Heizer om10 ch02

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Heizer om10 ch02

  1. 1. 10/16/2010 Operations Strategy in a 2 Global Environment Outline Global Company Profile: Boeing A Global View of Operations PowerPoint presentation to accompany Cultural and Ethical Issues Heizer and Render Operations Management, 10e Developing Missions And Principles of Operations Management, 8e Strategies PowerPoint slides by Jeff Heyl Mission Strategy© 2011 Pearson Education, Inc. publishing as Prentice Hall 2-1 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-2 Outline – Continued Outline – Continued Achieving Competitive Advantage Strategy Development and Through Operations Implementation Competing On Differentiation Key Success Factors and Core Competing On Cost Competencies Competing On Response Build and Staff the Organization Ten Strategic OM Decisions Integrate OM with Other Activities© 2011 Pearson Education, Inc. publishing as Prentice Hall 2-3 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-4 Outline – Continued Learning Objectives When you complete this chapter you Global Operations Strategy should be able to: Options International Strategy gy 1. Define mission and strategy Multidomestic Strategy 2. Identify and explain three strategic approaches to competitive Global Strategy advantage Transnational Strategy 3. Identify and define the 10 decisions of operations management© 2011 Pearson Education, Inc. publishing as Prentice Hall 2-5 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-6 1
  2. 2. 10/16/2010 Learning Objectives Some Boeing Suppliers (787) Firm Country Component When you complete this chapter you Latecoere France Passenger doors should be able to: Labinel France Wiring Dassault France Design and 4. Understand the significant key PLM software success f t factors and core d Messier-Bugatti France Electric brakes competencies Thales France Electrical power 5. Identify and explain four global conversion system and integrated operations strategy options standby flight display Messier-Dowty France Landing gear structure Diehl Germany Interior lighting© 2011 Pearson Education, Inc. publishing as Prentice Hall 2-7 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-8 Some Boeing Suppliers (787) Some Boeing Suppliers (787) Firm Country Component Firm Country Component Cobham UK Fuel pumps and valves Fuji Heavy Japan Center wing box Rolls-Royce UK Engines Industries Smiths Aerospace UK Central computer Kawasaki Heavy Japan Forward fuselage, y system Industries fixed section of wing, landing l di gear well ll BAE SYSTEMS UK Electronics Teijin Seiki Japan Hydraulic actuators Alenia Aeronautics Italy Upper center fuselage & Mitsubishi Heavy Japan Wing box horizontal stabilizer Industries Toray Industries Japan Carbon fiber for Chengdu Aircraft China Rudder wing and tail units Group Hafei Aviation China Parts© 2011 Pearson Education, Inc. publishing as Prentice Hall 2-9 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 10 Some Boeing Suppliers (787) Global Strategies Firm Country Component Korean Aviation South Wingtips Boeing – sales and production are Korea worldwide Saab Sweden Cargo access doors 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© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 11 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 12 2
  3. 3. 10/16/2010 Global Strategies Growth of World Trade Volvo – considered a Swedish company 35 – but until recently was controlled by an 30 – Collapse of the American company, Ford. The current Berlin Wall 25 – Volvo S40 is built in Belgium and shares ent its platform with the Mazda 3 built in 20 – Perce Japan and the Ford Focus built in Europe. 15 – Haier – A Chinese company, produces 10 – compact refrigerators (it has one-third of 5– the US market) and wine cabinets (it has 0 –| | | | | | | | | | | half of the US market) in South Carolina 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 (est*) Year Figure 2.1© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 13 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 14 Some Multinational Some Multinational Corporations Corporations % Sales % Assets % Sales % Assets Outside Outside Outside Outside Home Home Home % Foreign Home Home Home % Foreign Company Country Country Country Workforce Company Country Country Country Workforce p Citicorp USA 34 46 NA ICI Britain 78 50 NA Colgate- USA 72 63 NA Nestle Switzerland 98 95 97 Palmolive Philips Netherlands 94 85 82 Dow USA 60 50 NA Electronics Chemical Siemens Germany 51 NA 38 Gillette USA 62 53 NA Unilever Britain & 95 70 64 Honda Japan 63 36 NA Netherlands IBM USA 57 47 51© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 15 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 16 Reasons to Globalize Reduce Costs Foreign locations with lower wage Reasons to Globalize rates can lower direct and indirect Tangible 1. Reduce costs (labor, taxes, tariffs, etc.) costs Reasons 2. Improve supply chain Maquiladoras 3. Provide better goods and services 3 P id b tt d d i 4. Understand markets World Trade Organization (WTO) Intangible 5. Learn to improve operations North American Free Trade Reasons 6. Attract and retain global talent Agreement (NAFTA) APEC, SEATO, MERCOSUR, CAFTA European Union (EU)© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 17 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 18 3
