OM 323

Strategic Planning Levels

Corporate, Strategic Business Unit Planning, Functional Planning

Corporate Planning

address the portfolio of a business owned by a firm

Order Qualifiers

characteristics that customers perceive as minimum standards of acceptability to be considered as a potential for purchase

value proposition 5 Characteristics

Combination of product features that customers find attractive; differentiates from competition; satisfies financial & strategic objectives; Consistent; matches firm's values

Strategic Business Unit (SBU) Planning

how should we compete (SWOT Analysis)

Functional Strategy Planning

what specifics do we need; what critical resources do we have to manage; what metrics should we measure progress; what capabilities should be considered; how should we co-ordinate

process related competitive priorities

innovation, flexibility, sustainability

process quality

assessment of how well customer's expectations are met

Process Cost

customers want things cheap but not cheap things

fit

alignment with capabilities, value proposition and critical customer

Dematerialization

turning goods into services

New Product Design & Development Process

transforms new product technologies into a set of specifications that define a product

new process design and development projects

The transformation of product specifications and new process technology into a new or revised production system.

Fast Innovators

-Capture additional sales by getting their new products to market more quickly than their competitors do

-Are able to react quickly to competitors' product introductions, thus capitalizing on the development and promotional efforts of their competitors

-Produce a more continuous stream of new product introductions that create a greater and more constant market awareness of their brands

high-quality innovators

- Fewer issues launching products, and fewer failures

- Effectively satisfy customers for higher brand loyalty

Efficient Innovators

- Fund more new design and development projects

- Sell at lower prices, or have lower break even quantities

innovation portfolio planning

The process of selecting and prioritizing innovation projects to ensure that they are consistent with the firm's strategy and development capacity.

idea & opportunity development

-hire best talent

-effective compensation

-provide adequate resources

-open innovation

open innovation

practices and processes that encourage the use of external as well as internal ideas as well as internal and external collaboration when conceiving, producing, and marketing new products and services

Internet of Things (IoT)

the network of products embedded with connectivity-enabled electronics

order to delivery lead time

The time that passes from the instant the customer places and order for a product until the instant that the customer receives the product

Strategic Profit Model

a model that shows how operational changes affect the overall performance of a business unit

Codevelopment

Joint ownership of new product design (or a contract basis for use).

risks of codevelopment

- less control over intellectual property

- less control over goals and timing

-less rewards

benefits of codevelopment

- efficiency

- more ideas

- shared risk

Concept Development

developing a new product into alternative product concepts

Stage Gate Process

a disciplined approach that defines specific criteria for each project stage that must be completed before proceeding to the next stage

Value Engineering/Value Analysis

-identify functional purposes of product

-separate into what makes it work what makes it sell

-estimate value and rate the value

-compare importance of each function with cost

-implement changes to product design that maximise value

Design for Manufacturing (DFM)

designing a product so that it can be produced easily and economically

Design for Assembly (DFA)

design that focuses on reducing the number of parts in a product and on assembly methods and sequence

Design for 6 Sigma (DFSS)

designers systematically evaluate the consistency with which a good/service can be produced given the capabilities used

design for product serviceability

focus on easing product disassembly and reusing product components

Design for Logistics (DFL)

packing and shipping requirements are considered in initial product design: weight, size, nesting, packaging required, partial disassembly

Design for Environment (DFE)

designing a product from material that can be recycled or easily repaired rather than discarded

Component Standardization

designing the product to work with various products across the product family

modular product design

using combinations of components with standardized product interfaces to create different product variations

service platform

a product designed to deliver a wide range of customizable services

computer-aided design (CAD)

the use of computers to aid in the development of products

computer-aided engineering

software that enables users to test, analyze, and optimize their designs

Purposes of a prototype

Fail early and inexpensively

Gather more accurate requirements

Technically understand the problem

3-D Printing benefits

-Rapid Prototyping

-Mass Customization

-Reduced Reliance on Supplier inventory

process specifications

describe the logic of the processes occurring within the lowest levels of a data flow diagram

cost-plus pricing

cost determining price

target costing pricing

price driving cost

Target Cost Formula

Market Price - Desired Profit

Voice of the Customer (VOC)

Actual customer descriptions in words for the functions and features customers desire for goods and services

beta testing

uses potential consumers, who examine the product prototype in a "real use" setting to determine its functionality, performance, potential problems, and other issues specific to its use

House of Quality

a matrix that helps a product design team translate customer requirements into operating and engineering goals

Quality Function Deployment (QFD)

An approach that integrates the "voice of the customer" into both product and service development

customer requirements planning matrix

A template that guides identification and translation of customer requirements into product features.

