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The course focuses on four key
issues
• Basic Principles
• Decision Category Framework
• Means of Competition
• New Imperatives of the 21st Century –
globalization and outsourcing
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A COMPANY’S MANUFACTURING FUNCTION TYPICALLY IS
EITHER A COMPETITIVE WEAPON OR A CORPORATE MILLSTONE.
IT IS SELDOM NEUTRAL. YET, THE CONNECTION BETWEEN
MANUFACTURING AND CORPORATE SUCCESS IS RARELY SEEN AS
MORE THAN THE ACHIEVEMENT OF HIGH EFFICIENCY AND LOW
COSTS.
WICKHAM SKINNER
HBR, MAY-JUNE 1969
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SHIP IT
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Problem one: conflicts
• More capacity • Better forecasts
• Variety • Economical operations
• Cost • Other strategic criteria
• Meeting targets • Maintaining quality
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Problem two: role in strategy
Marketing
Sales Finance
Strategic
R&D Planning
Corporate Plans
Manufacturing
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The Corporate Strategic Planning Process
Corporate 1 2 6 9 12
Interactions
Business
3 4 7 10
Functional 5
8 11
D.L.
D.L. Barton
Barton “Core
“Core Competency
Competency and
and Core
Core Rigidity”
Rigidity”
Prahalad
Prahalad and
and Hamel
Hamel “The
“The Core
Core Competence
Competence of
of the
the Corporation”
Corporation”
Hayes
Hayes and
and Pisano
Pisano “The
“The New
New Manufacturing
Manufacturing Strategy”
Strategy”
Hayes
Hayes and
and Upton
Upton “Operations-based
“Operations-based Strategy”
Strategy”
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External Industry Forces External
Influences Influences
-Industry Attractiveness
- Competitive Structure:
Opportunities & Threats
Finance Logistics
Key Success - Internal Coherence
Factors: - Inter-functional Coordination 10
- Strategic Fit
Companies vary considerably on
this ideal approach
• Use of both capabilities and positioning
• Formality of process
• Type of formal method
• Input of operations
• Focus on all decision categories
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The Similar Approach of Hoshin Management
Environmental
Long-term Change
vision & plan
Diagnosis
Company’s
by president
mid-term plan
Plan Do
Act Check
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Source: A New American TQM by Shiba, Graham, Walden, 1993
Reasons for Inconsistent Manufacturing
Structures
1. Manufacturing cannot modify the old
manufacturing policies and structure.
2. Managers in manufacturing have no clear,
consistent definition of the manufacturing task
facing the organization.
3. The manufacturing policies and the
infrastructure being employed are inconsistent.
4. The organization lacks a focus. It is attempting
to cover too many technologies or too many
products and markets, too wide a range volume,
and more than one manufacturing task.
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Reasons for Inconsistent Manufacturing
Structures (cont.)
5. The organization has the wrong equipment
& process technology for the present
manufacturing task.
6. Selection of products and processes for
each plant in a multi-plant setup have no
consistent focus.
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The decision category approach examines
manufacturing decision categories for
consistency with strategic vision
• Structural decisions
– bricks and mortar
– machinery
• Infrastructure
– people
– systems
– procedures
• Fit with business, corporation and other
functions 15
Major Manufacturing Decision Categories
1. FACILITIES
7. SUPPLY CHAIN AND MATERIALS
• size
• location • logistics facilities and methods
• focus • inventory policies
2. CAPACITY • vendor relations
• amount
• production planning
• timing
8. ORGANIZATION AND INCENTIVES
• type
3. VERTICAL INTEGRATION AND SUPPLIER • structure
MANAGEMENT • reporting levels
• direction • degree of centralization
• extent • role of staff
• interfaces • control/reward systems
• collaboration • costing systems
4. PRODUCTION TECHNOLOGIES AND PROCESSES
9. BUSINESS PROCESSES
• equipment Product Development
• automation
• interfaces
• interconnectedness
• responsibilities
• scale
• vendor development
• flexibility
5. WORK FORCE AND MANAGEMENT Quality Programs
• wage policies • monitoring
• security • intervention
• skill levels • responsibilities
6. INFORMATION TECHNOLOGIES Other
• Use and level of investment 16
• Parity or differentiation
Facilities and Capacities
Capacity Issues:
- Does Capacity lead or follow Demand:
- Capacity Decisions have long lead times and involve
large increments
- Capacity needs to address short-term needs
Facility Issues:
- Pure Space Needs - Functional Needs
- Geographic & Distribution Issues - Scale Issues
- Focus Issues - Means of Evaluation
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Technology
Technology and the Manufacturing Process is a fundamental
determinant of how a company competes
- Processes have specific attributes that are appropriate for
different products and life cycles
- Any new process or technology will have a major effect on
a business
- No technology meets all needs
- Products and businesses have life cycles that change
process needs
- Multiple sites involve issues of management and focus
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Process Productivity is Best Understood Through
the Process-Product Matrix
Products
One of Kind High Volume
Process
Rigid
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BASIC INFRASTRUCTUAL QUESTIONS
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Present Operations Policies
Operations Unit
Decision
Description of Past Policy Strengths Weaknesses
Category
Production
Technologies
& Processes
Capacity
Workforce
and
Management
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Present Operations Policies (cont’d.)
Operations Unit
Decision
Description of Past Policy Strengths Weaknesses
Category
Business
Processes
Facilities
Vertical
Integration
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