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© 2008 Prentice Hall, Inc.2 – 1 Operations Management Chapter 2 – Operations Strategy in a Global Environment PowerPoint presentation to accompany Heizer/Render.

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Presentation on theme: "© 2008 Prentice Hall, Inc.2 – 1 Operations Management Chapter 2 – Operations Strategy in a Global Environment PowerPoint presentation to accompany Heizer/Render."— Presentation transcript:

1 © 2008 Prentice Hall, Inc.2 – 1 Operations Management Chapter 2 – Operations Strategy in a Global Environment PowerPoint presentation to accompany Heizer/Render Principles of Operations Management, 7e Operations Management, 9e Some additions and deletions have been made by Ömer Yağız to this slide set. (Revised February 2012)

2 © 2008 Prentice Hall, Inc.2 – 2 Outline Global Company Profile: Boeing Global Company Profile: Boeing A Global View of Operations A Global View of Operations Cultural and Ethical Issues Cultural and Ethical Issues Developing Missions And Strategies Developing Missions And Strategies Mission Mission Strategy Strategy

3 © 2008 Prentice Hall, Inc.2 – 3 Outline – Continued Achieving Competitive Advantage Through Operations Achieving Competitive Advantage Through Operations Competing On Differentiation Competing On Differentiation Competing On Cost Competing On Cost Competing On Response Competing On Response Ten Strategic OM Decisions Ten Strategic OM Decisions

4 © 2008 Prentice Hall, Inc.2 – 4 Outline – Continued Issues In Operations Strategy Issues In Operations Strategy Research Research Preconditions Preconditions Dynamics Dynamics

5 © 2008 Prentice Hall, Inc.2 – 5 Outline – Continued Strategy Development and Implementation Strategy Development and Implementation Critical Success Factors and Core Competencies Critical Success Factors and Core Competencies Build and Staff the Organization Build and Staff the Organization Integrate OM with Other Activities Integrate OM with Other Activities

6 © 2008 Prentice Hall, Inc.2 – 6 Outline – Continued Global Operations Strategy Options Global Operations Strategy Options International Strategy International Strategy Multidomestic Strategy Multidomestic Strategy Global Strategy Global Strategy Transnational Strategy Transnational Strategy

7 © 2008 Prentice Hall, Inc.2 – 7 Learning Objectives 1.Define mission and strategy 2.Identify and explain three strategic approaches to competitive advantage 3.Identify and define the 10 decisions of operations management When you complete this chapter you should be able to:

8 © 2008 Prentice Hall, Inc.2 – 8 Learning Objectives 4.Identify five OM strategy insights provided by PIMS research 5.Identify and explain four global operations strategy options When you complete this chapter you should be able to:

9 © 2008 Prentice Hall, Inc.2 – 9 Global Strategies Boeing – sales and production are worldwide Boeing – sales and production are worldwide Benetton – moves inventory to stores around the world faster than its competition by building flexibility into design, production, and distribution Benetton – moves inventory to stores around the world faster than its competition by building flexibility into design, production, and distribution Sony – purchases components from suppliers in Thailand, Malaysia, and around the world Sony – purchases components from suppliers in Thailand, Malaysia, and around the world

10 © 2008 Prentice Hall, Inc.2 – 10 Global Strategies Volvo – considered a Swedish company but it is (was) controlled by an American company, Ford. Now it belongs to Geely, a Chinese company. The current Volvo S40 is built in Belgium and shares its platform with the Mazda 3 built in Japan and the Ford Focus built in Europe. Volvo – considered a Swedish company but it is (was) controlled by an American company, Ford. Now it belongs to Geely, a Chinese company. The current Volvo S40 is built in Belgium and shares its platform with the Mazda 3 built in Japan and the Ford Focus built in Europe. A comment made on the Net upon the purchase of Volvo by Geely: Interesting. A brand renown for building cars that could survive a demolition derby with a couple of Sherman tanks will be made in a country renown for building cars that spontaneously disintegrate when a fly hits the windscreen. A comment made on the Net upon the purchase of Volvo by Geely: Interesting. A brand renown for building cars that could survive a demolition derby with a couple of Sherman tanks will be made in a country renown for building cars that spontaneously disintegrate when a fly hits the windscreen.

11 © 2008 Prentice Hall, Inc.2 – 11 Haier – A Chinese company, produces compact refrigerators (it has one-third of the US market) and wine cabinets (it has half of the US market) in South Carolina Haier – A Chinese company, produces compact refrigerators (it has one-third of the US market) and wine cabinets (it has half of the US market) in South Carolina Globalization means that producing locally and exporting is not a viable business model any more for many industries Global Strategies

12 © 2008 Prentice Hall, Inc.2 – 12 Some Multinational Corporations % Sales% Assets OutsideOutside HomeHomeHome% Foreign CompanyCountryCountryCountryWorkforce CiticorpUSA3446NA Colgate-USA7263NA Palmolive Dow USA6050NA Chemical GilletteUSA6253NA HondaJapan6336NA IBMUSA574751

13 © 2008 Prentice Hall, Inc.2 – 13 Some Multinational Corporations % Sales% Assets OutsideOutside HomeHomeHome% Foreign CompanyCountryCountryCountryWorkforce ICIBritain7850NA NestleSwitzerland PhilipsNetherlands Electronics SiemensGermany51NA38 UnileverBritain & Netherlands

