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STRATEGY and COMPETITION

Production Planning and Control. STRATEGY and COMPETITION. 1. BMFP 4513. Haeryip Sihombing Universiti Teknikal Malaysia Melaka (UTeM). Topic Areas of PPC Course. Aggregate Planning Scheduling Supply Chain Simulation Lean production Management of Information System.

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STRATEGY and COMPETITION

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  1. Production Planning and Control STRATEGY and COMPETITION 1 BMFP 4513 Haeryip Sihombing Universiti Teknikal Malaysia Melaka (UTeM)

  2. Topic Areas of PPC Course • Aggregate Planning • Scheduling • Supply Chain • Simulation • Lean production • Management of Information System • Prerequisite topics: • Forecasting

  3. Operations (product design, manufacturing, product quality, process efficiency, customer service, inventory management…) Marketing (often conservative product analysis, imitative/innovative, IBM & Xerox) Finance (views manufacturing management as portfolio management  risk reduced by diversification, by 1969, 70% of largest firms has no dominant business) Functional Areas of the Firm

  4. What is Strategy ? Strategy is a common vision that unites an organization, provides consistency in decisions, and keeps the organization moving in the right direction

  5. Time Horizons for Strategic Decisions • 1. Long Term Decisions ( > year)  Strategic decision • Locating and Sizing New Facilities • Finding New Markets for Products • Mission Statement: meeting quality objectives • 2. Intermediate Term Decisions (weeks or month) • Forecasting Product Demand • Determining Manpower Needs • Setting Channels of Distribution • Equipment Purchases and Maintenance • 3. Short Term Decisions (hours or days)  Tactical decision • Purchasing • Shift Scheduling and Maintenance • Inventory Control

  6. The Elements of Strategy

  7. Decision Horizons of Manufacturing Strategy

  8. History of Production and OM • Major Thrust of the Industrial Revolution 1850-1890 • Factories tended to be small. Boss had total control. Little regard for workers safety or workers rights. • Production Manager Position. 1890-1920. • Frederick Taylor champions the idea of “scientific management”. • As complexity grows specializations take hold. • Inventory Control Manager • Purchasing Manager • Scheduling Supervisor • Quality Control Manager etc.

  9. GLOBALIZATION COMPETITION Global competition is heating up to an unprecedented degree. It appears that several factors favor the success of some industries in some countries For example: • Germany: printing presses, luxury cars, chemicals • Switzerland: pharmaceuticals, chocolate • Sweden: heavy trucks, mining equipment • United States: personal computers, software, entertainment • Japan: automobiles, consumer electronics

  10. Porter’s Thesis Famed management guru, Michael Porter, has developed a theory to explain the determinants of national competitive advantage. These include: • Factor Conditions (Land, Labor,Capital, etc.) • Demand Conditions (local marketplace may be more sophisticated/demanding than world marketplace) • Related and Supporting Industries • Firm Strategy, structure, rivalry (e.g.: Germans are strong technically, Italian family structure, Japanese management methods)

  11. Time-Based Competition “Time-based competitors focus on the bigger picture, on the entire value-delivery system. They attempt to transform an entire organization into one focused on the total time required to deliver a product or service. Their goal is not to devise the best way to perform a task, but to either eliminate the task altogether or perform it in parallel with other talks so that over-all system response time is reduced. Becoming a time-based competitor requires making revolutionary changes in the ways that processes are organized” (Blackburn(1991). Being not only the first to market but the first to volume production as well gives a firm a decided advantage.

  12. How Do Firms Differentiate Themselves from Competitors? • Low Cost Leaders: Some examples include • WalMart and Costco in Retailing • Korean automakers (Hyundai, Kia, etc.) • e machines personal computers • High Quality (and price) Leaders. Ex: • Mercedes Benz automobiles • Rolex Watches • (some firms do both: Chevrolet and Cadillac)

  13. QUALITY & DESIGN FLEXIBILITY QUALITY Fresh, Natural Ingredients Toppings & Crust Choice Expensive Ingredients Slow to Cook Low Volume Ovens COST TIME VOLUME FLEXIBILITY Understand TradeoffsExample: Made-to-Order Pizza

  14. Some Dimensions of Competition • Re-engineering of the Business Process • Streamlining process • JIT Deliveries • Cutting waste • Time-based competition • Shortening time to delivery • Competing on Quality

  15. The process of taking a cold hard look at the way that things are done. Term coined by Hammer and Champy in their 1993 book. Classic Example: IBM Credit Corporation. The process had been broken down to a series of multiple steps, each having substantial delays. Approval required from 6 days to 2 weeks. The process was re-engineered so that a single specialist would handle a request from beginning to end. The result was that turnaround time was slashed to an average of 4 hours! Business Process Re-engineering

  16. Just-In-Time JIT is a production control system that grew out of Toyota’s kanban system. It is a philosophy of production control (also know as lean production) that attempts to reduce inventories to an absolute minimum. It has become pretty much a standard way of thinking in many industries (especially the automobile.) We will discuss JIT and its relationship to MRP in next session course.

  17. The Product Life-Cycle Curve

  18. The Product/Process Matrix

  19. So you have an idea what others do … and you have a business idea…

  20. OPERATION AS A SYSTEM

  21. DECISION MAKING

  22. Customer Needs Strategic Vision New and Current Products Performance Priorities and Requirements Quality, Dependability, Speed, Flexibility, and Price Enterprise Capabilities Operations & Supplier Capabilities Technology Systems People R&D CIM JIT TQM Distribution Support Platforms Financial Management Human Resource Management Information Management A Framework for Manufacturing Strategy

  23. PRODUCTION SYSTEM

  24. CAPACITY • Level of capacity • Size of capacity changes • Handling excess demand • Hiring/firing workers • Need for new facilities

  25. FACILITIES • Best size for facility • Large or small facilities • Facility focus • Facility location

  26. HUMAN RESOURCES • Skill levels required • Degree of autonomy • Policies • Profit sharing • Individual or team work • Type of supervision • Levels of management • Training

  27. QUALITY • Target level • Measurement • Employee involvement • Training • Systems needed to ensure quality • Maintaining quality awareness • Evaluating quality efforts • Determining customer perceptions

  28. SOURCING • Degree of vertical integration • Supplier selection • Supplier relationship • Supplier quality • Supplier cooperation

  29. OPERATIONS PRIORITIES • Cost • Quality • Delivery Flexibility • Delivery Speed • Delivery Reliability • Coping with Changes in Demand • Flexibility and New Product Introduction Speed

  30. The TRANSFORMATION PROCESS

  31. MANAGEMENT IN e-BUSINESS

  32. TYPES OF B2B TRANSACTIONS

  33. GLOBALIZED THE BUSINESS

  34. COMPETITION

  35. STRATEGIC DECISIONS IN OPERATIONS

  36. Example : WAL-MART

  37. Product Vs. Process Vs. Technology

  38. Matrix

  39. ISSUES and TRENDS

  40. The END

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