01smr ses1 ver 1-2

Strategic Management of Resources

Session 1Aligning Resourceswith Strategic Plans

Strategic Management of Resources, ver. 1.2—October 20021-2

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Strategic Management of ResourcesSession 1: Aligning Resources with Strategic Plans

Session 2: Choices Affecting Structure

Session 3: Choices Affecting Infrastructure

Session 4: Configuring and IntegratingOperating Processes

Session 5: Supply Chain Management

Session 6: Configuring and Integrating Design and Development and Cost

Management Processes

Session 7: Project Management

Session 8: Measurement Management

Session 9: Change Management


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Objectives of Session 1

Recognize the need for integration of the manufacturing process with the company strategy

Identify considerations to make in developing the strategy

Understand organizational strategy selection Explain how resources can be aligned with

strategic market objectives Determine the importance of customer

requirements in product design and development Describe the strategic importance of Just-in-Time

(JIT) and total quality management (TQM)


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Principle of Competitive Exclusion

“No two species can coexist that make their living in the

identical way.”

—Professor G.F. Gause


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Strategy (Strategic Plan)

The plan for how to marshal and determine actions to support the mission, goals,and objectives of an organization. Generally includes an organization’s explicit mission, goals, and objectives and the specific actions needed to achieve those goals and objectives.

— APICS Dictionary, 9th ed.


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Considerations in Developing Strategy Components

Development of time horizons Identification of key events Development of distinctive competence Creation of a competitive advantage Flexibility of decision patterns Transformation of inputs into value-added

outputs Commitment of necessary resources


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Strategic Planning Model

Source:Hayes, Robert H., Steven C. Wheelwright, and Kim B. Clark, Dynamic Manufacturing: Creating the Learning Organization, (The Free Press, 1988). Adapted with permission.

Corporateand

BusinessStrategy

ProductDevelopment

Strategy

OperationsStrategy

FinancialStrategy

MarketingStrategy

FacilitiesPlan

Short/LongTerm Planning

Plan

ControlsPlan

DirectionsPlan

MarketSegment

Plan

MarketNiches

Plan

CompetitiveAnalysis

Plan

ProductionTechnology

Plan

ProductionGeneration

Plan

MarketShares

Plan

CriticalSkillsPlan

UnitCapability

Plan

Economics New Technology

Cu

stom

er Req

uirem

ents

External FactorsRegulato

ry A

gen

cies

Co

mp

etit

ion

Financial PlanO

pera

tions P

lan

Marketing Plan

Product Dev

elop

men

t Pla

n


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A Corporate Strategy Model

Mission

Organizational Objectives

Environmental Scanning

Internal Strength and Weakness Analysis

Corporate Strategy

Vision


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Typical Strengths and Weaknesses

Function Weaknesses

Marketing Strong salesforceExcellent distribution

Excellent marketinginformation

Insufficient salesforcePoor forecasting

Finance/Accounting

Excess cashLarge line of credit

Excellent costinformationWall Street rating

Using wrong cost systemHeavily leveragedNo timely reporting

R&D/Design Experienced designersPatent protection

Insufficient R&D spending

Strengths


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Business Strategy ApproachesThree possible strategies for competitive distinction

Price leadership– Low-cost operations

– Effective supply chain management

– Standardized off-the-shelf products

– Standardized processes Product differentiation

– High-quality products

– Easily adaptable processes Focus toward a particular customer

– Responsive delivery, process flow

– Customized for targeted market segment


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Operations Strategy

“The content and process of activities, directed toward distinctive operations competence, that evaluate potential impacts of situations and alternatives in structured time dimensions and integrate a pattern of decisions to balance the resource commitments, output requirements, and risk in various focused transformation efforts”

Source: Stonebraker, Peter W. and G.Keong Leong , Operations Strategy, (Prentice-Hall, 1994). Reprinted with permission of Prentice-Hall..


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Four Elements of Operations Strategy

Method for evaluating the impact of activities

Definition of time dimensions– Time horizon – Time fences

A mechanism for integrating decisions

Transformation efforts

Source: Hayes, Robert H., Wheelwright, Steven C., and Clark, Kim B., Dynamic Manufacturing, (The Free Press, 1988). Reprinted with permission of The Free Press.


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Focus of an Operations Strategy Process-focused strategy

– Wide range of customized products or services at low volumes

Product- or service-focused strategy– Narrow range of standardized products

or services at high volumes Customer-focused strategy


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Strategy Development Approaches

Overview approach– Identify several core

strategic focuses– Make a checklist– Focus on one or two

issues Trade-off approach

– Identify most important variables and contributing factors

– Identify interaction and possible impacts

Reductionist approach– Identify root causes– Reduce effects

Sequential approach– Address competitive

priorities one at a time– Build upon foundation

priority

Source: Stonebraker, Peter W. and Leong G.Keong, Operations Strategy, (Allyn and Bacon, 1994). Adapted with permission of Allyn and Bacon.


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Strategic Planning Model

Source:Hayes, Robert H., Wheelwright, Steven C., and Clark, Kim B., Dynamic Manufacturing: Creating the Learning Organization, (The Free Press, 1988). Adapted with permission of Prentice-Hall.