14 © 2008 Prentice Hall, Inc.2 – 14 Some Boeing Suppliers (787) FirmCountryComponent LatecoereFrancePassenger doors LabinelFranceWiring DassaultFranceDesign and PLM software PLM software Messier-BugattiFranceElectric brakes ThalesFranceElectrical power conversion system conversion system and integrated and integrated standby flight display standby flight display Messier-DowtyFranceLanding gear structure DiehlGermanyInterior lighting

15 © 2008 Prentice Hall, Inc.2 – 15 Some Boeing Suppliers (787) FirmCountryComponent CobhamUKFuel pumps and valves Rolls-RoyceUKEngines Smiths AerospaceUKCentral computer system system BAE SYSTEMSUKElectronics Alenia AeronauticsItalyUpper center fuselage & fuselage & horizontal stabilizer horizontal stabilizer Toray IndustriesJapanCarbon fiber for wing and tail units wing and tail units

16 © 2008 Prentice Hall, Inc.2 – 16 Some Boeing Suppliers (787) FirmCountryComponent Fuji HeavyJapanCenter wing box Industries Industries Kawasaki HeavyJapanForward fuselage, Industries fixed section of wing, Industries fixed section of wing, landing gear well landing gear well Teijin SeikiJapanHydraulic actuators Mitsubishi Heavy JapanWing box Industries Industries Chengdu Aircraft ChinaRudder Group Hafei AviationChinaParts

17 © 2008 Prentice Hall, Inc.2 – 17 Some Boeing Suppliers (787) FirmCountryComponent Korean AviationSouthWingtips Korea Korea SaabSwedenCargo access doors

18 © 2008 Prentice Hall, Inc.2 – 18 Reasons to Globalize 1.Reduce costs (labor, taxes, tariffs, etc.) 2.Improve supply chain 3.Provide better goods and services 4.Understand markets 5.Learn to improve operations 6.Attract and retain global talent Tangible Reasons Intangible Reasons

19 © 2008 Prentice Hall, Inc.2 – Reduce Costs Foreign locations with lower wage rates and tariffs can lower direct and indirect costs Foreign locations with lower wage rates and tariffs can lower direct and indirect costs Maquiladoras (free trade zones-Mexico) Maquiladoras (free trade zones-Mexico) World Trade Organization (WTO) World Trade Organization (WTO) Trade blocs & agreements (reduced cost of operating) Trade blocs & agreements (reduced cost of operating) North American Free Trade Agreement (NAFTA) North American Free Trade Agreement (NAFTA) Asia-Pacific Economic Cooperation(APEC-21 countries) Asia-Pacific Economic Cooperation(APEC-21 countries) South East Asia Treaty Org(SEATO-8 countries South East Asia Treaty Org(SEATO-8 countries MERCOSUR (Argentina, Brazil, Paraguay, and Uruguay MERCOSUR (Argentina, Brazil, Paraguay, and Uruguay European Union (EU) European Union (EU) Ex: Many U.S. businesses have their call centers in India

20 © 2008 Prentice Hall, Inc.2 – Improve the Supply Chain Locating facilities closer to unique resources Locating facilities closer to unique resources Auto design to California Auto design to California Athletic shoe production to China (it was South Korea before) Athletic shoe production to China (it was South Korea before) Perfume manufacturing in France Perfume manufacturing in France

21 © 2008 Prentice Hall, Inc.2 – Provide Better Goods and Services Objective and subjective characteristics of goods and services Objective and subjective characteristics of goods and services On-time deliveries On-time deliveries Cultural variables (customized goods & services to meet unique cultural needs) Cultural variables (customized goods & services to meet unique cultural needs) Improved customer service (reduce response time) Improved customer service (reduce response time)

22 © 2008 Prentice Hall, Inc.2 – Understand Markets Interacting with foreign customers and suppliers can lead to new opportunities Interacting with foreign customers and suppliers can lead to new opportunities Cell phone design from Europe (Nokia) Cell phone design from Europe (Nokia) Cell phone fads (accessories) from Japan and Korea Cell phone fads (accessories) from Japan and Korea a device which converts your rear-view mirror into a display for the phone. So if someone is calling you, just look at the number on the mirror while you drive.a device which converts your rear-view mirror into a display for the phone. So if someone is calling you, just look at the number on the mirror while you drive. Sony Ericsson has launched stereophonic speakers called MDS-65, which can be attached to the phone and give the effect of a mini home theatre.Sony Ericsson has launched stereophonic speakers called MDS-65, which can be attached to the phone and give the effect of a mini home theatre. just look at all the accessories for the Ipod and the Iphone.just look at all the accessories for the Ipod and the Iphone. Extend the product life cycle Extend the product life cycle

