introduction & strategy module introduction & administrative
TRANSCRIPT
Introduction & Strategy Module
Introduction & Administrative www.kellogg.northwestern.edu/course/opns430/emp/vanmieghem/
What is operations Process view of Ops
What is a good operation? A Strategic Framework for Ops
Aligning strategy and operations: Focus Relationship between process choice and strategy Shouldice Hospital Wriston Manufacturing
Operations as a managerial integration function Evaluation and Improvement
Course is structured to answer:
1. What is an improvement? Strategic role of ops
2. Where target improvements? Identify metrics by linking process flows with financial flows
3. How improve? Improve each metric
Course: Goals and Overview
Slide 2 © J. A. Van Mieghem
What is Operations?
“The planning and execution of work” (JVM 2008)
“Creation and delivery of products and services to customers” (JVM 2008)
3 Views of Operations
Slide 4 © J. A. Van Mieghem
Competencies
Operations StrategyResources Processes
Max NPV
Operations strategy is a plan for developing resources and configuring processes such that the resulting competencies maximize NPV
A process is a well-structured transformation of inputs into outputs
Outputs
GoodsServices
Inputs
Flow units/Entities(customers, data,
material, cash, etc.)
Labor & Capital
Resources
Network ofActivities and Buffers
Slide 5 © J. A. Van Mieghem
The three ‘colors’ of operational excellence
Management Infrastructure
“The formal structures, processes and systems through which resources are managed in support of the operating system”
“The way people think, feel and conduct themselves in the workplace, individually and collectively”
Mindsets, Capabilities & Behaviors
“The way assets and resources are configured and optimised to create value and minimise losses”
Operating System
Source: John Drew
What defines a “good process”? Delivered value / Supply chain surplus
Delivered value of process = benefit to process customers – total process
cost
Benefit driven by customer value Variety
V(flexibility)Quality Q:
• of product or outcome
• of service
Time T:• Rapid, reliable delivery• New product
development
Price p (Cost)
I am looking for a small batch of printed books
Which location seems better: a printer in the US or in China?
A question
Slide 8 © J. A. Van Mieghem
A question… Competitive analysis: cost v. quantity
$-
$5
$10
$15
$20
$25
1,000 2,000 3,000 4,000 5,000
BioPrint (Minneapolis, MN)
Jostens (Topeka, KS)
AsianPrinting (middleman in L.A., CA)
Aomeiya (Shandong, China)
BookMasters (Grand Rapids, MI)
Caxton Printers (Caldwell, Idaho)
Imaging Hawaii (Honolulu)
Lithopak (Shenzhen, China)
Lotsize
Cost/book
Slide 9 © J. A. Van Mieghem
A question… Competitive analysis: cost v. responsiveness
BioPrint (Minneapolis, MN)
Jostens (Topeka, KS)
AsianPrinting (middleman in L.A., CA)
Aomeiya (Shandong, China)
BookMasters (Grand Rapids, MI)
Caxton Printers (Caldwell, Idaho)
Imaging Hawaii (Honolulu + Hong Kong)
Lithopak (Shenzhen, China)
$5 $10 $15 $20 $25
Cost efficiency ($/book)
Responsiveness (weeks)
BookMasters (Grand Rapids)2
3
7
8
Aomeiya (Shandong)
Slide 10 © J. A. Van Mieghem
What defines a good operation?
A good operation
structures the processes and resources to
align and adapt the operational competencies
with the needs of the customer(s)
Slide 11 © J. A. Van Mieghem
A Framework for designing an Operations Strategy and Structure
1. What is our strategic position: how do we compete & provide value in the market?
What is the value proposition to our customers? Rank (p, T, Q, V)
2. Given our strategic position, what must operations do particularly well?
Which competencies must ops develop? Rank (c, T, Q, Flex)
3. Given needed competencies, how should operations processes be structured to develop competencies that support strategy? Process choice (structure) and management
competitivestrategy
Resources & Processes
operationalcompetencies
What defines a good operation?Achieving alignment at Shouldice Hospital
Slide 13 © J. A. Van Mieghem
Wriston Manufacturing
Handouts to be distributed in class
Slide 14 © J. A. Van Mieghem
Total Burden Rates (total overhead cost / direct labor cost)
01234567
Free capacity and Throughput
$0
$50
$100
$150
$200
Sandusky,OH
Essex,Canada
Detroit, MI
Saginaw,MI
Lima, OH
Lebanon,PA
Tiffin, OH
Fremont,OH
Maysville,KY
Sandusky,OH
Essex,Canada
Detroit, MI
Saginaw,MI
Lima, OH
Lebanon,PA
Tiffin, OH
Fremont,OH
Maysville,KY
Wriston’s HED Division Plant NetworkExhibit 2A
Slide 15 © J. A. Van Mieghem
Recall the two fundamental strategies:1. Doing the same things as rivals but better
2. Doing different things
Focused, tailored operations are more competitive than generics
What is your plan to get to or push out the frontier?
The Fundamentals: Competitive Advantage through Tailored Operations
Cost efficiency
Cus
tom
izat
ion
A
efficient frontier
Slide 16 © J. A. Van Mieghem
The Concept of Operational Focus
A focused process attempts to deliver one specific and narrow customer value proposition (i.e., its priority ranking is clear and constant for all patients)– It is optimized to deliver the needed competencies for one narrow patient segment– Focus does not imply standardization: ER is focused on providing timeliness and
flexibility to patient needing emergency care
Cost efficiency
Flexibility(responsiveness)
World-classEmergency Room
World-classspecialty non-emergencyShouldice Hospital
One generalhospital
efficient frontier = current state of best practice
Slide 17 © J. A. Van Mieghem
Summary: Introduction & Strategy Module
Operations is the process of bringing goods and services to customers Process view = viewing an organization as a transformation of inputs into outputs through a
network of activities and buffers, utilizing resources, IT and mgt
A good operation maximizes value or supply chain surplus A strategic framework for operations for increasing the value of operations by aligning the
competencies of the operations structure (resources & processes) with corporate strategy
Aligning strategy and operations can be achieved through: Focus Process choice
Cases: Shouldice Hospital Wriston Manufacturing