- Operation Strategy
- Competitive Advantage
- Time Based Competition
D.G. MehtaB.E., DMS, MMM
PPT 1 / 9
PRODUCTION MANAGEMENT (TRADITIONAL APPROACH)
BASIC FUNCTIONAL ROLE (Objectives)
1)Fully utilise man & machine.
2)Low Production Cost (Maximum Profit)
3)Production Planning & Control.
4)Control and reward people
2)Scheduling production run
4)O & M
5)People Assessment & Award
REASONS OF NEW APPROACH
(Shift from Production Management to Operation Management)
In 1993, Prime Minister Narasim Rao’s Government signed the General Tariffs & Trade Agreement (GATT) with W.T.O. USA.
Due to this, Government took the following measures for liberalisation of Industry in our country.
1)Heavy Reduction in Import Duty.
2)Foreign Equity Participation.
3)Elimination of Industrial Licensing System.
4)Encouraging Monetary and fiscal policy.
5)Introduction of SEBI and other financial measures.
All above resulted into import of equipment, raw materials, components etc. very low prices. Also their features, specification quality etc. are far superior than indigenous products. Products are readily available with goods service back up.
Above has totally changed the business environment of the Country. This has compelled indigenous manufacturer for quick changing of products with very low prices as well as competitive quality. Hence the traditional production system was required to be re-oriented to fast moving demand for the products. This alignment of production system viz-a-viz realignment of HR Finance Marketing is called operation management.
Strategies of Operation
Due to the total change in the environment manufactures were required to compete the good products with low price and the ready delivery by evolving a strategic business development from marketing to operations by the cost leadership and differentiation strategies
Differentiation strategy : This calls for following changes in the new operation management. 1.New product design.
2.Attractive product mix.
5.Quick response to new requirements.
6.Quick new product development.
Above differentiation strategy when incorporated from marketing to operation management then ultimately following alignment advantages are available. 1.Reduction in operation lead time.
2.Improvement in quality of products.
3.Improvement in maintenance
4.No postponement in schedule.
Cost Leadership Strategy
Working on price reduction of product is called low cost leadership. This new approach gives alignment to operation management. It is compared below :-
|Old Approach |New Approach | |Cost control |Eliminate non-value addition activity | |Budgetary Control |Improve quality of design | |Reduction in Inventory |Improvement in process | |Reduction in investments |Reduce investment | | |Improvement in technology |
Operation Alignments :
-Reduce manufacturing time through fewer operation.
-Access through better location.
-Overall improvement in production