Operations Strategy in Action
Almost every company seems to be restructuring itself to face the
downturn, be it through financial engineering, or by retrenching to
core activities. So they sell off foreign subsidiaries (Aviva),
recent diversifications (ABB), or in desperate cases almost
anything that's worth something and isn't nailed to the floor
(Vivendi and Marconi). Oddly, few firms make a thing about going
back to the real basics, which is manufacturing or, more
accurately, operations. Odd, because competing operationally -
making and selling things better and more cheaply than the
opposition - is the simplest and best strategy of all. In tough
times like these, most other 'strategies' look like sorry
substitutes for failing to get the basics right in the first place.
Schefenacker Vision Systems (formerly part of Britax) is a maker of
car wing mirrors. Schefenacker has been improving its mirrors for
more than 10 years. It can now satisfy the most demanding customers
- for example, from its plant in the south of England it delivers a
possible 420 permutations of mirror daily direct to Jaguar's
assembly line in the Midlands to match each car that comes down the
assembly line. The ability to do this cost-effectively is an entry
ticket to lots of international business. Less obviously, the
company's virtuosity allows it to design and build better, more
sophisticated parts for instance, with lighting or electronics
built in. That allows it to go upmarket, where margins are wider.
At the same time, as with Dell, it also gives it the possibility of
expanding up and down the value chain. Thanks to relentless
emphasis on doing more with less .. . Schefenacker has freed up
space on the factory floor for five new production cells. It uses
these to manufacture simple
oparts which it had previously outsourced to others. Strategic
result: Schefenacker no longer pays the other guy's profit margin,
spreads overheads across a larger base, and can suck waste out of a
larger section of the supply chain. Manufacturing director Mickey
Love says: 'Lean production gives you an opportunity to make things
that you can sell to customers you didn't have before.' Of all the
advantages of operations excellence as a strategy, its impact on
people is the most momentous. In firms that take this route,
improvement of every aspect of design, manufacture, distribution,
delivery and service is by definition strategic. Better product
quality or a day sliced off delivery lead time is a strategic, not
tactical, move. That means improvement is part of the day job for
every individual; which also means 100 per cent participation, with
no choice. The secret is that operating excellence makes strategy
easy. As Richard Schonberger, one of the original proselytizers for
lean manufacturing, said: 'What makes a great team is the basics.
Then almost anything the coach chooses to do makes the coach look
like a shrewd strategist.'
1. Read the article and discuss how operations can provide strategic advantage to this organisation.
2. Discuss the performance of the company in terms of the five performance objectives and the relationship among these performance objectives.
3. Discuss a suitable operations strategy approach for these kinds of organisations.
Answer 1:
Advantages of operations management:
It increases the effectiveness, efficiency and excellence in the organization which supports to reach the goals and objectives of the organization. It also increases the value added activities and by the help of different process and it is the principle of achieving success. It produces the result by transforming proper inputs into it. It helps in managing all the aspects in the perspective and operation of an organization. It focuses on planning and controlling part, it focuses on all the activities and necessary information of the products as well as services. This management increases productivity in the organization, decreases the cost, helps in improving the flexibility and meet the basic requirements of the customer and improves the services given to customer.
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