Page 42 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 2: Strategy and Operations Strategy

Information technology provides vast new ways to communicate—both within operations, Notes
such as having machines talking to machines, and between the players within the firm’s supply
chain, such as B2B (business-to-business) vendor management software. B2B supply chain
management tools that use information technology to enhance the flow of materials within the
supply chain are being adopted by many organizations. Traditional ‘purchasing’ may continue
to exist, but the roles of humans within e-purchasing systems will be dramatically different.
This is the first force.
The second force is the market’s demand for product customization. Customers can participate
in leading edge firms’ product innovation process.

Example: Maruti Udyog Limited, the premier automobile manufacturer in India, has
responded to the changing competitive conditions in the market. In a bid to retain its premier
position in the market, it is offering customization for its basic car model, the Maruti 800, even
before consumers have demanded it. This includes basic face lifting to a completely colour
coordinated version. The customer has been offered a choice of colour combinations, material
and functionality add-ons. The facility is available on new purchases. It is also available for
in-use cars so that the company retains the goodwill of its existing customers.
Customization has increased in importance as economies of scale no longer induce manufacturers
to make standard products using standard parts.

Example: Sundaram Fasteners Ltd. has split its earlier integrated manufacturing system
into smaller production modules. The company calls these ‘zones of autonomous production’.
These have enhanced worker skills on the one hand, and the company’s flexibility on the other.
The third major force impacting operations managers is increased globalism-especially within
the firms’ supply chain. This has been instrumental in creating a new production system of
“worldwide sourcing” which is now a foundation of the new world economy. Instead of simply
operating plants abroad, multinationals integrate those plants that manufacture their components
as subdivisions of a globally organized production process.

Example: General Motors sources its components from as many as 50 countries. Its
radiator caps are supplied by Sundaram Fasteners.

Globalism also impacts the services sector. A small security set up in Hyderabad is providing
security services for a number of large integrated office complexes in New York, though it has
placed no security personnel in the U.S.A. Another example is the emergence of India into a
major player in software development. Infosys, NIIT, HCL, etc., are primarily offering their
services in offshore markets. They service clients such as Ford, General Motors, GE, Unilever,
etc.

2.4.1 Implementing Strategy

Implementing the operations strategy involves the organizing, directing/implementing, and
controlling the different facets of management effectively. This process is difficult since it requires
top management to secure and manage the resources needed to actually achieve the business
strategic objectives: managers who can faithfully translate the thoughts of top management, and
job workers who have the skill and motivation to deliver the results.

At slow clock-speeds, the means used to deploy and implement a corporate strategy throughout
a firm can be policy driven. As one moves down through an organization, each level down can
define what its function needs to do to support the firm’s efforts to achieve its strategic goals.

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