23 © 2008 Prentice Hall, Inc.2 – BURADA…Learn to Improve Operations Remain open to the free flow of ideas Remain open to the free flow of ideas General Motors partnered with a Japanese auto manufacturer (Toyota) to learn (NUMMI-Calif.) General Motors partnered with a Japanese auto manufacturer (Toyota) to learn (NUMMI-Calif.) benchmarking - first practised by Xerox Corp. benchmarking - first practised by Xerox Corp. Equipment and layout have been improved using Scandinavian ergonomic competence Equipment and layout have been improved using Scandinavian ergonomic competence TAV –- Tepe-Akfen-Vie (Tepe learned airport operations from Vie) TAV –- Tepe-Akfen-Vie (Tepe learned airport operations from Vie)

24 © 2008 Prentice Hall, Inc.2 – Attract and Retain Global Talent Offer better employment opportunities Offer better employment opportunities Better growth opportunities and insulation against unemployment Better growth opportunities and insulation against unemployment Relocate unneeded personnel to more prosperous locations during economic downturns (flexibility) Relocate unneeded personnel to more prosperous locations during economic downturns (flexibility) Incentives for people who like to travel Incentives for people who like to travel

25 © 2008 Prentice Hall, Inc.2 – 25 Cultural and Ethical Issues Cultures can be quite different Cultures can be quite different Attitudes can be quite different towards Attitudes can be quite different towards Punctuality Punctuality Lunch breaks Lunch breaks Environment Environment Intellectual property Intellectual property Thievery Thievery Bribery Bribery Child labor Child labor My Saudi Arabian experience with punctuality!

26 © 2008 Prentice Hall, Inc.2 – 26 You May Wish To Consider National literacy rate National literacy rate Rate of innovation Rate of innovation Rate of technology change Rate of technology change Number of skilled workers Number of skilled workers Political stability Political stability Product liability laws Product liability laws Export restrictions Export restrictions Variations in language Variations in language Work ethic Work ethic Tax rates Tax rates Inflation Inflation Availability of raw materials Availability of raw materials Interest rates Interest rates Population Population Number of miles of highway Number of miles of highway Phone system Phone system

27 © 2008 Prentice Hall, Inc.2 – 27 Match Product & Parent Braun Household Appliances Braun Household Appliances Firestone Tires Firestone Tires Godiva Chocolate Godiva Chocolate Haagen-Dazs Ice Cream Haagen-Dazs Ice Cream Jaguar Autos Jaguar Autos MGM Movies MGM Movies Lamborghini Autos Lamborghini Autos Alpo Petfoods Alpo Petfoods 1.Volkswagen 2.Bridgestone 3.Campbell Soup 4.Ford Motor Company 5.Gillette 6.Nestlé 7.Pillsbury 8.Sony Match Product & Parent (Kimin eli kimin cebinde?)

28 © 2008 Prentice Hall, Inc.2 – 28 Match Product & Parent (Kimin eli kimin cebinde?) Braun Household Appliances Braun Household Appliances Firestone Tires Firestone Tires Godiva Chocolate Godiva Chocolate Haagen-Dazs Ice Cream Haagen-Dazs Ice Cream Jaguar Autos Jaguar Autos MGM Movies MGM Movies Lamborghini Autos Lamborghini Autos Alpo Petfoods Alpo Petfoods 1.Volkswagen 2.Bridgestone 3.Ülker Group 4.Ford Motor Company 5.Gillette 6.Nestlé 7.Pillsbury 8.Sony

29 © 2008 Prentice Hall, Inc.2 – 29 Match Product & Country Braun Household Appliances Braun Household Appliances Firestone Tires Firestone Tires Godiva Chocolate Godiva Chocolate Haagen-Daz Ice Cream Haagen-Daz Ice Cream Jaguar Autos Jaguar Autos MGM Movies MGM Movies Lamborghini Autos Lamborghini Autos Alpo Pet Foods Alpo Pet Foods 1.Great Britain 2.Germany 3.Japan 4.United States 5.Switzerland

30 © 2008 Prentice Hall, Inc.2 – 30 Match Product & Country Braun Household Appliances Braun Household Appliances Firestone Tires Firestone Tires Godiva Chocolate Godiva Chocolate Haagen-Daz Ice Cream Haagen-Daz Ice Cream Jaguar Autos Jaguar Autos MGM Movies MGM Movies Lamborghini Autos Lamborghini Autos Alpo Pet Foods Alpo Pet Foods 1.Great Britain 2.Germany 3.Japan 4.United States 5.Switzerland 6.Turkey

31 © 2008 Prentice Hall, Inc.2 – 31 Developing Missions and Strategies Mission: overall purpose of an organization (misyon; varoluş nedeni). Mission: overall purpose of an organization (misyon; varoluş nedeni). The mission of an organization defines its reason for existence. Why are we in business? The mission of an organization defines its reason for existence. Why are we in business? Mission statements tell an organization where it is going Mission statements tell an organization where it is going Mission of the organization plus mission of the functional areas (prod, mktg, finance, R&D, etc) Mission of the organization plus mission of the functional areas (prod, mktg, finance, R&D, etc)

32 © 2008 Prentice Hall, Inc.2 – 32 Developing Missions and Strategies The strategy is an organizations action plan to achieve its mission and goals The strategy is an organizations action plan to achieve its mission and goals It is a long term plan It is a long term plan

