1. Session 5-15
Ms.Pooja Patnaik

2. Operation Strategy:
Operation strategy is concerned with setting broad policies and plans for using the resources of a firm to best support its long term competitive strategy.

3. Elements of Production/Operations Strategy
Operations strategy comprises six components :
Positioning the production system,
Focus of factories and service facilities,
Product/Service design and development,
Technology selection and process development,
Allocation of resources to strategic alternatives, and
Facility planning.

4. Increase Production Capacity Decisions on Processes
Operations Strategy
Strategy Process
Example
Customer Needs
More Product
Corporate Strategy
Increase Org. Size
Operations Strategy
Increase Production Capacity
Decisions on Processes
and Infrastructure
Build New Factory 3

5. Competitive Dimensions
Cost or Price
Make the Product or Deliver the Service Cheap
Quality
Make a Great Product or Deliver a Great Service
Delivery Speed
Make the Product or Deliver the Service Quickly
Delivery Reliability
Deliver It When Promised
Coping with Changes in Demand
Change Its Volume
Flexibility and New Product Introduction Speed
Change It
Other Product-Specific Criteria
Support It 4

6. Order Qualifiers and Winners
Order qualifiers are the basic criteria that permit the firms products to be considered as candidates for purchase by customers
Example: A brand name car can be an “order qualifier.
Order winners are the criteria that differentiates the products and services of one firm from another
Repair services can be “order winners”
Examples: Warranty, Roadside Assistance, Leases, etc 6

7. Session-6

8. Strategy Design Process
Strategy Map
What it is about!
Financial Perspective
Improve Shareholder Value
Customer Perspective
Customer Value Proposition
Internal Perspective
Build-Increase-Achieve
Learning and Growth Perspective
A Motivated and Prepared Workforce 3

9. Kaplan and Norton’s Generic Strategy Map
In the Kaplan and Norton’s Generic Strategy Map, under the Financial Perspective, the Productivity Strategy is generally made up from two components:
Improve cost structure: Lower direct and indirect costs
Increase asset utilization: Reduce working and fixed capital
In the Kaplan and Norton’s Generic Strategy Map, under the Financial Perspective, the Revenue Growth Strategy is generally made up from two components:
Build the franchise: Develop new sources of revenue
Increase customer value: Work with existing customers to expand relationships with company 7

10. Kaplan and Norton’s Generic Strategy Map (Cont.)
In the Kaplan and Norton’s Generic Strategy Map, under the Customer Perspective, there are three ways suggested as means of differentiating a company from others in a marketplace:
Product leadership
Customer intimacy
Operational excellence
In the Kaplan and Norton’s Generic Strategy Map, under the Learning and Growth Perspective, there are three principle categories of intangible assets needed for learning:
Strategic competencies
Strategic technologies
Climate for action 7

11. Strategic Management Involves Five Steps
Step1 : Select the corporate mission and major corporate goals.
Step2: Analyze the opportunities and threats or constraints that exist in the external environment. Also analyze the strengths and weaknesses that exist in internal environment.
Step3: Formulate strategies that will match the organization's strengths & weaknesses with the environment's threats and opportunities.
Step 4: Implement the strategies.
Step5: Evaluate and control activities to ensure that the organization's objectives are achieved.

12. Developing a manufacturing strategy-
Main objectives are-
To translate required competitive dimension (obtained from marketing) into specific performance requirements for operation
To make the plans necessary to ensure that operation capabilities are sufficient to accomplish them
Steps in Developing a Manufacturing Strategy-
1. Segment the market according to the product group
2. Identify product requirements, demand patterns, and profit margins of each group
3. Determine order qualifiers and winners for each group
4. Convert order winners into specific performance requirements

13. Service Strategy Capacity Capabilities
Process-based
Capacities that transforms material or information and provide advantages on dimensions of cost and quality
Systems-based
Capacities that are broad-based involving the entire operating system and provide advantages of short lead times and customize on demand
Organization-based
Capacities that are difficult to replicate and provide abilities to master new technologies 11

14. Productivity:
Productivity is a common measure on how well resources are being used. In the broadest sense, it can be defined as the following ratio: Outputs Inputs

15. Session-7

16. Why a product life cycle?
A company’s positioning and differentiation strategy must change as the product, market, and competitors change over the product life cycle(PLC)
When we say that a product has a life cycle we assert four things:
Products have a limited life.
Products sales pass through distinct stages, each posing different challenges, opportunities and problems to the seller.
Profits rise and fall at different stages of the product life cycle.
Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life – cycle stages.

