can obviously discuss the impact of each of these factors on a company mission. An alternative is to have each student take a company mission and identify the connection to each of the factors. In particular, ask students if the connection is uni- or bi-directional, i.e., The environment within which a company operates may impact its mission, can the mission also impact the environment?*The distinction between mission and strategy probably requires some discussion. The best approach might be to ask students, who have obtained the mission statements of companies with which they are familiar, to discuss their perception of the company strategy. There may also be companies which publish a statement of strategy as well their mission on their web site.*Here, you might introduce the hierarchical nature of strategies, and, as prelude to subsequent slides, ask students whether they believe it is better to plan from the top down, or bottom up.*This slide can be used to frame a discussion of the process of developing strategies. If so, the steps of Environmental and SWOT Analysis should be expanded.

You might also ask the students Whose responsibility is Strategy Planning? Is participation in this process restricted to upper level management, or does it involve all levels of employees? Might one have different expectations for the answer to this question for a particular company ( Circle K as opposed to Merck)?

The contrast between strategy planning for all levels of the organization at once, versus strategy planing for the organization as a whole, with subsequent rolldown to lower levels might be discussed.*This slide simply opens the discussion on the several modes of competing.*Ask students for examples of companies competing on the basis of differentiation.

If they cannot identify any, you can fall back on a discussion of McDonalds, Burger King, and Wendys. Ask the students to identify the differences between the three franchises. *One of the major points to be made here is that competing on cost does not necessarily mean having the lowest cost: There is also the notion of value, and in particular, value defined by the customer. There are some drivers who will argue that Volvo competes on cost suggesting that Volvos are low cost for a vehicle with such demonstrated safety benefits and long life expectancy. *Most students readily acknowledge that competing on the basis of response involves the notion of quickness or speed, so the discussion should probably concentrate on the other three elements. The concept of and need for institutionalization will likely require significant discussion. Here you might point out that response is seldom the prerogative of any, single, individual - appropriate response is often the outcome of the work of many. *You might point out that businesses now operate in a very rapidly changing environment - and that these changes are often in fundamental characteristics of the environment, e.g., use of the world-wide web is enabling some very fundamental changes in the way in which firms do business. Competing on any basis (differentiation, cost, or response) requires the ability to adapt to these changes on a firm-wide basis, not as individuals..*Students can be asked to add to the list of examples shown in this slide.You might also ask students whether OM can contribute in similar ways in all industries.

*This slide simply introduces the 10 decisions.You may not wish to do more than define the decision area and give one or two examples.

*Here again, you might look particularly at the impact of the difference between goods and services. You may be able to get students to consider such consequences as the level of worker skill required, the difficulty in controlling quality, etc.****This slide can be used to introduce the process design options, and help students begin to understand the conditions of volume and variety under which they are most useful.

Student should be asked to provide and discuss examples.*Here it may be helpful to point out that although the strategies are significantly different for the two companies, both successful. If possible, you should have students consider what the missions of the two companies might be.****This is the first of several slides portraying the results of some fairly recent research.

You might point out that these are necessary conditions, perhaps not sufficient.

*If one argues that the quality/service categories really belong in OM, the total for OM reaches 44%.*A second study: 248 business were asked to rate thirty two categories.

The more general results are given in the next slide*Make the point here that this is a minimum set of necessary issues which must be understood. Understanding these alone does not guarantee success.

If you have not done it before, here is where you can begin to prod students into looking at the true complexity faced by the operations manager., *You might begin here to raise the notion that change in strategy is not optional - but must occur when any other factor(s) change(s). The Japanese have come to view strategy as being continually adaptive.

The next slide lists the stages in the product life cycle. The several slides following that elaborate on strategic issues over the product life cycle.*The purpose of this slide is simply to introduce the stages of the product life cycle and provide time for the instructor to present brief definitions.

A context for further elaboration is provided by the following four slides. The fifth enables a useful summary.*As you discuss the product life cycle, it may be helpful to ask students to identify products they believe to currently be in the stage under discussion. Ask them what evidence they have to support their conclusions.****This slide can be useful in summarizing strategy changes over the lifecycle of the product.*It might be helpful here to define critical success factors.*This slide can be used to frame a discussion of SWOT analysis. Students should be asked what types of questions might be appropriate at each stage.*This slide frames the individual elements of the SWOT analysis process.

The notion that SWOT must look at both internal and external issues can be raised here.

It may also be worthwhile stressing that the Internal analysis must be: 1. A critical analysis with an honest, open-minded assessment, not politically driven 2. An assessment of strengths and weaknesses in light of the specific corporate mission.*This slide introduces the notion of Critical Success Factors.

Many students seem to perceive Critical Success Factor analysis as an easy process. It may help to ask your students to develop a list of critical success factors for a business with which they are familiar. (If all else fails, ask them to develop the critical success factors for the college or university they attend.) Once they have identified a number of factors (the number depending on the time available), make them go back and justify the importance of each factor. As they are in the process of justification, ask What happens if the business fails to adequately address this factor? At this point, begin to help them differentiate between factors which will result in sub-optimal performance and those which will result in outright failure. In many colleges/universities, for example, offering a top quality program may not be necessary, while ensuring that each graduate has a job offer upon graduation may be.*Discuss how the individual strategies combine to achieve the overall company mission.**********This slide can be used to tie coverage of Chapter 2 together.*****

CHapter 2 Operation Strategy

Documents

Transcript of CHapter 2 Operation Strategy