33 © 2008 Prentice Hall, Inc.2 – 33 FedExs Mission FedEx is committed to our People-Service-Profit philosophy. We will produce outstanding financial returns by providing total reliable, competitively superior, global air-ground transportation of high priority goods and documents that require rapid, time-certain delivery. Equally important, positive control of each package will be maintained using real time electronic tracking and tracing systems. A complete record of each shipment and delivery will be presented with our request for payment. We will be helpful, courteous, and professional to each other and the public. We will strive to have a completely satisfied customer at the end of each transaction. Figure 2.2

34 © 2008 Prentice Hall, Inc.2 – 34 Mercks Mission The mission of Merck is 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 Figure 2.2

35 © 2008 Prentice Hall, Inc.2 – 35 Hard Rock Cafes Mission Our Mission: To spread the spirit of Rock n Roll by delivering an exceptional entertainment and dining experience. We are committed to being an important, contributing member of our community and offering the Hard Rock family a fun, healthy, and nurturing work environment while ensuring our long-term success. Figure 2.2

36 © 2008 Prentice Hall, Inc.2 – 36 Arnold Palmer Hospital Arnold Palmer Hospital is a healing environment providing family-centered care with compassion, comfort and respect… when it matters the most. Figure 2.2

37 © 2008 Prentice Hall, Inc.2 – 37 TAIs Mission (old version) TAI is a company of dedicated, dynamic and resourceful people searching for excellence and continued growth in the field of aerospace. Our mission is to fulfil the aerospace requirements of our nation and world markets with commitment to high quality, value and on time delivery. TAI is a company of dedicated, dynamic and resourceful people searching for excellence and continued growth in the field of aerospace. Our mission is to fulfil the aerospace requirements of our nation and world markets with commitment to high quality, value and on time delivery.

38 © 2008 Prentice Hall, Inc.2 – 38 TAIs Mission (current version) With our great leader Atatürks vision: The Future is in the Skies and our nations eagerness to Build its own aircraft; TAI has dedicated itself to be in the skies and space and be pioneers in developing Turkeys aviation and space industry. With our great leader Atatürks vision: The Future is in the Skies and our nations eagerness to Build its own aircraft; TAI has dedicated itself to be in the skies and space and be pioneers in developing Turkeys aviation and space industry. Mission statements may change over time..

39 © 2008 Prentice Hall, Inc.2 – 39 TAIs Mission (most current version)

40 © 2008 Prentice Hall, Inc.2 – 40 To provide excellent telecommunication solutions within the framework of Total Quality Management philosophy. NETAŞs Mission

41 © 2008 Prentice Hall, Inc.2 – 41 Fully satisfying customer expectations and requirements is the guiding mission of Arçelik. In order to achieve and maintain the high standards it has, Arçelik has a continual programme of investment which encompasses plants, manufacturing equipment, research & development and most importantly personnel. Arçeliks Mission

42 © 2008 Prentice Hall, Inc.2 – 42 Benefit to Society Mission Factors Affecting Mission Philosophy and Values Profitability and Growth Environment CustomersPublic Image Benefit to stockholders

43 © 2008 Prentice Hall, Inc.2 – 43 Sample Missions Sample Company Mission To manufacture and service an innovative, growing, and profitable worldwide microwave communications business that exceeds our customers expectations. Sample Operations Management Mission To produce products consistent with the companys mission as the worldwide low-cost manufacturer. Figure 2.3

44 © 2008 Prentice Hall, Inc.2 – 44 Sample Missions Figure 2.3 Sample OM Department Missions Product designTo design and produce products and services with outstanding quality and inherent customer value. Quality managementTo attain the exceptional value that is consistent with our company mission and marketing objectives by close attention to design, procurement, production, and field service operations Process designTo determine and design or produce the production process and equipment that will be compatible with low-cost product, high quality, and good quality of work life at economical cost.

45 © 2008 Prentice Hall, Inc.2 – 45 Sample Missions Figure 2.3 Sample OM Department Missions LocationTo locate, design, and build efficient and economical facilities that will yield high value to the company, its employees, and the community. Layout designTo achieve, through skill, imagination, and resourcefulness in layout and work methods, production effectiveness and efficiency while supporting a high quality of work life. Human resourcesTo provide a good quality of work life, with well-designed, safe, rewarding jobs, stable employment, and equitable pay, in exchange for outstanding individual contribution from employees at all levels.

46 © 2008 Prentice Hall, Inc.2 – 46 Sample Missions Figure 2.3 Sample OM Department Missions Supply chain management To collaborate with suppliers to develop innovative products from stable, effective, and efficient sources of supply. InventoryTo achieve low investment in inventory consistent with high customer service levels and high facility utilization. SchedulingTo achieve high levels of throughput and timely customer delivery through effective scheduling. MaintenanceTo achieve high utilization of facilities and equipment by effective preventive maintenance and prompt repair of facilities and equipment.

