Developing Operations Strategies

Corporate Objectives
Requirements to meet Competition Functional Areas Operations Business Strategies Marketing Business Plan Finance/Accounting Marketing Plan Engineering Production Plan SWOT analysis Others Other Plans

Operations Objectives
Operation

Long- Range Decisions about products, Processes and Facilities Positioning Production System Focus of Factories or Service Facilities Product/Service Design and Development Technology Selection and Process Development Allocation of Resources to Alternatives Facility Planning: Capacity, Location and Layout

Operations Strategy Framework: From Customer Needs to Order Facilities

Strategic Vision Customer Needs New Products Current Products

Performance Priorities & Requirements Quality New Product Development Price Dependability Speed Flexibility After Sale Service

Enterprise Capabilities Operations Capabilities Supplier Capabilities Technology Systems People Distrib R&D CIM JIT TQM - ution Financial Support Platforms Information
Management HRD Management

Operations Strategy and Competitiveness

A strategy is a broad, long-term plan, conceived in order to to achieve business objectives. These are developed at three levels: The corporate level The business level The functional level The functional level includes marketing, finance, and human resources. One of the key objectives of any business organization is to reach a position where it is able to attract more customers than its competitors. The characteristics of of a companys operations function are important in determining its choice of products and markets, and the elements of competitive strength. Operational strengths can be used effectively as competitive weapons. Product/Process Expertise Quick Delivery - Flexible Capacity

Characteristics of To-days Business: 1. Shorter Product Cycle 2. Production Flexibility 3. Low-cost Process 4. Convenience and Location 5. Product Variety and Facility Size 6. Quality Characteristics of the Product life Cycle

Sales volume

Start-up Rapid Growth

Maturation

Stages

Commodity on decline

Process Analysis The term process can be described as a set of tasks that transform inputs into useful outputs. Detailed process planning entails planning the steps of the process itself. A process usually consists of (1) a set of tasks, (2) a flow of material and information that connect the set of tasks, and (3) storage of material and information. Task: Each task in a process accomplishes, to a certain degree, the transformation of input into the desired output Flow: The flow of material involves the transfer of a product from one task to it s next task. The flow of information helps in determining how much of the transformation has been done in the previous task and what exactly remains to be completed in the present task. Storage: When neither a task is being performed nor a part being transferred, the part has to be stored. Goods in storage, waiting to be processed by the next task often

called work-in-process inventory. Process Flow Charting: It focuses on the specific processes that raw materials, parts and subassemblies follow as they move through the plant. Most common management tools used in planning the process flow are: assembly drawings assembly charts route sheets and flow process charts A flow process uses standard American Society of Mechanical Engineers (ASME) symbols to denote what happens to the product as it progresses through productive facility. The symbols for the various processes are explained at the side of the chart. As a rule, the fewer the delays and storages in the process, the better the flow.

A typical Flow Process Chart

Feet Moved Dec. Min. Materials received from suppliers Inspect Inspection to finish dept Transportation Apply corrosive treatment To raw stores In raw stores To drill press Wait for drill operator(setup) Drill holes Finish drill press Operation Key Storage

95

0.250 1.500
0.060

60

1.000

1.000 40 90.000

0.236 94 1.500

Note:

An assembly drawings is simply an exploded view of the product showing its component parts An assembly chart (Gonzinto Chart)uses the information presented in the assembly drawing and defines how parts go together, their order of assembly, and often the overall material flow pattern. An operation and route sheet specifies operations and process routing for a particular part. It conveys such information as the type of equipment, tooling, and operations required to complete the part.
Process Selection Process engineering refers to the tactical planning activities that regularly occur in manufacturing. Process selection, in contrast, refers to the strategic decision of selecting which kind of production processes to have in the plant.

Types of Processes At the most basic level. The types of processes can be categorized as under: Conversion processes Changing basic material into useful product. Example: Iron ore to steel sheets Fabrication processes Changing raw material into some specific form. Example: Forming sheet metal into a container or reactor. Assembly processes Putting together many parts or components into a final useful product. Example: Engine or vehicle or compressor Testing processes This is not, strictly speaking, a fundamental process, but it is so widely mentioned as a stand-alone major activity that it is included in some of the processes. Example: Spectrometer for testing composition of metal.

Process Flow Structures: (Product -Process Matrix) It refers to how a factory organizes material flow using one or more of the process technologies listed above. Job Shop: Production of small batches of a large number of different products, most of which require a different set or sequence of processing steps. Example: machine tool shops and plans that make custom-designed PCBs or commercial printing. Batch: A somewhat standardized job shop. Such a structure is generally employed when a business is relatively stable line of products, each of which is produced in periodic batches, either to customer order or for inventory. Most of these items follow the same flow pattern through the plant. Example: Heavy equipment, specialty chemicals. Assembly line: Production of discrete parts moving from workstation to workstation at a controlled rate, following the sequence needed to build the product. Example: Manual assembly of toys and appliances

automobile assembly. When other processes are employed in a line fashion along with assembly, it is commonly referred to as production line. Continuous flow: Conversion or further processing of undifferentiated materials such as petroleum, chemicals, or soft drinks. As on assembly lines, production follows a predetermined sequence of steps, but the flow is continuous rather than discrete. Example: Sugar, Glass, Cement. Measuring Product Development Performance: There is some evidence that generating a steady stream of new products to market may be extremely important to ongoing profitability. To succeed, firms must be responsive to changing customer needs and the moves of their competitors. The ability to identify opportunities, mount the development effort, and bring to market new products and processes quickly is critical. Firms must bring new products

and processes to market efficiently. Measures of product development success can categorized into those that relate to the speed and frequency of bringing new products on line, to the productivity of the actual development process, and to the quality of the actual products introduced. Taken together, time, quality, and productivity define the performance of development, and in combination with other activities sales, manufacturing, advertising, and customer service determine the market impact of the project and its profitability. The following exhibit shows in detail the performance measures for development projects.

Performance Dimension

Measures

Impact on Competitiveness Responsiveness to customers/ competitors Quality of designclose to market Frequency of projects model life Number of projectsfreshness and breadth of line Frequency of projects - economics of development Reputation customer loyalty Relative attractiveness to customers market share Profitability cost of ongoing service

Time-to- market Frequency of new product introductions Time from initial concept to market introduction Number started and number completed Actual versus plan Percent of sales coming from new products Productivity Engineering hours per project Cost of materials and tooling per project Actual versus plan

Quality

Conformance reliability in use Design performance and customer satisfaction Yield factory and field