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Introduction & Strategy Module  Introduction & Administrative  www.kellogg.northwestern.edu/course/opns430/emp/vanmieghem/ www.kellogg.northwestern.edu/course/opns430/emp/vanmieghem/

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Presentation on theme: "Introduction & Strategy Module  Introduction & Administrative  www.kellogg.northwestern.edu/course/opns430/emp/vanmieghem/ www.kellogg.northwestern.edu/course/opns430/emp/vanmieghem/"— Presentation transcript:

1 Introduction & Strategy Module  Introduction & Administrative   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

2  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

3 What is Operations? “The planning and execution of work” (JVM 2008) “Creation and delivery of products and services to customers” (JVM 2008)

4 3 Views of Operations Slide 4 © J. A. Van Mieghem Competencies Operations Strategy Resources Processes Max NPV  Operations strategy is a plan for developing resources and configuring processes such that the resulting competencies maximize NPV

5 A process is a well-structured transformation of inputs into outputs Outputs Goods Services Inputs Flow units/Entities (customers, data, material, cash, etc.) Labor & Capital Resources Network of Activities and Buffers Slide 5 © J. A. Van Mieghem

6 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

7 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)

8  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

9 A question… Competitive analysis: cost v. quantity $- $5 $10 $15 $20 $25 1,0002,0003,0004,0005,000 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

10 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) Aomeiya (Shandong) Slide 10 © J. A. Van Mieghem

11 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

12 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 competitive strategy Resources & Processes operational competencies

13 What defines a good operation? Achieving alignment at Shouldice Hospital Slide 13 © J. A. Van Mieghem

14 Wriston Manufacturing Handouts to be distributed in class Slide 14 © J. A. Van Mieghem

15 Total Burden Rates (total overhead cost / direct labor cost) 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 Network Exhibit 2A Slide 15 © J. A. Van Mieghem

16  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 Customization A efficient frontier Slide 16 © J. A. Van Mieghem

17 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-class Emergency Room World-class specialty non-emergency Shouldice Hospital One general hospital efficient frontier = current state of best practice Slide 17 © J. A. Van Mieghem

18 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


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