47 © 2008 Prentice Hall, Inc.2 – 47 Strategic Process MarketingOperations Finance/ Accounting Functional Area Missions Organizations Mission

48 © 2008 Prentice Hall, Inc.2 – 48 Strategy Action plan to achieve mission Action plan to achieve mission Functional areas have strategies Functional areas have strategies Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses Strategies exploit opportunities and strengths, neutralize threats, and avoid weaknesses

49 © 2008 Prentice Hall, Inc.2 – 49 Strategies for Competitive Advantage (OM) Compete on differentiation – better, or at least different Compete on differentiation – better, or at least different Compete on cost – cheaper Compete on cost – cheaper Compete on response – rapid response (hızlı hareket) Compete on response – rapid response (hızlı hareket) My idea : Maybe a fourth one is quality My idea : Maybe a fourth one is quality

50 © 2008 Prentice Hall, Inc.2 – 50 Competing on Differentiation Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customers perception of value Kimberly Clarks Safeskin gloves – leading edge products Kimberly Clarks Safeskin gloves – leading edge products Walt Disney Magic Kingdom theme park – experience differentiation Walt Disney Magic Kingdom theme park – experience differentiation Hard Rock Cafe – dining experience Hard Rock Cafe – dining experience

51 © 2008 Prentice Hall, Inc.2 – 51 Honda cars with Qiblah (Kıble) indicator sold in Saudi Arabia and Gulf countriesHonda cars with Qiblah (Kıble) indicator sold in Saudi Arabia and Gulf countries Prayer carpets with built-in compass made in Taiwan and sold in Arab countriesPrayer carpets with built-in compass made in Taiwan and sold in Arab countries Cell phones camera FM video games GPS wi-fi other applicationsCell phones camera FM video games GPS wi-fi other applications Competing on Differentiation

52 © 2008 Prentice Hall, Inc.2 – 52 Competing on Cost Provide the maximum value as perceived by customer. Does not imply low quality. Southwest Airlines – secondary airports, no frills service, efficient utilization of equipment Southwest Airlines – secondary airports, no frills service, efficient utilization of equipment Pegasus Airlines in Turkey Pegasus Airlines in Turkey Wal-Mart – small overheads, decreased shrinkage, distribution costs Wal-Mart – small overheads, decreased shrinkage, distribution costs Belgian discount food retailer Franz Colruyt – no bags, low light, no music, doors on freezers saves energy costs Belgian discount food retailer Franz Colruyt – no bags, low light, no music, doors on freezers saves energy costs Low-cost leadership Low-cost leadership

53 © 2008 Prentice Hall, Inc.2 – 53 Flexible, reliable and quick response. Values related to timely product development and delivery timely product development and delivery reliable scheduling reliable scheduling flexible performance flexible performance Competing on Response

54 © 2008 Prentice Hall, Inc.2 – 54 Competing on Response Flexibility is matching market changes in design innovation and volumes Flexibility is matching market changes in design innovation and volumes Institutionalization at Hewlett-Packard Institutionalization at Hewlett-Packard Reliability is meeting schedules Reliability is meeting schedules German machine industry German machine industry Timeliness is quickness in design, production, and delivery Timeliness is quickness in design, production, and delivery Johnson Electric, Bennigans(restaurant; delivery in 15 minutes), Motorola, Dominos Pizza Johnson Electric, Bennigans(restaurant; delivery in 15 minutes), Motorola, Dominos Pizza

55 © 2008 Prentice Hall, Inc.2 – 55 Competing on Response Flexibility is matching market changes in design innovation and volumes Flexibility is matching market changes in design innovation and volumes Institutionalization at Hewlett-Packard Institutionalization at Hewlett-Packard Reliability is meeting schedules Reliability is meeting schedules German machine industry German machine industry Timeliness is quickness in design, production, and delivery Timeliness is quickness in design, production, and delivery Johnson Electric, Bennigans(restaurant), Motorola, Dominos Pizza Johnson Electric, Bennigans(restaurant), Motorola, Dominos Pizza

56 © 2008 Prentice Hall, Inc.2 – 56 Competing on Response Examples for Quick Response: Dominos Pizza Türkiyenin en sevdiği pizzaları hazırlayan Dominos Pizza olarak evlere serviste yepyeni bir dönem başlatıyoruz. Ülkemizde 30 dakikada teslim garantisi veren tek firma olan Dominos Pizza bugüne dek "eğer geç kalırsak, sonraki siparişinizde bir pizzanız hediye" diyorduk. Şimdi de yepyeni bir söz daha veriyor ve eğer 30 dakikada gelemezsek siparişinizdeki kapınızda hemen bir pizzanın ücretini almıyoruz diyoruz. Dominos Pizza Türkiyenin en sevdiği pizzaları hazırlayan Dominos Pizza olarak evlere serviste yepyeni bir dönem başlatıyoruz. Ülkemizde 30 dakikada teslim garantisi veren tek firma olan Dominos Pizza bugüne dek "eğer geç kalırsak, sonraki siparişinizde bir pizzanız hediye" diyorduk. Şimdi de yepyeni bir söz daha veriyor ve eğer 30 dakikada gelemezsek siparişinizdeki kapınızda hemen bir pizzanın ücretini almıyoruz diyoruz. Tansaş 3 dakika içinde yeni bir kasanın açılması garantisi Tansaş 3 dakika içinde yeni bir kasanın açılması garantisi

