Om For Competitive Advantages (mppm2008)

OPERATIONS MANAGEMENT FOR COMPETITVE A DVANTAGE ดร. ชัยรัช หิรัญยะวะสิต Chairat Hiranyavasit, Ph.D., CPIM (APICS) คณะบริหารธุรกิจ สถาบันบัณฑิตพัฒนบริหารศาสตร์

(NIDA)

Telephone: 08-1614-6910

[email protected]

Chairat Hiranyavasit, Ph.D., CPIM

Operations Management for Competitive Advantage

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Instructor’s Background • Education Degrees:

– B.Sc. in Chemical Engineering, Chulalongkorn University – M.S. in Production and Inventory Management, Georgia State University – Ph.D. in Operations Management, Georgia State University – Certified Production and Inventory Management (CPIM) by American Production and Inventory Control Society (APICS)

• Areas of Specialization:

– Strategy Formulation and Deployment – Operations Management

Chairat Hiranyavasit, Ph.D., CPIM

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Instructor’s Background • Past Work Experiences: – Bangkok Motor Equipment Co., Ltd., Thailand / Project Manager – Siam Technology, Co., Ltd. / Engineering Consultant – IBM-GSU Project, Atlanta, Georgia, USA / Research Team Leader – Georgia State University, Atlanta, Georgia, USA / Instructor – Auburn University, Auburn, Alabama, USA / Assistant Professor • Current Works: – National Institute of Development Administration (NIDA) • Full-time Faculty in Operations Management, School of Business Administration – Consultant Chairat Hiranyavasit, Ph.D., CPIM

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ระบบการปฏิบต ั ิการ (Operations System) Environment Social Political Economy Legal Technology Suppliers Competitors Customers

SUPLLIERS

Actions

Inputs

Data

Transformation Process Data

Outcome Outputs

Actions

Data

CUSTOMERS

Data

Monitoring & Control

Chairat Hiranyavasit, Ph.D., CPIM

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CUSTOMER VALUE CHAIN FRAMEWORK Cu stomer Valu e Eff ectiv eness Effic iency Analyze market and customers

Analyze industry and Formulate competitors strategies

Develop and design products/ services

Develop and design processes

Market and sell products/ services

Produce products/ services

Deliver products/ services

Collect payment

PRIMARY ACT IVIT IES Human resource management

Information management

Technology management

Accounting and financial management

Performance measurement

SUPP ORTING ACT IVIT IES Chairat Hiranyavasit, Ph.D., CPIM

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CUSTOMER VALUE Customer Value • สร้างคุณค่าต่อลูกค้า • ความสามารถในสนองตอบความต้องการของลูกค้า • สามารถแก้ไขปัญหาให้ลูกค้าได้ • สร้างประโยชน์แก่ลูกค้า

Chairat Hiranyavasit, Ph.D., CPIM

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CUSTOMER VALUE Perceived quality

Speed & Reliability

Convenience

Customer value Customer treatment

Dependability Monetary price

Chairat Hiranyavasit, Ph.D., CPIM

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EFFECTIVENESS Ef fectiveness

• doing the righ t thing s to cr eate the most value s for cu stom er and co m pany. ...การผลิตและส่งมอบสินค้า/บริการตรงกับความต้องการของลูกค้า ...สร้างความพึงพอใจแก่ลูกค้าได้ …ไม่ทำาลายสิง่ แวดล้อม และวัฒนธรรมที่ดีงาม Chairat Hiranyavasit, Ph.D., CPIM

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EFFICIENCY Ef fici ency

right wa y

• doing som et hing t he at t he l owest po ssi ble cost .

