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Production Planning and Control

Strategic Implications of OM

Lecturer : Eng. W.M Goriwondo


NUST
Department of Industrial & Manufacturing Engineering
OM and Business Growth
Three Main Elements of Operations Management

Operations
Strategic Strategic
Bottlenecks
Implications Capacity Plan
For growth

These create foundation for growth


Strategic Implications?
 are the demands that the Strategic and Marketing
choices will place on your production system.
 for each Product Market Combination (PMC), you
have to design your production system in such a way
that it will deliver all the specifications that you have
planned for this PMC.
??Dream company??
Make the best quality products at the highest
speed available in the market, with the greatest
reliability known to customers at a lower cost
than our competitors with unprecedented
flexibility.

 Usually all the fields are related and usually


conflicting.
 Search for the optimum inline with your
Strategic Direction.
The Operations strategy mix
Resource Usage

Low quality fluctuation demands quality


machines and processes and increased
Quality testing
Perfomance Objectives

Few products in the pipeline, many products in

Market Competitiveness
stock and prioritisation of urgent orders
Speed increase speed.

Performance monitoring systems and strict


Dependability processes give reliable output

Smaller batches of different products with lots


Flexibility of variety increase the choice of customers

Cost effective means of production and use of


Cost cheap materials.
Strategic Decisions
OPERATIONS MANAGEMENT
How to review the Strategic Implications

Effectiveness and efficiency of an OM function is measured by the following


performance objectives
 Quality
 For customer satisfaction
 Speed
 Goods are delivered fast
 Reliability
 Goods are delivered as promised
 Flexibility
 Wide range or products produced with ease. High product mix
 Cost
 Low costs allow organisations to reduce their prices. Compete effectively.

There is conflict of interest between these objectives.


Strategic Implications?
Reviewing Strategic Implications
 Will help you to : -
 Focus your production system on the most
important performance objectives
 Safeguard the output of your most important
PMCs
 Check whether all the PMCs can co-exist in the
same production system
 Envisage/Anticipate conflicts of interest between
PMCs in your system so that you can put in place
measures to deal with them.
Review Strategic Implications
Evaluating the Strategic Implications
Step 1: List the most important Strategic &
Marketing objectives for the next 3 – 5 years
Corporate Strategy Marketing Strategy
Mission Range of products &
Generic Strategy services
Distinctive competency PMCs

Industry success factors Markets and segments


Volumes

Ex : Take your Strategic plan and your marketing plan and make
an overview of all decisions made.
Review Strategic Implications
Step 2:
List the different PMCs and identify their most
important performance objectives
Eg. Quality and delivery reliability are the
most important and leading fields of
performance for all PMCs
Review Strategic Implications
Step 3:
Evaluate the impact of each performance
objective on the production system
 Focus on one objective at a time /
pretend all the others are not important
 One objective may require investment in state
of the art equipment, while another objective
requires a high output.
 Cost will be a factor here
Review Strategic Implications
Step 4 :
Identify possible areas of conflict between
the different PMCs
In what areas do conflict arise?
What is the nature of these conflict?
What is the magnitude of each conflict,
is it critical?
Review Strategic Implications
Step 5
 Decide on measures to compensate or deal with
these conflicts by asking the following questions
 Can the PMCs co-exist in the same production
system
 If so, how can you solve or control the conflicting
areas?
 If not, what alternatives do I have?
 Can it be outsourced or use a different production system