57 © 2008 Prentice Hall, Inc.2 – 57 OMs Contribution to Strategy Product Quality Process Location Layout Human resource Supply chain Inventory Scheduling Maintenance FLEXIBILITY: Sonys constant innovation of new products………………………………....Design HPs ability to lead the printer market………………………………Volume Southwest Airlines No-frills service……..…..LOW COST DELIVERY: Pizza Huts 5-minute guarantee at lunchtime…………………..…..………………….Speed Federal Expresss absolutely, positively on time………………………..….Dependability QUALITY: Motorolas HDTV converters….…… Conformance Motorolas pagers………………………..….Performance Caterpillars after-sale service on heavy equipment……………....AFTER-SALE SERVICE Fidelity Securitys broad line of mutual funds………….BROAD PRODUCT LINE Figure 2.4 OperationsSpecificCompetitive DecisionsExamplesStrategy UsedAdvantage Response (Faster) Cost leadership (Cheaper) Differentiation (Better)

58 © 2008 Prentice Hall, Inc.2 – Strategic OM Decisions 1.Goods and service design 2.Quality 3.Process and capacity design 4.Location selection 5.Layout design 6.Human resources and job design 7.Supply chain management 8.Inventory 9.Scheduling 10.Maintenance

59 © 2008 Prentice Hall, Inc.2 – 59 Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices Goods and service design Product is usually tangible Product is not tangible Quality Many objective standards Many subjective standards Process and capacity design Customers not involved Customer may be directly involved Capacity must match demand Table 2.1

60 © 2008 Prentice Hall, Inc.2 – 60 Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices Location selection Near raw materials and labor Near customers Layout design Production efficiency Enhances product and production Human resources and job design Technical skills, consistent labor standards, output based wages Interact with customers, labor standards vary Table 2.1

61 © 2008 Prentice Hall, Inc.2 – 61 Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices Supply chain Relationship critical to final product Important, but may not be critical Inventory Raw materials, work-in-process, and finished goods may be held Cannot be stored Scheduling Level schedules possible Meet immediate customer demand Table 2.1

62 © 2008 Prentice Hall, Inc.2 – 62 Goods and Services and the 10 OM Decisions Operations Decisions GoodsServices Maintenance Often preventive and takes place at production site Often repair and takes place at customers site Table 2.1

63 © 2008 Prentice Hall, Inc.2 – 63 An example: Process Design LowModerateHigh Volume HighModerateLow Variety of Products Process-focused JOB SHOPS (Print shop, emergency room, machine shop, fine-dining restaurant) Repetitive (modular) focus ASSEMBLY LINE (Cars, appliances, TVs, fast-food restaurants) Product focused CONTINUOUS (steel, beer, paper, bread, institutional kitchen) Mass Customization Customization at high Volume (Dell Computers PC, cafeteria) Example on p. 40

64 © 2008 Prentice Hall, Inc.2 – 64 Managing Global Service Operations Capacity planning Capacity planning Location planning Location planning Facilities design and layout Facilities design and layout Scheduling Scheduling Requires a different perspective on:

65 © 2008 Prentice Hall, Inc.2 – 65 Operations Strategies for Two Drug Companies (Diff vs low cost) Brand Name Drugs, Inc. Generic Drug Corp. Competitive Advantage Product Differentiation Low Cost Product Selection and Design Heavy R&D investment; extensive labs; focus on development in a broad range of drug categories Low R&D investment; focus on development of generic drugs Quality Major priority, exceed regulatory requirements Meets regulatory requirements on a country by country basis Table 2.2

66 © 2008 Prentice Hall, Inc.2 – 66 Operations Strategies for Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. Competitive Advantage Product Differentiation Low Cost Process Product and modular process; long production runs in specialized facilities; build capacity ahead of demand Process focused; general processes; job shop approach, short- run production; focus on high utilization Location Still located in the city where it was founded Recently moved to low- tax, low-labor-cost environment Table 2.2

67 © 2008 Prentice Hall, Inc.2 – 67 Operations Strategies for Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. Competitive Advantage Product Differentiation Low Cost Scheduling Centralized production planning Many short-run products complicate scheduling Layout Layout supports automated product- focused production Layout supports process-focused job shop practices Table 2.2

68 © 2008 Prentice Hall, Inc.2 – 68 Operations Strategies for Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. Competitive Advantage Product Differentiation Low Cost Human Resources Hire the best; nationwide searches Very experienced top executives; other personnel paid below industry average Supply Chain Long-term supplier relationships Tends to purchase competitively to find bargains Table 2.2

69 © 2008 Prentice Hall, Inc.2 – 69 Operations Strategies for Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. Competitive Advantage Product Differentiation Low Cost Inventory High finished goods inventory to ensure all demands are met Process focus drives up work-in-process inventory; finished goods inventory tends to be low Maintenance Highly trained staff; extensive parts inventory Highly trained staff to meet changing demand Table 2.2

70 © 2008 Prentice Hall, Inc.2 – 70 Issues In Operations Strategy Operations managers must consider three issues related to strategy formulation: Research about effective operations management strategies Research about effective operations management strategies Preconditions for developing effective OM strategies Preconditions for developing effective OM strategies The dynamics of OM strategy development The dynamics of OM strategy development

71 © 2008 Prentice Hall, Inc.2 – Research Characteristics of High ROI Firms: High product quality High product quality High capacity utilization High capacity utilization High operating efficiency High operating efficiency Low investment intensity (amount of capital required to produce a lira of sales) Low investment intensity (amount of capital required to produce a lira of sales) Low direct cost per unit Low direct cost per unit From the PIMS (profit impact of market strategy) program of the Strategic Planning Institute in cooperation with GE Data on 3000 organizations collected. ROI used as measure of success ROI = net income/total assets