...การออกแบบ การผลิต การส่งมอบ สินค้า/บริการที่มีคุณภาพตามมาตรฐานที่กำาหนดไว้ มีต้นทุนและค่าใช้จา่ ยในการดำาเนินงานตำ่า

Chairat Hiranyavasit, Ph.D., CPIM

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ความท้าทาย (Challenges) ของผู้ผลิต การแข่งขันทวีความรุนแรงขึน ้ มาก • คูแ ่ ข่งขันมากขึน ้ เก่งขึน ้ • มีสินค้าในตลาดให้ลูกค้าได้เลือกซ้ือมากขึน ้ • ลูกค้าต้องการสินค้าคุณภาพสูงขึน ้ ในราคาถูกลง • ผู้ผลิตต้องต่อสู้กบ ั ต้นทุนการผลิตและค่าใช้จ่า ยในการดำาเนินกิจการท่ส ี ูงขึน ้ อย่างต่อเน่ ือง

Chairat Hiranyavasit, Ph.D., CPIM

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ความท้าทาย (Challenges) ของผู้ผลิต จะอยู่รอดและประสบความสำาเร็จได้ต้องสามารถผ ลิตสินค้า • BETTER: คุณภาพสูงขึน ้ (Better quality) • FASTER: ส่งมอบได้เร็วขึน ้ (Faster delivery) • CHEAPER: ต้นทุนถูกลง (Lower costs)

Chairat Hiranyavasit, Ph.D., CPIM

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มีเหตุการณ์เหล่านีเ้กิดขึน ้ ในสถานท่ีทำางานของ ท่านบ้างหรือไม่

Chairat Hiranyavasit, Ph.D., CPIM

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MARKET AND CUSTOMER ANALYSIS EF FEC TIVEN ESS EF FICIENC Y CUS TOMER VAL UE Analyze market and customers

Analyze industry and Formulate competitors strategies

Develop and design products/ services

Develop and design processes

Market and sell products/ services

Produce products/ services

Deliver products/ services

Collect payment

PRIMARY ACT IVIT IES Human resource management

Information management

Technology management

Accounting and financial management

Performance measurement

SUPP ORTING ACT IVIT IES Chairat Hiranyavasit, Ph.D., CPIM

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MAREKET AND CUSTOMER ANALYSIS • • • •

Scan the macro-environment Divide a big market into market segments. Select market segment (specific customer group) to target Assess the customer needs

Chairat Hiranyavasit, Ph.D., CPIM

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S-P-E-L-T Aanalysis Economic Political

Legal

Social

Technological Organization’s Opportunities and Threats

Chairat Hiranyavasit, Ph.D., CPIM

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Major Segmentation Variables for Consumer Ma rkets • Geographic: Country, Region, City • Demographic: Age, Family Size, Family Life Cycle, Gender, Income, Occupation, Education, Religion, Race, Na tionality, Social Class

• Psychographic: Lifestyle, Personality • Behavioral: User status, Usage rate, Loyalty status, Buyer-readiness stage, Attitude toward product

Chairat Hiranyavasit, Ph.D., CPIM

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Segmentation of the Toothpaste Market Segments

Demographics

Behavioristics

Psychographics

Favored Brands

Economy

Low income family

Heavy users

High autonomy, value oriented

Any brands on sales

Medicinal

Health conscious family

Heavy users

Hypochonodriac, conservative

Fluocarin

Cosmetic

Teens, young adults

Smokers Coffee/Tea drinkers

High sociability, active

Zact

Taste

Children in family

Spearmint/fruit lovers High self-involvement, hedonistic

Chairat Hiranyavasit, Ph.D., CPIM

Operations Management for Competitive Advantage

Kodomo

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Select the Market Segment to Focus • Must look at two factors:

– Overall attractiveness of the segment: • • • • •

Size Growth Profitability Scale economy Risk

– Company’s objectives and resources:

• In-line with the company’s long term objectives • Required technology, skills, and resources

Chairat Hiranyavasit, Ph.D., CPIM

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Assess the Customer Needs • Product/service needs: quality, degree of customization desired, price • Delivery needs: speed of delivery, delivery dependability, safety, courtesy, convenience • Volume needs: high or low volume, degree of variability in volume, degree of predictability on volume • Other needs: reputation, number of years in business, technical after-sale support, billing system, product/service d esign capability Chairat Hiranyavasit, Ph.D., CPIM