Corporateand

BusinessStrategy

ProductDevelopment

Strategy

OperationsStrategy

FinancialStrategy

MarketingStrategy

FacilitiesPlan

Short/LongTerm Planning

Plan

ControlsPlan

DirectionsPlan

MarketSegment

Plan

MarketNiches

Plan

CompetitiveAnalysis

Plan

ProductionTechnology

Plan

ProductionGeneration

Plan

MarketShares

Plan

CriticalSkillsPlan

UnitCapability

Plan

Economics New Technology

Cus

tom

er Req

uirem

ents

External FactorsRegula

tory

Age

ncie

sC

om

pet

itio

n

Financial PlanO

pera

tions Plan

Marketing Plan

Product Dev

elop

men

t Pla

n


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Operations Strategy

Source: Stonebraker, Peter W. and Keong Leong, G., Operations Strategy (Boston: Allyn and Bacon, 1994). Adapted with permission of Allyn and Bacon.

Corporate StrategyFocus: Survival

Service-enhanced product or delivered service Satisfied customer

Policy

Manufacturing Operations Strategy

Focus: Competitive Strategies

Cost Flexibility Quality Delivery

Other OperationsStrategies

MarketingFinance

Human ResourceEngineering

Business StrategyFocus: Distinctive competence in the field

• Cost leadership• Product differentiation• Focus (cost or differentiation)


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A Firm Can Compete On

PriceQuality

Time

Flexibility

Delivery

Product Design Service


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Competitive Advantage Categories

Nonissues

Characteristics that do not enter into the competitive picture for that market niche

Order Winners

Characteristics that make your customers prefer you over competitors

Qualifiers

Characteristics you need to get into the game

Source: Hill, Terry, Manufacturing Strategy, (Irwin McGraw-Hill, 1994). Reprinted with permission of Irwin McGraw-Hill.


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Determinants of Industry Attractiveness

Source: Porter, Michael E., and Victor E. Millar, How Information Gives You Competitive Advantage (Harvard Business Review Strategic Management of Resources APICS Readings APICS, 2000.

Bargainingpowerof buyers

Bargainingpowerof suppliers

Threat of substitute products or services

Threat of newentrants

Rivalry among existing competitors


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Total Quality Management

“An effective system for integrating the quality development, quality maintenance, and quality improvement efforts of the various groups in an organization so as to enable production and service at the most economical levels which allow for full customer satisfaction”

—Armand Fiegenbaum

Quality


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Approaches to Quality

Transcendent quality is an ideal, a condition of excellence

Product-based quality is based on a product attribute

User-based quality is fitness for use Manufacturing-based quality is

conformance to requirements Value-based quality is the degree of

excellence at an acceptable price


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Quality Function Deployment

A methodology designed to ensure that all the major requirements of the customer are identified and subsequently met or exceeded through the resulting product design process and the design and operation of the supporting production management system.

Source: APICS Dictionary, 9th Ed. 1998


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This visual has been deleted. The numbering sequence has not been changed.

--The Committee


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Internal and External Customers

OrganizationProcess

Process

Internal Customer

Internal Customer

External Customer

Output

Output


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Quality Costs

Internal failure costs External failure costs Appraisal costs Prevention costs


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Quality at the Source

Companywide involvement Employee empowerment Development of world-class suppliers Prevention orientation Employee morale/attitudes


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Strategic Importance One way to achieve competitive advantage Customer focused and customer driven Necessary for survival and competitive

advantage

Customer

Overall Business Strategy

JIT TQM


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Definition of JIT

JIT is a philosophy of operations based on planned elimination of all waste and on continuous improvement of productivity. It encompasses the successful execution of all manufacturing activities required to produce a final product or service, from design engineering to delivery, including all stages of conversion from raw material onward.

Source: APICS Dictionary, 9th Ed. 1998


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Important Concepts of JIT

Elimination of Waste Respect for People

Continuous Improvement Focus on Customer

Customer


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Lean and JIT Similarities

Based on the Toyota production system Focus on value as defined by the customer Focus on eliminating all forms of waste Employ total quality management tools Employ continuous improvement


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--The Committee


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Benefits of JIT

50-90% reduction in throughput times 50-90% reduction in work in process 60-80% reduction in scrap and rework 50-90% reduction in setup times 30-60% reduction in manufacturing space

required

Source: Sandras, W. A. Jr., Just-in-Time: Making It Happen (Unleashing the Power of Continuous Improvement.), (John Wiley and Sons, 1989.) Adapted with permission of John Wiley and Sons.


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Benefits of JIT (cont.)

20% increase in shipments 40% reduction in space utilization 33% reduction in labor standards

Source: Hall, Robert W., Attaining Manufacturing Excellence, (Dow Jones-Irwin, 1987). Adapted with permission of Dow Jones-Irwin.


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Benefits of JIT (cont.)

Source: Wantuck, K.A., Just in Time for America, (KWA Media, 1989). Adapted with permission of KWA Media.

Improved ReducedQuality Inventory

Productivity Lot sizes

Service Lead times

Capacity Unit costs

Standardization Design time

Transport Systems Space

Flexibility Energy


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Objectives of JIT

To gain a competitive advantage To improve responsiveness to customers To achieve perfect quality To improve quality of work life To improve flexibility To improve resource productivity To use time-based management To reduce product cost

01smr ses1 ver 1-2

Documents

market shares

competitive

competitive

continuous

business strategy

operations

dynamic manufacturing

marketing