72 © 2008 Prentice Hall, Inc.2 – 72 Strategic Options to Gain a Competitive Advantage 28% - Operations Management 18% - Marketing/distribution 17% - Momentum/name recognition 16% - Quality/service 14% - Good management 4% - Financial resources 4% - Financial resources 3% - Other 3% - Other Results of a study concerning importance of each area for competitive advantage

73 © 2008 Prentice Hall, Inc.2 – 73 Elements of Operations Management Strategy Low-cost product Low-cost product Product-line breadth (ürün yelpazesi (gamı) genişliği) Product-line breadth (ürün yelpazesi (gamı) genişliği) Technical superiority Technical superiority Product characteristics/differentiation Product characteristics/differentiation Continuing product innovation Continuing product innovation Low-price/high-value offerings Low-price/high-value offerings Efficient, flexible operations adaptable to consumers Efficient, flexible operations adaptable to consumers Engineering research development Engineering research development Location Location Scheduling Scheduling

74 © 2008 Prentice Hall, Inc.2 – Preconditions to strategy development Strengths and weaknesses of competitors and possible new entrants into the market Strengths and weaknesses of competitors and possible new entrants into the market Current and prospective environmental, technological, legal, and economic issues Current and prospective environmental, technological, legal, and economic issues The product life cycle The product life cycle Resources available within the firm and within the OM function Resources available within the firm and within the OM function Integration of OM strategy with companys strategy and with other functional areas Integration of OM strategy with companys strategy and with other functional areas One must understand:

75 © 2008 Prentice Hall, Inc.2 – Dynamics of Strategic Change Strategies change for two reasons: Changes within the organization Changes within the organization Personnel Personnel Finance Finance Technology Technology Product life Product life Changes in the environment Changes in the environment Microsoft (SW hardware) Microsoft (SW hardware) Paşabahçe Şişe Cam (product + delivery + service) Paşabahçe Şişe Cam (product + delivery + service)

76 © 2008 Prentice Hall, Inc.2 – 76 Product Life Cycle (extremely important for strategy development) Best period to increase market share R&D engineering is critical Practical to change price or quality image Strengthen niche Poor time to change image, price, or quality Competitive costs become critical Defend market position Cost control critical IntroductionGrowthMaturityDecline Company Strategy/Issues Figure 2.5 Internet search engines Sales Xbox 360 Drive-through restaurants CD-ROMs 3 1/2 Floppy disks LCD & plasma TVs Analog TVs iPods tablets

77 © 2008 Prentice Hall, Inc.2 – 77 Product Life Cycle Product design and development critical Frequent product and process design changes Short production runs High production costs Limited models Attention to quality IntroductionGrowthMaturityDecline OM Strategy/Issues Forecasting critical Product and process reliability Competitive product improvements and options Increase capacity Shift toward product focus Enhance distribution Standardization Less rapid product changes – more minor changes Optimum capacity Increasing stability of process Long production runs Product improvement and cost cutting Little product differentiation Cost minimization Overcapacity in the industry Prune line to eliminate items not returning good margin Reduce capacity Figure 2.5

78 © 2008 Prentice Hall, Inc.2 – 78 Strategy Analysis SWOT Analysis Internal Strengths Internal Weaknesses External Opportunities External Threats Mission Competitive Advantage

79 © 2008 Prentice Hall, Inc.2 – 79 Strategy Development Process Determine Corporate Mission State the reason for the firms existence and identify the value it wishes to create. Form a Strategy Build a competitive advantage, such as low price, design, or volume flexibility, quality, quick delivery, dependability, after- sale service, broad product lines. Environmental Analysis Identify the strengths, weaknesses, opportunities, and threats. Understand the environment, customers, industry, and competitors. Figure 2.6

80 © 2008 Prentice Hall, Inc.2 – 80 Strategy Development and Implementation Identify critical success factors Identify critical success factors Build and staff the organization Build and staff the organization Integrate OM with other activities Integrate OM with other activities The operations managers job is to implement an OM strategy, provide competitive advantage, and increase productivity

81 © 2008 Prentice Hall, Inc.2 – 81 Critical success factors (CSF) Activities or factors that are of key importance for achieving competitive advantage Activities or factors that are of key importance for achieving competitive advantage You have to get them right to survive and achieve goals You have to get them right to survive and achieve goals McDonalds – efficient layout, play area for children, efficient kitchen Hes Kablo – quality (purity) of fiber optic cable Hes Kablo – quality (purity) of fiber optic cable

82 © 2008 Prentice Hall, Inc.2 – 82 Critical Success Factors DecisionsSample OptionsChapter ProductCustomized, or standardized5 QualityDefine customer expectations and how to achieve them6, S6 ProcessFacility size, technology, capacity7, S7 LocationNear supplier or near customer8 LayoutWork cells or assembly line9 Human resourceSpecialized or enriched jobs10, S10 Supply chainSingle or multiple suppliers11, S11 InventoryWhen to reorder, how much to keep on hand12, 14, 16 ScheduleStable or fluctuating production rate13, 15 Maintenance Repair as required or preventive maintenance17 MarketingServiceDistributionPromotion Channels of distribution Product positioning (image, functions) (image, functions) Finance/AccountingLeverage Cost of capital Working capital ReceivablesPayables Financial control Lines of credit Production/Operations Figure 2.7