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Order Qualifiers and Winners • An ORDER QUALIFIER is a screening criterion that permits a firm’s products/services to even be considered as possible candidates for purchase. (ตัวแปรที่ลูกค้าใช้ในการ Screen หาตัวเลือกสินค้า) • An ORDER WINNER is a criterion that customers use to make the final decision to buy products. The Order Winner is the key attribute that a firm should differentiate its’ produc ts/services from other firms. (ตัวแปรที่ลูกค้าใช้ในการติดสินใจซื้อขั้นสุดท้าย) Chairat Hiranyavasit, Ph.D., CPIM

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Example…Food Company Market Segment I: General Household Consumers Products:

Ready to eat foods

Order Winners:

Taste Brand reputation Packaging

Order Qualifiers:

Quality conformance Convenience to buy Price

Chairat Hiranyavasit, Ph.D., CPIM

Market Segment II: Restaurant chain Products:

ไก่หมักซ๊อส

Order Winners:

Taste Delivery dependability Price

Order Qualifiers:

Brand reputation Packaging Quality conformance Delivery speed

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The Unexploited Opportunities

Unarticulated

Unexploited Opportunities

Customer Needs

Unexploited Opportunities Unexploited Opportunities

Articulated Served

Unserved

Customer Types Chairat Hiranyavasit, Ph.D., CPIM

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INDUSTRY AND COMPETITOR ANALYSIS EF FEC TIVEN ESS EF FICIENC Y CUS TOMER VAL UE Analyze market and customers

Analyze industry and Formulate competitors strategies

Develop and design products/ services

Develop and design processes

Market and sell products/ services

Produce products/ services

Deliver products/ services

Collect payment

PRIMARY ACT IVIT IES Human resource management

Information management

Technology management

Accounting and financial management

Performance measurement

SUPP ORTING ACT IVIT IES Chairat Hiranyavasit, Ph.D., CPIM

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The Diamond of National Advantage Firm strategy, Structure And rivalry

Demand Conditions

Factor (input) Conditions

Related and Supporting industries

Chairat Hiranyavasit, Ph.D., CPIM

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The Diamond of National Advantage Firm strategy, Structure And rivalry

Demand Conditions

Factor (input) Conditions

Related and Supporting industries

Chairat Hiranyavasit, Ph.D., CPIM

Operations Management for Competitive Advantage

Government Policy and Regulation 25

Selected Regional Clusters of Competitive U.S. Industries Detroit Auto equipment and parts New York City Financial service, Advertising, Publishing, Multimedia Pennsylvania/New Jersey Pharmaceuticals Dalton, Georgia Carpet South Florida Health technology, Computer South Texas/Louisiana Chemicals Silicon Valley Microelectronics, Biotechnology, Venture capital Seattle Aircraft equipment and design, Boat and ship building, Metal fabrication Loa Angeles Area Defense/aerospace, Entertainment Las Vegas Amusement, Casinos, Small airlines Chairat Hiranyavasit, Ph.D., CPIM

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COMPETITIVE FORCES THAT SHAPE STRATEGY กำาแพงกีดกัน ่ การเข้ามาของ คู่แข่งรายใหม่

อำานาจการต่อ รองของผู้ขาย

Suppliers

ภัยคุกคามจาก สินค้าทดแทน

Chairat Hiranyavasit, Ph.D., CPIM

Potential New Entrants Rivalry among Competing Sellers Substitute Products

Buyers

อำานาจการต่อรอง ของผูซ ้ ้ ือ

สภาวะการแข่งขัน ระหว่างผู้ผลิต

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Benchmarking • “Know your enemy and know yourself; in a hundred battles you will never be in peril.” • Benchmarking is a continuous systematic process for evaluating the products, services, and work processes of org anizations that are recognized as representing best practices for the purpose of organizational improvement. • Benchmarking is an effective tool for: – Establishing that there is a need for change – Identifying what should be changed – Creating a picture of how the organization should look after the change.