Failure Mode and Effects Analysis (FMEA)

-Determine what to be analysed

-Identify types of potential failures

-Risk Priority number

-Create Plans to deal with each critical failure mode

-Implement & Measure

Risk Priority Number (RPN)

Severity x Occurrence x Detection

process thinking

a way of viewing activities in an organization as processes rather than as departments or functions

Juran's Law

15% of operational problems are the result of human errors; the other 85% are due to systemic process errors

Strategic Planning Inputs

competitor data, market assessments, internal capability assessments, economic forecasts

Strategic Planning Outputs

Strategic vision, long-term objectives and plans

Innovation Inputs

technological developments, customer needs, production capabilities

Innovation Outputs

new products, new production technologies

Customer Service Inputs

customer orders and requests, complaints, demand forecasts, priorities

Customer Service Outputs

entered orders, delivery commitments, resolved problems

resource management inputs

Strategic objectives, resource costs, availability of existing resources

resource management outputs

Capacity plans, facilities plans

HR management inputs

strategic objectives, skill requirements, demand requirements, staffing requirements

HR management outputs

hiring, training, staffing plans, employee development

Supply Management Inputs

Supplier capabilities, raw materials, customer orders, demand forecasts

Supply Management Outputs

fulfilled orders, production schedules, goods and services

Performance Management Inputs

raw info, benchmarks, standards

Performance Management Outputs

Performance variance, trends

Anatomy of a process

1. Activities

2. Inputs/outputs/flows

3. Process structure

4. Management policies

Operation Activities

transforms an input

Transportation Activities

activity which moves an input from one place to another

delay activities

occurs when the flow of an input is unintentionally stopped as a result of interference

Storage activity

where items are inventoried under formal control

Informational flow

data commnication

material flow

The movement of raw materials and product through the process steps of a value stream.

structure

-deals with organization of a process

-limits process capabilities

management policies

provide goals, define how work processes should be performed, and determine how organizational members are rewarded

Capacity Planning

process of assessing a company's ability to produce enough output to satisfy market demand

Lead Capacity Strategy

A capacity strategy in which capacity is added in anticipation of demand.

adding/removing capacity

add/remove capacity relative to demand

Lag Capacity Strategy

A capacity strategy in which capacity is added only after demand has materialized.

Strategic Capacity Planning

long term, physical plants, new buildings, outsourcing

tactical capacity Planning

6-24 months, specializing labor/equipment, leasing subcontracting, equipment installation and renovation, hiring/firing/contracting labor

operational capacity Planning

effective capacity

Design capacity minus allowances such as personal time and maintenance

Design Capacity

The maximum output rate or service capacity an operation, process, or facility is designed for

Utilization capacity

actual output/design capacity

Yield Rate Formula

# of acceptable products or services/ # of started products or services

Theory of Constraints (TOC)

a systematic management approach that focuses on actively managing those constraints that impede a firm's progress toward its goal

Every process has a constraint

-Bottleneck: physical limitation applied by a person, equipment, facilities

- Serial/sequential structure: occur one after another

- Parallel structure: an activity is done two or more resources simultaneously

throughput rate (flow rate) formula

Inventory/Flow Time

cycle time

the time needed to complete a process

Little's Law Formula

inventory = throughput rate x flow time

Number of Assembly lines

(Total Processing Time + Setup Time)/Operating Time Available

Every Process Contains Variance that Consumes Capacity

Input, Output, Process, Product, Delivery, Variance

Every process must be managed as a system

every change must be evaluated in how it relates to other activities in the process

Measures are crucial to the process success

need to rely on metrics

Every process must continually improve

Operation managers do not work in static world therefore must be improving continually

process structure

how inputs, activities, and outputs of a process are organized

Product-Process Matrix

a framework depicting when the different production process types are typically used depending on product volume and how standardized the product is