Unformatted text preview:

Strategy What is a strategy in general ? Why do we need a strategy? What does a strategy tell us? Decisions that must support the strategyStrategy conceptsTotal costTotal cost exampleSome real world examples of managers not understanding total costsOur supply chain’s total costs equation is determined by our strategySome generic cost leadership activitiesDifferentiation strategySome generic differentiation activitiesFocusA different and potentially more useful way to view strategyOrder winners verses qualifiers“When flawless isn’t good enough”Slide 14ConclusionsStrategy 1StrategyWhat is a strategy in general ?Why do we need a strategy?What does a strategy tell us?Decisions that must support the strategy•Structure–delivery system–facility design–location–capacity planning•Infrastructure (management)–service encounter–quality–information–capacity ?Strategy 2Strategy concepts •Almost every decision we make must support our company’s (supply chain’s) strategy•Decisions that do not support the strategy tend to lower the value received by our customers.–This happens far to frequently because most managers are pushed in other directions by company policies and procedures •Go back to research discussed in previous class–Measurement systems are often designed to foil strategy.•Hall Mark DC / Harlan / Armor–Managers do not understand the concept of total costStrategy 3Total cost•Total cost is one of the most important ideas I can disseminate to you.–Price - is the dollar expenditure to purchase an input–Total cost is all of the costs associated with the input–The two often differ significantly both within an organization and in different organizations.•The total cost of an item will be determined by our strategy and can include: price, costs of poor quality, costs of late shipments, and many other costs. The total cost equation should also quantify the benefits of things like faster delivery (which may have a higher price)Strategy 4Total cost example•You are in charge of buying food for an important client meeting. Your boss instructs you to spend as much as you have too, but no more. So you have the supermarket cater the affair by preparing a 20 dollar cold cut tray. In addition, you buy a few bottles of soda. To lend an air of class to the event you also purchase some quality disposable implements and plates. What is the total costs of this event if the client is:•Buying your service because of your quality reputation?•Is a customer who wants you to help them market their environmentally (and animal) friendly products ?•A customer known to make purchase decisions based entirely on getting the lowest price ?Strategy 5Some real world examples of managers not understanding total costs•Caterpillar running low volume engines in large batches to save on set-up costs•Bridge in Kansas •Saving 10 cents a pound on ground beef•Getting paid when the street is re-paved in Philly–Or the sinking expresswayOur strategy determines the total cost of a decision (note that in general price does not vary)Strategy 6Our supply chain’s total costs equation is determined by our strategy•Cost leadership (need not be low price) strategy–South West Airlines–General Motors–McDonalds•what has the market told McDonalds about low prices ?–Post office–Wal-Mart–OSU ?•We say value but…Strategy 7Some generic cost leadership activities•Low cost customers (segmentation)–banks who only deal with people with good credit–TIAA CREF •Standardization–McDonalds–Southwest•Reduce “unnecessary” interactions –ATM–Dell•Taking a service off line - separate the customer from delivery of the service (can you say inventory buffer)–Economies of scale–Film processingStrategy 8Differentiation strategy •Creating something that is unique (often higher quality, faster delivery, or a level of innovation not available elsewhere)–Ritz Carlton Hotels–Federal Express–Herman Miller office furniture–Harvard University–Dell Computer–Subway Sandwiches–One hour photo shopsStrategy 9Some generic differentiation activities•Tangibility – important for services–many car dealers wash your car when it comes in for service - why?•Customization of a standard product–people pay a bit more and wait a bit longer at Burger King to have it their way–an insurance agent who comes to your house on your time•Quality–Lexus•Speed / reliability – Federal ExpressStrategy 10Focus•We deal with only a specific segments of customers - this is often a version of differentiation.•Basically the key distinction between focus and differentiation is attempted market penetration.•Many regional operations have a focus strategy –Fox sports has different regional broadcasts (focus)–ESPN is the all sports for the entire country network (differentiation)Strategy 11A different and potentially more useful way to view strategy•Our strategy is our stated way of satisfying (we hope) customers. But it ignores one key element; customer expectations. So we have another way of looking at the way we meet customer expectations for:Availability ConvenienceDependability PriceQuality ReputationSafety SpeedSelection CustomizationOften put into 4 generic categories of: price, quality, delivery, and flexibilityStrategy 12Order winners verses qualifiers•On any of the previously listed (not an exhaustive list) criteria our customers will have a minimally acceptable level which our company / supply chain must achieve to be considered as a potential provider. –The minimal accepted level is an order qualifier•On some criteria our company / supply chain will exceed minimal expectations. If customers value this additional performance we will have a way of winning orders.–Order winners are what customers use to chose between qualified (meet order qualifiers) suppliers of a processStrategy 13“When flawless isn’t good enough”•Recent JD powers data. –Traditional measure of auto quality – defects per car•This is a conformance based measure of quality•Today the American firms do pretty well on these measures – certainly better than ever before–Customers now expect a car to be defect free – in other words doing this is not enough – it is an order qualifier–Now quality encompasses other elements of quality such as functionality, aesthetics, fit and finish, and so on.Strategy 14Order winners and qualifiers: a way to


View Full Document

OSU BA 457 - Strategy

Download Strategy
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view Strategy and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Strategy 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?