Lecture 2
Performance objectives
Dependability
Flexibility
Speed
Cost
Quality
Reduces inventories- the longer items take to move though a process, the more time they will be waiting= higher inventory
Reduces risk - the faster the throughput time- the later forecasting can be left
Saves time- Prevents late delivery slowing down throughput speed. Prevents lateness causing disruption and wasted time and effort
Gives stability -if everything is dependable, a level of trust will build up between different parts of operations. (predictable, no surprises)
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Quality increases dependability - e.g. goods run out on the supermarket shelves results in loss in revenue and irritating customers
Reduces costs - the fewer mistakes made by each process in the operation the less time will be needed to correct mistakes and less confusion and irritation
Product (modified products) Mix (wide range of products) volume (change its level of output) delivery (change timing of delivery)
Why is it important
If competing on price, the lower the price of producing goods the lower the price can be to customers
Saves time- (hospital example, individual needs, flexible facilities)
Speeds up response- (hospital, can cope with a sudden influx of patients)
Top-down/bottom-up
Forming operations strategy
Bottom-up strategies companies may make strategic decisions (guides) based on experience of proving products and services to customers at operational level
Top-down strategies guides the business in relation to its customers, markets and competitors, also the strategy of the corporate group
Hayes and Wheelwright's four stages
Externally supportive operations are creative, innovative and proactive and driving the company 'one step ahead' of competitors
Internal neutrality is the very poorest level of contribution by the operations function, holding the company back from competing effectively
Internally supportive operations are the best in their market, achieve this by gaining a clear view of companies competitive, strategic goals by developing resources.
External neutrality breaking out of stage one, beginning to compare itself with similar companies in the outside market.
Implementation where strategy is executed, clarity of strategy, effective top management is essential at this stage
Monitoring tracking ongoing performance, diagnosing data making sure that everything is going as planned, providing early detection of problems
Formulation clarifying objectives/decisions that make up the strategy. produce strategies that are coherent and comprehensive