  4. 4. 10/16/2010 Improve the Supply Chain Provide Better Goods and Services Locating facilities closer to unique resources Objective and subjective characteristics of goods and Auto design to California services Athletic shoe production to China On-time deliveries Perfume manufacturing in France Cultural variables Improved customer service© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 19 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 20 Learn to Improve Understand Markets Operations Interacting with foreign customers and suppliers can lead to new Remain open to the free flow of opportunities ideas Cell phone General Motors partnered with a design from Japanese auto manufacturer t J t f t to Europe learn new approaches to Cell phone production and inventory control fads from Equipment and layout have been Japan improved using Scandinavian Extend the product life cycle ergonomic competence© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 21 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 22 Attract and Retain Global Cultural and Ethical Issues Talent Cultures can be quite different Offer better employment Attitudes can be quite different opportunities towards Better growth opportunities and Punctuality Thievery insulation against unemployment Lunch breaks Bribery Relocate unneeded personnel to more prosperous locations Environment Child labor Intellectual property© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 23 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 24 4
  5. 5. 10/16/2010 Companies Want To Consider Match Product & Parent National literacy rate Work ethic Braun Household Appliances 1. Volkswagen Rate of innovation Tax rates Firestone Tires 2. Bridgestone Rate of technology Inflation change Godiva Chocolate 3. Campbell Soup Availability of raw Number N mber of skilled materials Haagen-Dazs Ice 4. 4 Tata Motors Limited workers Cream 5. Proctor and Gamble Interest rates Political stability Jaguar Autos 6. Nestlé Population Product liability laws MGM Movies 7. Pillsbury Number of miles of Export restrictions highway Lamborghini Autos 8. Sony Variations in language Phone system Alpo Petfoods© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 25 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 26 Match Product & Parent Match Product & Country Braun Household Braun Household Appliances 1. Volkswagen Appliances Firestone Tires 2. Bridgestone Firestone Tires 1. Great Britain Godiva Chocolate 3. Campbell Soup Godiva Chocolate 2. Germany Haagen-Dazs Ice 4. 4 Tata Motors Limited Haagen-Dazs I H D Ice 3. Japan Cream 5. Proctor and Gamble Cream 4. United States Jaguar Autos 6. Nestlé Jaguar Autos 5. Switzerland MGM Movies 7. Pillsbury MGM Movies 6. India Lamborghini Autos 8. Sony Lamborghini Autos Alpo Petfoods Alpo Pet Foods© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 27 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 28 Match Product & Country Developing Missions and Braun Household Appliances Strategies Firestone Tires 1. Great Britain Godiva Chocolate 2. Germany Mission statements tell an Haagen-Dazs I H D Ice 3. Japan organization where it is going Cream 4. United States Jaguar Autos The Strategy tells the 5. Switzerland MGM Movies organization how to get there 6. India Lamborghini Autos Alpo Pet Foods© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 29 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 30 5
  6. 6. 10/16/2010 Mission Merck The mission of Merck is to provide Mission - where are society with superior products and you going? services—innovations and solutions Organization’s that improve the quality of life and p q y purpose for being satisfy customer needs—to provide Answers ‘What do employees with meaningful work and we provide society?’ advancement opportunities and Provides boundaries investors with a superior rate of return. and focus Figure 2.2© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 31 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 32 Hard Rock Cafe Arnold Palmer Hospital Our Mission: To spread the spirit of Rock ’n’ Roll by delivering an Arnold Palmer Hospital for exceptional entertainment and dining Children provides state-of-the-art, experience. We are committed to being family centered healthcare y an important, contributing member of focused on restoring the joy of our community and offering the Hard childhood in an environment of Rock family a fun, healthy, and compassion, healing, and hope. nurturing work environment while ensuring our long-term success. Figure 2.2 Figure 2.2© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 33 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 34 Factors Affecting Mission Sample Missions Philosophy and Values Sample Company Mission To manufacture and service an innovative, growing, and Profitability profitable worldwide microwave communications business Environment and Growth that exceeds our customers’ expectations. Mission Sample Operations Management Mission Customers Public Image To produce products consistent with the company’s mission as the worldwide low-cost manufacturer. Benefit to Society Figure 2.3© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 35 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 36 6
  7. 7. 10/16/2010 Sample Missions Sample Missions Sample OM Department Missions Sample OM Department Missions Product design To design and produce products and Location To locate, design, and build efficient and services with outstanding quality and economical facilities that will yield high inherent customer value. value to the company, its employees, and the community. Quality management To attain the exceptional value that is consistent with our company mission and Layout design To achieve, through skill, imagination, and marketing objectives by close attention to resourcefulness in layout and work methods, design, procurement, production, and field production effectiveness and efficiency service operations while supporting a high quality of work life. Process design To determine, design, and produce the Human resources To provide a good quality of work life, with production process and equipment that will well-designed, safe, rewarding jobs, stable be compatible with low-cost product, high employment, and equitable pay, in exchange quality, and good quality of work life at for outstanding individual contribution from economical cost. employees at all levels. Figure 2.3 Figure 2.3© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 37 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 38 Sample Missions Strategic Process Sample OM Department Missions Organization’s Supply-chain To collaborate with suppliers to develop Mission management innovative products from stable, effective, and efficient sources of supply. Inventory To achieve low investment in inventory consistent with high customer service levels g and high facility utilization. Functional Area Missions Scheduling To achieve high levels of throughput and timely customer delivery through effective scheduling. Maintenance To achieve high utilization of facilities and equipment by effective preventive maintenance and prompt repair of facilities Finance/ Marketing Operations and equipment. Accounting Figure 2.3© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 39 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 40 Strategy Strategies for Competitive Advantage Action plan to achieve mission Differentiation – better, or at Functional areas have strategies g least different Strategies exploit Cost leadership – cheaper opportunities and Response – rapid response strengths, neutralize threats, and avoid weaknesses© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 41 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 42 7
  8. 8. 10/16/2010 Competing on Competing on Cost Differentiation Provide the maximum value as Uniqueness can go beyond both the perceived by customer. Does not physical characteristics and service imply low quality. attributes to encompass everything that impacts customer s perception customer’s Southwest Airlines – secondary S th t Ai li d of value airports, no frills service, efficient utilization of equipment Safeskin gloves – leading edge products Wal-Mart – small overhead, shrinkage, Walt Disney Magic Kingdom – distribution costs experience differentiation Franz Colruyt – no bags, low light, no Hard Rock Cafe – dining experience music, doors on freezers© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 43 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 44 OM’s Contribution to Strategy Competing on Response 10 Operations Competitive Decisions Approach Example Advantage Product DIFFERENTIATION Flexibility is matching market changes in Innovative design … Safeskin’s innovative gloves Broad product line … Fidelity Security’s mutual funds design innovation and volumes Quality After-sales service … Caterpillar’s heavy equipment service Experience … Hard Rock Café’s dining A way of life at Hewlett-Packard Process experience Location COST LEADERSHIP Reliability is meeting schedules Low overhead … Franz-Colruyt’s warehouse-type Differentiation stores t Layout (better) Effective capacity German machine industry use … Southwest Airline’s Human aircraft utilization Timeliness is quickness resource Inventory management … Wal Mart’s sophisticated Response (faster) in design, production, Supply chain distribution system Cost RESPONSE leadership and delivery Inventory Flexibility … Hewlett-Packard’s response to (cheaper) volatile world market Reliability … FedEx’s “absolutely, positively, Johnson Electric, Scheduling on time” Pizza Hut, Motorola Quickness … Pizza Hut’s 5-minute guarantee at lunchtime Maintenance Figure 2.4© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 45 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 46 10 Strategic OM Decisions Goods and Services and the 10 OM Decisions Operations 1. Goods and 6. Human resources Decisions Goods Services service design and job design Goods and Product is usually Product is not 2. Quality service tangible tangible 7. Supply-chain des g design 3. Process and management capacity design Quality Many objective Many subjective 8. Inventory standards standards 4. Location selection 9. Scheduling Process Customers not Customer may be and involved directly involved 5. Layout design 10. Maintenance capacity Capacity must design match demand© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 47 © 2011 Pearson Education, Inc. publishing as Prentice Hall Table 2.1 2 - 48 8
  9. 9. 10/16/2010 Goods and Services and Goods and Services and the 10 OM Decisions the 10 OM Decisions Operations Operations Decisions Goods Services Decisions Goods Services Location Near raw Near customers Supply Relationship Important, but selection materials and chain critical to final may not be labor product critical Layout Production Enhances product Inventory Raw materials, Cannot be stored design efficiency and production work-in-process, and finished Human Technical skills, Interact with goods may be resources consistent labor customers, labor held and job standards, output standards vary design based wages Scheduling Level schedules Meet immediate possible customer demand © 2011 Pearson Education, Inc. publishing as Prentice Hall Table 2.1 2 - 49 © 2011 Pearson Education, Inc. publishing as Prentice Hall Table 2.1 2 - 50 Goods and Services and the 10 OM Decisions Managing Global Service Operations Operations Decisions Goods Services Maintenance Often preventive Often “repair” and Requires a different perspective on: and takes place takes place at at p oduct o site customer’s s te production s te custo e s site Capacity planning Location planning Facilities design and layout Scheduling Table 2.1 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 51 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 52 Process Design Operations Strategies of Two Drug Companies High Process-focused Mass Customization JOB SHOPS Customization at high Brand Name Drugs, Inc. Generic Drug Corp. (Print shop, emergency Volume room, machine shop, (Dell Computer’s PC, Competitive Product Differentiation Low Cost oducts fine-dining Repetitive (modular) cafeteria) Advantage restaurant) focus Product Heavy R&D investment; Low R&D investment;Variety of Pro ASSEMBLY LINE Moderate (Cars, appliances, Selection and extensive labs; focus on focus on development TVs, fast-food Design development in a broad of generic drugs restaurants) Product focused range of drug CONTINUOUS categories (Steel, beer, paper, bread, institutional Quality Major priority, exceed Meets regulatory kitchen) regulatory requirements requirements on a Low country by country basis Low Moderate High Volume Table 2.2 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 53 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 54 9
  10. 10. 10/16/2010 Operations Strategies of Operations Strategies of Two Drug Companies Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. Brand Name Drugs, Inc. Generic Drug Corp. Competitive Competitive Product Differentiation Low Cost Product Differentiation Low Cost Advantage Advantage Process Product and modular Process focused; Scheduling Centralized production Many short run short-run process; long general processes; “job planning products complicate production runs in shop” approach, short- scheduling specialized facilities; run production; focus build capacity ahead of on high utilization demand Layout Layout supports Layout supports Location Still located in the city Recently moved to low- automated product- process-focused “job where it was founded tax, low-labor-cost focused production shop” practices environment Table 2.2 Table 2.2© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 55 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 56 Operations Strategies of Operations Strategies of Two Drug Companies Two Drug Companies Brand Name