class 3-4 operations & supply chain strategies.ppt 2007

8/8/2019 Class 3-4 Operations & Supply Chain Strategies.ppt 2007

1/29


2/29

Strategy

What is meant by strategy?

Strategy is the mechanism/process by which anorganisation/business make decisions on how to utilize theirresources

What are the basic factors that determine organisations

strategy?Vision Mission


3/29

Vision

What is meant by Vision of an Organisation?

Defines the desired or intended future state of an organization orenterprise in terms of its fundamental objective and/or strategicdirection.Vision is a long term view It is a source of inspiration.

For example a charity working with the poor might have a visionstatement which read "A world without poverty"


4/29

Vision of Ratan Tata

To provide a safe, all weather, cost effective, andenvironment friendly travel solution for the

Indian/Europian/American families


5/29

M

issionWhat is meant by Mission of an Organisation?Defines the fundamental purpose of an organization or anenterprise, basically describing why it exists and what it does to

achieve its Vision.

What was the Mission that came out of the Vision ofRatanTata?

Tata Nano Vision should significantly stretch the resources and capabilities

of the farm Vision should inspire people in the organization to achievethings they never thought possible Vision should unite people in the organization toward the

pursuit of one common goal


6/29

Vision vs Mission

Does Vision and Mission means the same?

Both are related The vision is more broad and future oriented the goal on thehorizon The mission is more focused how you will get to the horizon


7/29

Sample Vision/Mission Statements

Mc Donalds The vision is to be the worlds best quick service restaurant

experience. Being the best means providing outstanding quality,service, cleanliness, and value, so that we make every customer inevery restaurant smile

PVR Cinemas Our long-term vision is to remain Indias most premium and most

preferred Retail Entertainment Company. To achieve this vision, wecontinue to provide the highest exhibition standards at our cinemasbesides increasing the number of cinemas under operation on apan India basis. We further look forward to bringing allied retailentertainment concepts and complete the entertainment

experience for our customers.


8/29

Top-Down StrategyModelVision

Mission

BusinessStrategy

MarketingFinance

HR

IT

Operations& Supply

Chain

Strategy


9/29

StrategyModel for PVROur long-term vision is to remain Indias most

premium and most preferred Retail EntertainmentCompany.

We continue to provide the highest exhibition standards at our cinemas besides

increasing the number of cinemas under operation on a pan India basis.We further look forward to bringing allied retail entertainment concepts andcomplete the entertainment experience for our customers.

Target customers are high income families, individuals, corporates To expand into 25 cities in the south India by 2010

To bring the latest in entertainment technology To provide customized solution to different customer segment

Operational Strategy PVR uses Aircooled environment instead of Air Conditioning in TierII cities PVR provides samosas instead of hotdogs inTier II cities


10/29

Business Strategy

The strategy that identifies the firms targeted customers and setstime frames and performance objectives for the business.

Strategy determines the utilization of structural and infrastructuralelements of the organisation

Structural elements are tangible resources like buildings, equipment.

Infrastructural elements are the people, policies, decision rules,organisation structure, organisation values.


11/29

FunctionalStrategy Functional strategy translates a business strategy into specific actionsfor the functional areas such as marketing, HR and Finance.

Functional strategies should align with the overall business strategyand with each other.

Eg., Marketing Strategy: PVR Cinemas has tied up with Facebook,Visa Platinum and Amex Card.


12/29

Operations & S

upply Chain Strategy

Operations and supply chain strategy is a functional strategy thatindicates how structural and infrastructural elements within the

operations and supply chain areas will be acquired and developed tosupport the overall business strategy.

Objective To determine the right mix of structural and infrastructural

elements based on the clear understanding of the performancedimensions valued by customers and the trade-off involved The Ops & Supply Chain strategy should be aligned to businessstrategy To support the development of core competency of ops andsupply chain


13/29

Core Competency Core competency are organizational strengths or abilities, developedover a period of time, that customers find valuable and competitorsfind difficult or even impossible to copy.

Amul Core competency is in sourcing high quality milk fromcooperative at low cost

Nokia Core competency is in faster new product development

Dell computers Core competency is in supply chain network

What is the core competency of Maruti Suzuki?

What is the core competency of Microsoft?

What is the core competency of Intel?


14/29

Operations Strategies Engineer-to-Order means customer s specifications require unique engineeringdesign or significant customization. usually customer is highly involved in the product design

Inventory will not normally be purchased until needed bymanufacturing. Delivery lead time is long because it includes not only purchaselead time, but also design lead time.

