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Operations Strategy And Innovation

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Operations strategy is the systematic building of operations capabilities. ... Hayes and Wheelwright. Eight decision categories. Structural Categories ... – PowerPoint PPT presentation

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Title: Operations Strategy And Innovation


1
Chapter 8
  • Operations Strategy And Innovation

2
Introduction
  • Strategy starts with how the firm chooses to
    differentiate itself from competition.
  • Operations strategy is the systematic building of
    operations capabilities.
  • Operations can be divided into three broad
    categories.
  • Technology and facilities
  • operating policies
  • operations organization

3
Manufacturing Strategy
  • In 1974 Skinner published The Focused Factory.
  • This began a focus on manufacturing.
  • His argument was that a factory that focuses on
    a narrow product mix for a particular market
    niche will outperform the conventional plant,
    which attempts a broader mission

4
continued
  • He observed that if a firm had a manufacturing
    philosophy it was more likely to be successful.
  • He developed the idea of the focused factory.
  • Focused manufacturing is based on the concept
    that simplicity, repetition, experience, and
    homogeneity of tasks breeds competence.

5
Five Key Characteristics of the Focused Factory
  • Process technologies
  • Market Demands
  • Product Volumes
  • Quality Levels
  • Manufacturing Tasks
  • Empirical tests have met with limited success.

6
Hayes and Wheelwright
  • Eight decision categories
  • Structural Categories
  • capacity, facilities, technology and vertical
    integration
  • Infrastructural Categories
  • workforce, quality, production planning/material
    control, and organization.
  • The field has suffered from the lack of
    theoretical development especially rigorous
    empirical validation.

7
Four Basic Strategic Configurations
  • Niche differentiation
  • Broad differentiation
  • Cost leadership
  • Lean competition

8
Mass Customization
  • Hybrid strategy that has emerged during the last
    decade.
  • The use a fixed options at each stage of the
    production process, can create alternative
    products or service configurations.
  • Maybe best suited to low technology industries
    with large volume requirements.

9
Mass Customization
  • Extends the concept of joint production to
    capture the best of both worlds manufacturing.
  • Better customer response and satisfaction.
  • Tailoring products and economies of scale
    savings.

10
Joint Production and Economies of Scope
  • Theory of contestable markets.
  • When there is free entry into a market,
    exploitation of a natural monopoly is limited by
    the costs of exit not entry.
  • Therefore the magnitude of some costs is critical
    in determining the need for regulatory
    protection.

11
Team or joint production
  • Several types of resources are used.
  • The product is not a sum of separable outputs of
    each cooperating resource. An additional factor
    creates a team organization problem.
  • Not all resources used in team production belong
    to one person.

12
Scope
  • The idea of scope is quite different.
  • A few smaller plants alternating production
    between several jointly produced parts or
    products can outperform larger factories
    dedicated to one production product.
  • The ideal scope varies by situation.
  • Is assumed there is no penalty for changing from
    one product to another.
  • the key to creating scope and making this a
    viable option to scale is the flexible technology
    offered by computer technology applied to the
    factory floor.

13
The second industrial divide
  • A modern-day application of the craft methods of
    production coupled with general-purpose equipment
    which affords considerably more flexibility and
    avoids the dehumanization of work.
  • flexible specialization accommodation to
    ceaseless change.
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