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Chapter Objectives
Be able to:
Explain the relationship between business and functional strategies and the difference between structural and infrastructural elements. Describe some of the main operations and supply chain decision categories. Explain the customer-value concept and calculate a value-index score. Differentiate between order winners and qualifiers. Explain why this difference is important to developing operations and supply chain strategy. Discuss the concept of trade-offs and give an example. Define core competencies and give an example of how they can be used in the operations and supply chain areas for competitive advantage. Explain the importance of strategic alignment and describe the four stages of alignment between the operations and supply chain strategy and the business strategy.
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 2, Slide 2
Business Elements
Structural Difficult to change:
Buildings Equipment Computer systems Other capital assets
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 2, Slide 3
Definitions
Business Strategy
Long-term master plan for the company; establishes the general direction
Functional Strategies
Further develop the business strategy in segments of the business must be aligned and coordinated
Core Competencies
Organizational strengths that provide focus and foundation for the companys strategies
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 2, Slide 4
Marketing Strategy
R&D Strategy
Operations Strategy
Financia l Strategy
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 2, Slide 6
Functional Strategy
Translates the business strategy into functional terms.
Assures coordination with other areas. Provides direction and guidance for operations and supply chain decisions.
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 2, Slide 7
Key Interactions
Finance
Budgeting. Analysis. Funds.
MIS
What IT solutions to make it all work together?
Human Resources
Skills? Training? # of Employees?
Design
Sustainability. Quality. Manufacturability.
Marketing
What products? What volumes? Costs? Quality? Delivery?
Chapter 2, Slide 8
Accounting
Performance measurement systems. Planning and control.
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Control/reward systems? Centralization/decentralization? Workforce skilled/semi-skilled? Supplier selection/performance metrics? Procurement systems? Sourcing strategy? Forecasting? Inventory management? Production planning/control? Continuous improvement processes? Business process management SPC/Six Sigma Development process? Organization/supplier roles?
Chapter 2, Slide 10
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Value Analysis
A process for determining the best choice when there are no unambiguous formulas for doing so. Helps maintain focus in gathering and assessing relevant data.
(also called a preference matrix).
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 2, Slide 11
V I n Pn
Where:
n 1
Value Analysis:
Introduce new product?
Threshold score = 720
Performance Criteria
Market potential Unit profit margin Operations compatibility Competitive advantage Investment requirement Project risk
Value (A x B)
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 2, Slide 14
Value Analysis:
Introduce new product?
Threshold score of current product = 720
Performance Criterion
Market potential Unit profit margin Operations compatibility Competitive advantage Investment requirement Project risk
Value (A x B)
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 2, Slide 15
Value Analysis:
Introduce new product?
Threshold score = 720
Performance Criterion
Market potential Unit profit margin Operations compatibility Competitive advantage Investment requirement Project risk
Value (A x B)
180 200 120 150 30 20 700
Prioritizing:
Where Must We Excel? Potential dimensions of distinct
competence
Quality (performance, conformance, reliability)
Qualifiers
Minimum acceptable level of performance Over time, Differentiators Winners Qualifiers as competition intensifies.
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036 Chapter 2, Slide 18
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Measurements
Performance against:
Customer needs
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 2, Slide 21
Priority Trade-Offs
Generally very difficult to excel at all four performance dimensions. Some common conflicts
Low cost versus high quality Low cost versus flexibility Delivery reliability versus flexibility Conformance quality versus product flexibility
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 2, Slide 22
External
Internal
2008 Pearson Prentice Hall --- Introduction to Operations and Supply Chain Management, 2/e --- Bozarth and Handfield, ISBN: 0131791036
Chapter 2, Slide 23
Catherines Confectionaries