Drugs, Inc. Generic Drug Corp. Brand Name Drugs, Inc. Generic Drug Corp. Competitive Competitive Product Differentiation Low Cost Product Differentiation Low Cost Advantage Advantage Human Hire the best; Very experienced top Inventory High finished goods Process focus drives up Resources nationwide searches executives; other inventory to ensure all work-in-process personnel paid below demands are met inventory; finished industry average goods inventory tends to be low Supply Chain Long-term supplier Tends to purchase Maintenance Highly trained staff; Highly trained staff to relationships competitively to find extensive parts meet changing demand bargains inventory Table 2.2 Table 2.2© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 57 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 58 Issues In Operations Strategy Product Life Cycle Introduction Growth Maturity Decline Best period to Practical to change Poor time to Cost control Resources view egy/Issues increase market price or quality change image, critical share image price, or quality Value Chain analysis R&D engineering is Strengthen niche Competitive costs critical become critical Defend market Porter s Porter’s Five Forces model Company Strate position Drive-through Internet search engines restaurants Operating in a system with many iPods LCD & CD-ROMs external factors Xbox 360 plasma TVs Sales Avatars Constant change Analog Boeing 787 TVs Twitter Figure 2.5© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 59 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 60 10
  11. 11. 10/16/2010 Product Life Cycle SWOT Analysis Introduction Growth Maturity Decline Product design Forecasting Standardization Little product and critical Fewer product differentiation development Product and changes, more Cost Mission y/Issues critical process minor changes minimization Frequent reliability Optimum Overcapacity product and Internal process design Competitive capacity in the External OM Strategy product d t industry i d t changes improvements Increasing stability of Prune line to Strengths Opportunities Short production and options process eliminate runs Increase capacity items not Analysis Long production High production Shift toward runs returning costs product focus good margin Limited models Product Reduce Internal External Enhance improvement Attention to distribution and cost cutting capacity Weaknesses Threats quality Strategy Figure 2.5© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 61 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 62 Strategy Development Process Strategy Development and Analyze the Environment Implementation Identify the strengths, weaknesses, opportunities, and threats. Understand the environment, customers, industry, and competitors. Identify key success factors Build and staff the organization Determine the Corporate Mission State the reason for the firm’s existence and identify the value it wishes to create. Integrate OM with other activities Form a Strategy The operations manager’s job is to implement Build a competitive advantage, such as low price, design, or an OM strategy, provide competitive volume flexibility, quality, quick delivery, dependability, after- advantage, and increase productivity sale service, broad product lines. Figure 2.6© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 63 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 64 Activity Mapping at Key Success Factors Southwest Airlines Support a Core Competence and Implement Strategy by Identifying and Executing the Key Success Factors in the Functional Areas Courteous, but Marketing Finance/Accounting Production/Operations Limited Passenger Service Service Leverage Distribution Cost of capital Promotion Channels of distribution Working capital Receivables Lean, Short Haul, Point-to- Product positioning Payables Productive Point Routes, Often to ( (image, functions) g ) Financial control Lines of credit Employees Secondary Airports Competitive Advantage: Decisions Sample Options Chapter Low Cost Product Customized, or standardized 5 Quality Define customer expectations and how to achieve them 6, S6 Process Facility size, technology, capacity 7, S7 High Frequent, Location Layout Near supplier or near customer Work cells or assembly line 8 9 Aircraft Reliable Human resource Specialized or enriched jobs 10 Utilization Standardized Schedules Supply chain Single or multiple suppliers 11, S11 Inventory When to reorder, how much to keep on hand 12, 14, 16 Fleet of Boeing Schedule Stable or fluctuating production rate 13, 15 Maintenance Repair as required or preventive maintenance 17 737 Aircraft Figure 2.8© 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 2.7 2 - 65 © 2011 Pearson Education, Inc. publishing as Prentice Hall 2 - 66 11

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