the strategic role of operations
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The Strategic Role of Operations. Dr. Ron Lembke, Ph.D. University of Nevada, Reno. What is strategy?. “How a firm intends to create and sustain value for its shareholders” Major components: Operations effectiveness Customer management Product innovation Competitiveness: - PowerPoint PPT PresentationTRANSCRIPT
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The Strategic Role of Operations
Dr. Ron Lembke, Ph.D.University of Nevada, Reno
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What is strategy?“How a firm intends to create and sustain
value for its shareholders”Major components:
Operations effectivenessCustomer managementProduct innovation
Competitiveness:A firm’s relative position in comparison to
other firms in the marketplace
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Satisfying the CustomerMission: the organization’s purpose,
what it hopes to achieve; rationale for its existence.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.
(Merck mission statement)
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Mission Statement“Without a clear mission, an
organization is unlikely to achieve its true potential, because there is little direction for formulating strategies.”
Wouldn’t the same be true about people?
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My Favorite GuruWhen you think of
something, put it on a list.
Check your lists regularly.
Don’t get sucked into email distractions.
Get rid of the clutter you don’t need.
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StrategyStrategy: a plan for achieving the mission
Each functional area (accounting, finance, marketing) determines its “supporting mission”
Tactics: the methods to be used to achieve the strategic goals.Must support mission, corporate values
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Michael PorterThree ways to achieve corporate mission:1. Differentiation: Make your product different
and / or better2. Cost Leadership (lower prices): Wal- Mart,
Southwest Airlines3. Quick Response: Pizza Hut, FedEx
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Purchasing Triangle
Price
Quality
Speed
“Don’t be sad; two out of three ain’t bad” -- Meatloaf
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Competitive DimensionsCost -- make it cheapQuality and Reliability -- make it goodDurability – continues to work well for a long
timeSpeed -- make it fastReliability -- deliver when promisedCope with Change -- change volumeNew product speedCustomer support
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Impact of Life Cycle
CassettesRecords
Download
8-Tracks
CDs
DATMiniDisc
Introduction Growth Maturity Decline
DVDAudio
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Scale of Life Cycle
Records
DAT
Introduction Growth Maturity Decline
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Life Cycle and OperationsIntroduction: develop product, small-scale
productionGrowth: ramp up production, marketingMaturity: standardized, volume production,
optimizationDecline: cost minimization, eliminate
unprofitable products
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CompetitivenessOrder qualifiers: screening criterion that
allows your products to be considereddeliver on-time, reliability, general quality
Order Winners: criterion that differentiates your service/product above the competitionprice, quality, reliability
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Balanced Scorecard – track performance from following perspectives:Financial: revenue or productivity growthCustomer: Product leadership, customer
intimacy, operational excellenceInternal: innovation, customer management,
operational excellence, corporate citizenshipLearning and Growth: strategic competencies
and technologies, climate for action Kaplan and Martin, 1992, “The Balanced Scorecard:
Measures that Drive Performance” Harvard Business Review
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Operations StrategyCore capabilities: the skills that differentiate
the firm from its competitors.What is the thing you do better than
everyone else, that you could never dare trust to anyone else?Soft drinks: the secret sauceAutomobiles: designing engines
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ProductivityProductivity = Outputs / InputsPartial: Output/Labor or Output/CapitalMultifactor:
Output / (Labor + Capital + Energy )Total Measure:
Output / Inputs
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Growth of Service Economy
01020304050607080
1850 75 1900 25 50 75 2000
ServicesIndustryFarming
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ProductivityServices have always been a large portion of
U.S. economyServices’ share continues to growU.S. has higher service % than othersU.S. productivity growth has lagged other
countries in past.What explains this phenomena?
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Improving ProductivityDevelop productivity measurements– “you
can’t improve what you can’t measure”Identify and Improve bottleneck operations
firstEstablish goals, document and publicize
improvementsHow do we improve these?
Yep, Continuous Process Improvement