17. Product Life Cycle
Product life cycle is the course of a product’s sales and profits over time.
Product life cycle(PLC) deals with the life of a product in the market with respect to business or commercial costs and sales measures.
The five stages of each product lifecycle are product development, introduction, growth, maturity and decline.

18. Product Life Cycle Sales and Profits Over the Product’s Lifetime
Develop-
ment
Introduction
Growth
Maturity
Decline
Sales and Profits Over the Product’s Lifetime

19. Introduction Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Costs
Profits
Marketing Objectives
Product
Price
Low
High cost per customer
Negative
Create product awareness and trial
Offer a basic product
Use cost-plus formula
Distribution
Build selective distribution
Promotion
Heavy to entice product trial

20. Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Costs
Profits
Marketing Objectives
Product
Price
Rapidly rising
Average cost per customer
Rising
Maximize market share
Offer extension, service, warranty
Penetration strategy
Distribution
Build intensive distribution
Promotion
Reduce to take advantage of demand

21. Maturity Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Costs
Profits
Marketing Objectives
Product
Price
Peak
Low cost per customer
High
Maximize profits while defending market share
Diversify brand and models
Match or best competitors
Distribution
Build more intensive distribution
Promotion
Increase to encourage brand switching

22. Decline Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Costs
Profits
Marketing Objectives
Product
Price
Declining
Low cost per customer
Reduce expenditures and milk the brand
Phase out weak items
Cut price
Distribution
Selective: phase out unprofitable outlets
Promotion
Reduce to minimum level

23. Product Design and Production Design
Product Design: Concerned with form and function of a product. It refers to the arrangement of elements or parts that collectively form a product.
Production Design: Concept of designing products from the point of view of producibility.
Objectives of Product Design:
The overall objective is profit generation in the long run.
To achieve the desired product quality.
To reduce the development time and cost to the minimum.
To reduce the cost of the product.
To ensure producibility or manufacturability (design for manufacturing and assembly).

24. Factors Influencing Product Design
Customer requirements
Convenience of the operator or user
Trade off between function and form
Types of materials used
Work methods and equipments
Cost/Price ratio
Product quality
Process capability
Effect on existing products
Packaging

25. Characteristics of Good Product Design
Function or performance
Appearance or aesthetics
Reliability
Maintainability
Availability
Producibility
Simplification
Standardisation
Specification
Safety

26. 6 stages of product development
Planning
Concept Development
System-Level design
Design Detail
Testing and Refinement
Production Ramp-up 3

27. Process, Process Planning, Process design?
Process: A process is a sequence of activities that is intended to achieve some result, for example, to create added value for the customers
Process Planning: Concerned with planning the conversion processes needed to convert the raw material into finished products.
Process Design: Concerned with the overall sequences of operations required to achieve the product specifications

28. Types of Processes

29. Process Performance Metrics
Process performance metrics – defined: Measurement of different process characteristics that tell us how a process is performing

30. Process Selection, Process Strategy
Process selection: refers to the way production of goods or services is organized.
Process strategy: An organization's approach to selection of the process for the conversion of resource inputs into outputs.
Key aspects in process strategy include:
Make or buy decisions
Capital intensity and
Resource flexibility

31. Process Strategy Make or Buy is the 1st step of process planning.
Capital Intensity: is the mix of equipment and human skills in a production process.
Factors considered in make or buy decisions:
Resource Flexibility: it is the ease with which equipment and works can handle a wide variety of products , levels of output, duties and function.
Available capacity
Expertise
Quality consideration
Nature of demand
Cost

32. Vertical Integration:
It is the amount of production and distribution chain, from suppliers of the components to the delivery of products and services to customers, which is brought under the ownership of the firm.
The degree to which a firm needs to be vertically integrated determines how many production process needs to be planned and designed to be carried out in-house or by outsourcing.
Vertical integration is based on make or buy decisions. Where make is more integration and buy means more outsourcing

