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Operations Management Productivity & Competitive Advantage

Operations Management Productivity & Competitive Advantage. Introduction. Growth rate. Growth. Maturity. Decline.

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Operations Management Productivity & Competitive Advantage

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  1. Operations ManagementProductivity & Competitive Advantage

  2. Introduction Growth rate Growth Maturity Decline Stages in the Product Life Cycle Floppy Disks mp4 players CD players mp3 players cassette players DVD’s iphone Fax Machine

  3. Strategy & Issues During Product Life Introduction • Best period to increase market share • R&D engineering are critical • Company Strategy & Issues • Product design and development are critical • Frequent product and process design changes • Short production runs • High production costs • Utmost attention to quality • Quick elimination of market-revealed design defects • OM Strategy & Issues

  4. Strategy & Issues During Product Life Growth • Company Strategy & Issues • Sensitive to Changes in price or quality • Marketing is critical • Strengthen niche • Forecasting is critical • Product and process reliability • Competitive product improvements and options • Enhance distribution • OM Strategy & Issues

  5. Strategy & Issues During Product Life Maturity • Company Strategy & Issues • Poor time to increase market share • Competitive costs become critical • Usually poor time to change quality or price • Defend position via fresh promotional and distribution approaches • Standardization - Increasing stability of manufacturing process • Less rapid product changes and more minor annual model changes • Optimum capacity • Long production runs • Re-examination of necessity of design changes • OM Strategy & Issues

  6. Strategy & Issues During Product Life Decline • Company Strategy & Issues • Cost control critical to market share • Little product differentiation • Cost minimization • Overcapacity in the industry • Prune line to eliminate items not returning a good margin • Reduce capacity • OM Strategy & Issues

  7. Strategy Development and Implementation • Understand issues – research, preconditions, dynamics • Research • High return on investment • High product quality (relative to competition) • High capacity utilization • High operating efficiency • High capital turnover

  8. Strategy Development and Implementation Understand issues – Preconditions Strengths and Weaknesses of competitors as well as new entrants into the market, substitutes Current and prospective environmental, technological, legal and economic issues. Product life cycle Resources available within the firm and within the OM functions Integration of OM strategy with the company’s strategy and other functional areas.

  9. Strategy Development and Implementation Understand issues – Dynamics Strategic changes due to two reasons: Changes within the org. Personnel, finance, product life Changes in the environment

  10. Strategy Development and Implementation Form a strategy for competitive advantage Identify critical success factors Critical success factors are the factors that are key to achieving competitive advantage. Build and staff the organization Integrate OM with other activities.

  11. Identifying Critical Success Factors Production/Operations Finance/Accounting Leverage Cost of capital Working capital Receivables Payables Financial control Lines of credit Marketing Service Distribution Promotion Channels of distribution Product positioning (image, functions) Decisions Sample Option Product Customized, or standardized Quality Define customer expectations and how to achieve them Process Facility size, technology, capacity Location Near supplier or customer Layout Work cells or assembly line Human resource Specialized or enriched jobs Supply chain Single or multiple source suppliers Inventory When to reorder, how much to keep on hand Schedule Stable or fluctuating productions rate Maintenance Repair as required or preventive maintenance

  12. CSF’s of Microsoft • It focuses on one business – software • It thinks globally – operates and sells • Senior management involved in product development process • It recruits and retains top people in its field • Emphasizes on speed to market

  13. Courteous, but limited passenger service Short haul, point-to-point routes, often to secondary airports Lean, productive employees Competitive Advantage: Low Cost High aircraft utilization Frequent, reliable schedules Standardized fleet of Boeing 737 aircraft Southwest Airline’s Low Cost Competitive Advantage CSF’s

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