Lesson 1.2: Introduction to Operations Management - Operations Strategy in a Global Environment PDF

IE10 - OPERATIONS MANAGEMENT Part 1: Introduction to Operations Management Table of contents Operations and Operations Strategy 01 02 Productivity in a Global Environment 03 Project 04 Forecasting Ma...

IE10 - OPERATIONS MANAGEMENT Part 1: Introduction to Operations Management Table of contents Operations and Operations Strategy 01 02 Productivity in a Global Environment 03 Project 04 Forecasting Management  Operations Strategy 02 in a Global Environment A Global View of Operations and Supply Chains Boeing is competitive because both of its sales and supply chains are wolrdwide. Italy’s Benetton moves inventory to stores around the world faster than its competition with rapid communication and by building exceptional flexibility into design, production, and distribution Sony purchases components from a supply chain that extends to Thailand, Malaysia, and elsewhere around the world for assembly of its electronic products, which in turn are distributed around the world. Volvo, considered a Swedish company, was purchased by a Chinese company, Geely. But the current Volvo V40 is assembled in Belgium and Malaysia on a platform shared with the Mazda 3 (built in Japan) and the Ford Focus (built in six countries including the U.S.). A Global View of Operations and Supply Chains Globalization means customers, talent, and suppliers are worldwide. New standards of globalization impacted the ff: - Quality - Variety - Customization - Convenience - Timeliness - Cost A Global View of Operations and Supply Chains Six reasons of domestic business operations decide to change in form of international operation: 1. Improve the supply chain. 2. Reduce costs and exchange rate risk. 3. Improve operations. 4. Understand markets. 5. Improve products. 6. Attract and retain global talent. Determining Missions and Strategies Mission. Defines as its purpose – what it will contribute to the society. The mission states the rationale for the organization’s existence. Developing a good strategy is difficult, but it is much easier if the mission has been well-defined. Strategy. It is an organization’s action plan to achieve the mission. Achieving Competitive Advantage Through Operations Competitive Advantage. Implies the creation of a system that has a unique advantage over competitors. Operations managers achieve competitive advantage via differentiation, low cost and response. Competing on Differentiation. Differentiation is concerned with providing uniqueness. The idea of experience differentiation is to engage the customer—to use people’s five senses so they become immersed, or even an active participant, in the product. Competing on Cost. Low-cost leadership entails achieving maximum value as defined by your customer. Achieving Competitive Advantage Through Operations Competing on Response. Response as including the entire range of values related to timely product development and delivery, as well as reliable scheduling and flexible performance. Flexible response may be thought of as the The third aspect of response is quickness. ability to match changes in a marketplace where design innovations and volumes fluctuate substantially. The second aspect of response is the reliability of scheduling. Issues in Operations Strategy First perspective: Resource View Second perspective: Value chain analysis This means thinking in terms of the financial, This is used to identify activities that represent physical, human, and technological resources strengths, or potential strengths and may be available and ensuring opportunities for developing competitive that the potential strategy is compatible with advantage. those resources. Porter’s Five Forces Model It is a model that identifies and analyzes five competitive forces that shape every industry. Strategy Development and Implementation SWOT analysis is a formal review of internal strengths and weaknesses and external opportunities and threats. Key Success Factors and Core Competencies Key success factors (KSFs) are those activities that are necessary fir a firm to achieve its goals. Core Competencies are the set of unique skills, talents, and capabilities that a firm does at a world-class standard. Strategic Planning, Core Competencies, and Outsourcing Outsourcing is transferring activities that have traditionally been internal to external suppliers. Outsourcing implies an agreement (typically a legally binding contract) with an external organization. Risks & Issues of Outsourcing With roughly half of all outsourcing agreements fails because of the inadequate planning and analysis Timely delivery and quality standards may also be a major problems. Companies that outsource customer service tend to see a drop in customer satisfaction. Operation managers must also deal with other issues such, reduced employment levels, changes in facility requirements, potential adjustments to quality control systems and manufacturing process, and expanded logistics issues. Potential Advantages and Disadvantages of Outsourcing Rating Outsource Providers The Factor-rating method provides an objective way to evaluate outsource providers. The Factor-rating method involves rating suppliers on a number of factors, such as quality, delivery, price and service. Example 1: Rating Provider Selection Criteria National Architects, Inc., a San Francisco–based designer of high-rise office buildings, has decided to outsource its information technology (IT) function. Three outsourcing providers are being actively considered: one in the U.S., one in India, and one in Israel Exercise #2 1. Claudia Pragram Technologies, Inc., has narrowed its choice of outsourcing provider to two firms located in different countries. Pragram wants to decide which one of the two countries is the better choice, based on risk-avoidance criteria. She has polled her executives and established four criteria. The resulting ratings for the two countries are presented in the table below, where 1 is a lower risk and 3 is a higher risk. The executives have determined four criteria weightings: Price, with a weight of 0.1; Nearness, with 0.6; Technology, with 0.2; and History, with 0.1. a) Using the factor-rating method, which country would you select? b) Double each of the weights used in part (a) (to 0.2, 1.2, 0.4, and 0.2, respectively). What effect does this have on your answer? Why? Exercise #2 2. Ranga Ramasesh is the operations manager for a firm that is trying to decide which one of four countries it should research for possible outsourcing providers. The first step is to select a country based on cultural risk factors, which are critical to eventual business success with the provider. Ranga has reviewed outsourcing provider directories and found that the four countries in the table that follows have an ample number of providers from which they can choose. To aid in the country selection step, he has enlisted the aid of a cultural expert, John Wang, who has provided ratings of the various criteria in the table. The resulting ratings are on a 1 to 10 scale, where 1 is a low risk and 10 is a high risk. John has also determined six criteria weightings: Trust, with a weight of 0.4; Quality, with 0.2; Religious, with 0.1; Individualism, with 0.1; Time, with 0.1; and Uncertainty, with 0.1. Using the factor-rating method, which country should Ranga select?  End of Part 1 of Chapter 2 CREDITS: This presentation template was created by Slidesgo, and includes icons by Flaticon, and infographics & images by Freepik