33. cond: Types: Advantage and Disadvantage of Vertical Integration:
Backward integration: moving towards the sources of raw material.
Forward integration: the firm acquires the channel of distribution
Advantage and Disadvantage of Vertical Integration:
Advantages
Disadvantages
Sometimes increases market share and allow the firm to enter foreign market easily
Not attractive for low volume
Can achieve saving in production cost and produce higher quality goods
High capital investment and operating cost
Can achieve more delivery time
Less ability to react more quickly to changes in customer demands, competitive actions and new technologies
Better utilization of all types of resources

34. Session-8

35. Process Flowcharting Defined
Process flowcharting is the use of a diagram to present the major elements of a process
The basic elements can include tasks or operations, flows of materials or customers, decision points, and storage areas or queues
It is an ideal methodology by which to begin analyzing a process 4

36. Flowchart Symbols Purpose and Examples Tasks or operations
Examples: Giving an admission ticket to a customer, installing a engine in a car, etc.
Decision Points
Examples: How much change should be given to a customer, which wrench should be used, etc. 4

37. Flowchart Symbols Purpose and Examples Storage areas or queues
Examples: Sheds, lines of people waiting for a service, etc.
Flows of materials or customers
Examples: Customers moving to a seat, mechanic getting a tool, etc. 4

38. Types of Processes Single-stage Process Multi-stage Process Stage 14

39. Types of Processes (Continued)
A buffer refers to a storage area between stages where the output of a stage is placed prior to being used in a downstream stage
Stage 1
Stage 2
Buffer
Multi-stage Process with Buffer 4

40. Other Process Terminology
Blocking
Occurs when the activities in a stage must stop because there is no place to deposit the item just completed
If there is no room for an employee to place a unit of work down, the employee will hold on to it not able to continue working on the next unit
Starving
Occurs when the activities in a stage must stop because there is no work
If an employee is waiting at a work station and no work is coming to the employee to process, the employee will remain idle until the next unit of work comes 4

41. Other Process Terminology (Continued)
Bottleneck
Occurs when the limited capacity of a process causes work to pile up or become unevenly distributed in the flow of a process
If an employee works too slow in a multi-stage process, work will begin to pile up in front of that employee. In this is case the employee represents the limited capacity causing the bottleneck.
Pacing
Refers to the fixed timing of the movement of items through the process 4

42. Other Types of Processes
Make-to-order
Only activated in response to an actual order
Both work-in-process and finished goods inventory kept to a minimum
Make-to-stock
Process activated to meet expected or forecast demand
Customer orders are served from target stocking level 4

43. Process Performance Metrics
Operation time = Setup time + Run time
Throughput time = Average time for a unit to move through the system
Cycle time = Average time between completion of units
Throughput rate =
Cycle time
Efficiency = Actual output
Standard Output
Velocity = Throughput time
Value-added time 17

44. Process Throughput Time Reduction
Perform activities in parallel
Change the sequence of activities
Reduce interruptions 20

45. Session-9

46. Design of Services
Service design is unique in that the service and entire service concept are being designed
must define both the service and concept
- Physical elements, aesthetic & psychological benefits
e.g. promptness, friendliness, ambiance
Product and service design must match the needs and preferences of the targeted customer group

47. The Nature of Services 1. Everyone is an expert on services
2. Services are idiosyncratic
3. Quality of work is not quality of service
4. Most services contain a mix of tangible and intangible attributes
5. High-contact services are experienced, whereas goods are consumed
6. Effective management of services requires an understanding of marketing and personnel, as well as operations
7. Services often take the form of cycles of encounters involving face-to-face, phone, Internet, electromechanical, and/or mail interactions 3

48. Service Design Matrix Service Characteristics Pure services
Quasi-Manufacturing
Mixed services
Service Package
The physical goods
The sensual benefits
The psychological benefits
Differing designs
Substitute technology for people
Get customer involved
High customer attention
© 2010 Wiley

49. Service Strategy: Focus and Advantage Performance Priorities
Treatment of the customer
Speed and convenience of service delivery
Price
Variety
Quality of the tangible goods
Unique skills that constitute the service offering 8