83 © 2008 Prentice Hall, Inc.2 – 83 Core competencies Temel beceriler (yetenekler) A set of skills, talents and activites that a firm does particularly well. A set of skills, talents and activites that a firm does particularly well. They allow a firm to set itself apart from competitors and gain competitive advantage. They allow a firm to set itself apart from competitors and gain competitive advantage. IMPORTANT – CFSs and Core competencies must be supported by related activities activity mapping

84 © 2008 Prentice Hall, Inc.2 – 84 Activity mapping A graphical link of A graphical link of competitive advantage competitive advantage CSFs CSFs supporting activities supporting activities Next an example from airline industry Next an example from airline industry Southwest airlines Southwest airlines Pegasus Airlines Pegasus Airlines

85 © 2008 Prentice Hall, Inc.2 – 85 Activity Mapping Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 CSFs

86 © 2008 Prentice Hall, Inc.2 – 86 Activity Mapping Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 Automated ticketing machines No seat assignments No baggage transfers No meals (peanuts)

87 © 2008 Prentice Hall, Inc.2 – 87 Activity Mapping Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 No meals (peanuts) Lower gate costs at secondary airports High number of flights reduces employee idle time between flights

88 © 2008 Prentice Hall, Inc.2 – 88 Activity Mapping Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 High number of flights reduces employee idle time between flights Saturate a city with flights, lowering administrative costs (advertising, HR, etc.) per passenger for that city

89 © 2008 Prentice Hall, Inc.2 – 89 Activity Mapping Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 Pilot training required on only one type of aircraft Reduced maintenance inventory required because of only one type of aircraft Excellent supplier relations with Boeing has aided financing

90 © 2008 Prentice Hall, Inc.2 – 90 Activity Mapping Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 Reduced maintenance inventory required because of only one type of aircraft Flexible employees and standard planes aid scheduling Maintenance personnel trained only one type of aircraft 20-minute gate turnarounds Flexible union contracts

91 © 2008 Prentice Hall, Inc.2 – 91 Activity Mapping Courteous, but Limited Passenger Service Standardized Fleet of Boeing 737 Aircraft Competitive Advantage: Low Cost Lean, Productive Employees Short Haul, Point-to- Point Routes, Often to Secondary Airports High Aircraft Utilization Frequent, Reliable Schedules Figure 2.8 Automated ticketing machines Empowered employees High employee compensation Hire for attitude, then train High level of stock ownership High number of flights reduces employee idle time between flights

92 © 2008 Prentice Hall, Inc.2 – 92 Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) Import/export or license existing product Examples U.S. Steel Harley Davidson International Strategy

93 © 2008 Prentice Hall, Inc.2 – 93 Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson

94 © 2008 Prentice Hall, Inc.2 – 94 International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy

95 © 2008 Prentice Hall, Inc.2 – 95 Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson

96 © 2008 Prentice Hall, Inc.2 – 96 Standardized product Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) Use existing domestic model globally Franchise, joint ventures, subsidiaries Examples Heinz McDonalds The Body Shop Hard Rock Cafe Multidomestic Strategy

97 © 2008 Prentice Hall, Inc.2 – 97 Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson Multidomestic Strategy Use existing domestic model globally Franchise, joint ventures, subsidiaries Examples HeinzThe Body Shop McDonaldsHard Rock Cafe

98 © 2008 Prentice Hall, Inc.2 – 98 International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson Multidomestic Strategy Use existing domestic model globally Franchise, joint ventures, subsidiaries Examples HeinzThe Body Shop McDonaldsHard Rock Cafe Standardized product Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global Strategy Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) Move material, people, ideas across national boundaries Economies of scale Cross-cultural learning Examples Coca-Cola Nestlé Transnational Strategy

99 © 2008 Prentice Hall, Inc.2 – 99 Four International Operations Strategies Cost Reduction Considerations HighLow HighLow Local Responsiveness Considerations (Quick Response and/or Differentiation) Standardized product Economies of scale Cross-cultural learning Examples Texas Instruments Caterpillar Otis Elevator Global StrategyTransnational Strategy Move material, people, ideas across national boundaries Economies of scale Cross-cultural learning Examples Coca-Cola Nestlé International Strategy Import/export or license existing product Examples U.S. Steel Harley Davidson Multidomestic Strategy Use existing domestic model globally Franchise, joint ventures, subsidiaries Examples HeinzThe Body Shop McDonaldsHard Rock Cafe

100 © 2008 Prentice Hall, Inc.2 – 100 Ranking Corruption RankCountry2006 CPI Score (out of 10) 1Finland9.6 1Iceland9.6 1New Zealand9.6 5Singapore9.4 7Switzerland9.1 11UK8.6 14Canada8.5 15Hong Kong8.3 16Germany8.0 17Japan7.6 20USA, Belgium7.3 34Israel, Taiwan5.9 70Brazil, China, Mexico Russia Turkey Least Corrupt Most Corrupt Table 8.2


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