Example Ship buildingAircraft Luxury goods


15/29

Operations Strategies Make-to-Order means that the manufacturer does not start to make the productuntil a customers order is received. usually made from standard items but may include custom-

designed components as well. Delivery lead time is reduced because there is little design timerequired and inventory is held as raw material

Example

Furniture Restaurant


16/29

Operations Strategies

Assemble-to-order means that the product is made from standard components thatthe manufacturer can inventory and assemble according to acustomer order.

Delivery lead time is reduced further because there is no designtime needed Inventory is held ready for assembly

Example

Luxury cars Desktop computers/laptops Restaurant


17/29

Operations Strategies Make-to-stock means the supplier manufactures the goods and sells fromfinished goods inventory. Delivery lead time is shortest

Example Cars FMCG

Consumer Electronics


18/29

Impact of

Ops & SC

M

Strategy Structural Elements

Capacity Outsource/Sub-contractingWarehouses

Distribution Centres Technology Transportation Computer Systems

Infrastructural ElementsOrganisation structure, manpower Forecasting techniques Supplier selection process, criteria


19/29

PerformanceDimensions

Quality

Time

Flexibility

Cost


20/29

Qual

ity

Quality is defined as the characteristics of a product or service that bearon its ability to satisfy stated or implied needs.

Sub dimension of Quality PerformanceQuality:

What are the basic operating characteristics of the product orservice? Eg: comfartable ride in Honda City car

ConformanceQuality:

Was the product or service performed to specifications? EgHonda is expected to give mileage of 15kmpl, maintenance freeReliabilityQuality:

Will the product work for a long time without failing orrequiring maintanence? Eg: Chinese goods are known for lowreliability


21/29

Time Time has two basic characteristics: speed and reliability.

Sub dimension of Time Delivery Speed:

How quickly the operations or supply chain function can fulfill a

need, once it has been identified. Eg., Dominos Pizza in 30 mins Delivery Reliability:

Ability to deliver products and services when promised. Measured by percentage of orders delivered by promised timevery crucial for supply chain of perishable items like food, meat,flowers

reliability in terms of supply of correct order, no shortage/excess Delivery window is the acceptable time range in which deliveries canbe made.

A firm can have long lead times and still have high degree of delivery

reliability. Public Provident Fund versus Investment in private banks


22/29

Flex

ibility

Flexibility How quickly operations and supply chains can respond to theunique needs of customers.

Sub dimension of Flexibility Mix Flexibility:

ability to produce wide range of products or service Eg.,Dominos Pizza, Pizza Hut, Subway, Tata Motors, Maruti

Changeover Flexibility:

ability to provide new product with minimal delayVolume Flexibility:

ability to produce what ever volume the customer needs


23/29

Cost

Direct Cost like Raw Material, machine, people

Indirect Cost like administration, marketing

Overheads like water, security


24/29

Trade-Off Among PerformanceDimensions

Can we have superior quality of product at low price?

We will have to trade-off the one performance dimension with the

other based on the business strategy, target customer

KingFisher & KingFisher Red Airlines - what is the difference?


25/29

How to evaluatetwo competingproducts

Value Index

Dimension

Importance in a scaleof (1-5)

Performance Value Index

Indica V2 Honda Jazz Indica V2 Honda Jazz

PerformanceQuality (Mileage,Comfort, Maintanence)

3 2 5 6 15

Delivery Speed 1 5 5 5 5

After-Sales Support 2 3 4 6 8

Cost 4 5 2 20 8

37 36

As per the Value Index arrived, we will select Indica. But we willhave to go beyond the cumulative figure many times as it maymislead us many times


26/29

OrderQualifiers & Order Winners

OrderQualifiers are performance dimensions on whichcustomers expect a minimum level of performance.

Superior performance on an order qualifier will not, byitself give a company a competitive advantage

Example: Quality of the product

Order Winners are performance dimensions that

differentiate a companys products and services fromcompetitiors

Cost, delivery speed, flexibility Example: People go to Big Bazaar to buy the brandedgoods are they provide the same at the lowest price


27/29

Assignmenty Case Study : Catherines Confectionaries

y Book : Introduction to Operations & Supply Chain

Management - Cecil C.Bozarth & Robert .Handfieldy Pg No : 40


28/29

Marks Allotmenty Internals 35 marks

MidtermTest 10 marks

Case Presentation 5 marks

Quiz/Assignment 20 marks

o Externals 65 marks


29/29

class 3-4 operations & supply chain strategies.ppt 2007

Documents