50. Characteristics of a Well-Designed Service System
Each element of the service system is consistent with the operating focus of the firm
It is robust
It is structured so that consistent performance by its people and systems is easily maintained
It provides effective links between the back office and the front office so that nothing falls between the cracks
It manages the evidence of service quality in such a way that customers see the value of the service provided
It is cost-effective 17

51. Session-10

52. Design: Form design: how a product looks
Functional design: how a product performs
Concurrent Design
Improves quality of early design decisions
Decentralized -suppliers complete detailed design
Incorporates production process
Often uses a price-minus system
Scheduling and management can be complex as tasks are done in parallel

53. Technology in design: CAD -Computer Aided Design
Assists in creating and modifying designs
CAE -Computer Aided Engineering
Tests & analyzes designs on computer screen
CAD/CAM -Design & Manufacturing
Automatically converts CAD data into processing instructions for computer

54. Design for Manufacturability
Traditional Approach
“We design it, you build it” or “Over the wall”
Concurrent Engineering
“Let’s work together simultaneously” 9

55. Design for Manufacturing and Assembly
Greatest improvements related to DFMA arise from simplification of the product by reducing the number of separate parts:
During the operation of the product, does the part move relative to all other parts already assembled?
Must the part be of a different material or be isolated from other parts already assembled?
Must the part be separate from all other parts to allow the disassembly of the product for adjustment or maintenance? 10

56. Designing for the Customer
House of Quality
Ideal Customer Product
Quality Function
Deployment
Value Analysis/
Value Engineering

57. Definition:
QFD- a process that helps a company determine the products characteristics important to the customer and to evaluate its own products in relation to others.
HOUSE OF QUALITY- a matrix that helps a product design team translate customer requirement into operating and engineering goals.
VALUE ANALYSIS- analysis with the purpose of simplifying products and process by achieving a equivalent or better performance at a lower cost.

58. Measuring Product Development Performance
Measures
Performance
Dimension
Freq. Of new products introduced
Time to market introduction
Number stated and number completed
Actual versus plan
Time-to-market
Engineering hours per project
Cost of materials and tooling per project
Actual versus plan
Productivity
Conformance-reliability in use
Design-performance and customer satisfaction
Quality 17

59. Session-11

60. Key Term
PLANT WITHIN A PLANT- a concept in which different locations within a facility are dedicated to different product lines. each location is operated according to its own strategy to minimize the confusion associated with shifting from one type of strategy to another.
STRADDLING- occurs when a company seeks to match what a competitor is doing by adding new features , services, or technologies to existing activities
CORE- CAPABILITIES-
skills that differentiate a manufacturing of a service firm from its competitors

61. Key Terms-
Job shop- a process structure suited for low volume production of a great variety of non-standard products.
Eg- airplane manufacturers, plants that make custom designed printed circuit boards etc.
Batch shop-a process structure that produces a variety of standard products at relatively low volume. Helps in reducing the impact of set up time on equipment.
Eg- heavy equipment, electronic devices etc
Assembly Line- a process structure designed to make discrete parts. Parts are moved through a set of specially designed workstation at a controlled rate
Eg- manual assembly of toy and appliances
Continuous Flow-an often automated process structure that converts the raw material into finished goods in one continuous process.
Eg.- petroleum, chemicals

62. Key terms to remember- CONTRACT MANUFACTURERS-
Companies that specialize in manufacturing products for other companies and have become successful . These companies are called contract manufacturers. Thus simply we can put that as a contract manufacturer is an organization capable of manufacturing or purchasing all the components needed to produce a finished product or services.
CORE COMPETENCY-
a company’s core competency is the one thing that it can do better than its competitors. Core competency gives a long term competitive Advantage to the company
Concurrent engineering-
emphasizes cross functional integration and concurrent development of a product and its associated processes

63. Project Assignment
Visit a nearby branch of a bank and observe the various inputs and outputs in the transformation process. Make a schematic diagram to represent the transformation process including the random disturbances and the feedback mechanism. Find out the quality monitors for monitoring the quality of inputs to the process. What type of process design is followed by the bank.