Chairat Hiranyavasit, Ph.D., CPIM

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Types of Benchmarking • TWO types of benchmarking

– Internal Benchmarking • compares business practices internally. • identifies the best internal practices. – Competitive Benchmarking • focuses on the products, services, and work processes of your direct and/or indirect competitors. • identifies your organization’s strengths and weaknesses. • uncovers the best practices of an organization that is recognized as the leader in a specific area.

Chairat Hiranyavasit, Ph.D., CPIM

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The Xerox Ten-Step Benchmarking Process Model Planning Analysis Integration Action

1. Identify benchmarking subjects. 2. Identify benchmarking partners. 3. Determine collection method and collect data. 4. Determine current competitive gap. 5. Project future performance. 6. Communicate findings and gain acceptance. 7. Establish functional goals. 8. Develop action plans. 9. Implement plans and monitor progress. 10. Recalibrate the benchmark.

Source: Xerox Corporation. Chairat Hiranyavasit, Ph.D., CPIM

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Competitive Benchmarking and Gap Analysis

COMPETITOR ASSESSMENT IMPORTANCE CUSTOMER REQUIREMENTS TO CUSTOMERS WORST BEST Product Performance/ Features 30% Product Reliability

20%

Price

20%

Brand Reputation

10%

Conformance to Specification

10%

Fast and on-time delivery

5%

Quick repair services

5%

Chairat Hiranyavasit, Ph.D., CPIM

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The Importance-Performance Matrix Urgent action zone Performance Features Price Brand Order Reputation qualifying

Importance to Customers

Ap p r op r ia te zon e

Order winning

Less important

Chairat Hiranyavasit, Ph.D., CPIM

Worst than competitors

Product Reliability

Past, On-Time Delivery Excess zone Quick Repair Better than Relative competitors Performance

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STRATEGY FORMULATION EF FEC TIVEN ESS EF FICIENC Y CUS TOMER VAL UE Analyze market and customers

Analyze industry and Formulate competitors strategies

Develop and design products/ services

Develop and design processes

Market and sell products/ services

Produce products/ services

Deliver products/ services

Collect payment

PRIMAR Y ACT IVIT IES Human resource management

Information management

Technology management

Accounting and financial management

Performance measurement

SU PPO RT ING ACT IVIT IES Chairat Hiranyavasit, Ph.D., CPIM

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Operations Strategy Process Market and Customer Study

Competitive Benchmarking

Corporate/Business Strategy

Operations Strategy

Decisions on Processes and Infrastructure Chairat Hiranyavasit, Ph.D., CPIM

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Patterns of Target Market Selection Single-segment concentration

M1

M2

Selective specialization

M1

M3

P1

P1

P2

P2

P3

P3

Market specialization

M1

M2

M2

M3

P = Product M = Market

Product specialization

M3

M1

M2

Full market coverage

M1

M3

P1

P1

P1

P2

P2

P2

P3

P3

P3

Chairat Hiranyavasit, Ph.D., CPIM

Operations Management for Competitive Advantage

M2

M3

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Competitive Strategy Competitive Advantage Cost Broad Target

Other Uniqueness

COST LEADERSHIP DIFFERENTIATION

Competitive Scope Narrow Target

Chairat Hiranyavasit, Ph.D., CPIM

COST FOCUS

DIFERENTIATION FOCUS

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Competitive Strategy • Competitive Strategic Choices:

– Cost Leadership Strategy – Differentiation Strategy: • Superior quality • Superior service • Fast delivery • High delivery reliability • New product introduction speed • Flexible to volume change • Flexible to customize the products to each individual customer – Focus Strategy: Cost Focus and Differentiation Focus

Chairat Hiranyavasit, Ph.D., CPIM

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What is Strategy? By Michael E. Porter • The myriad activities (HBR, 1996) that go into creating,

producing, selling, and delivering a product or service are the basic units of competitive advantage. • Operational effectiveness means performing these activities better – that is, faster, or with fewer inputs and defects – than rivals. • Companies can reap enormous advantages from operational effectiveness.

What is Strategy? By Michael E. Porter (HBR, 1996)

• But from a competitive standpoint, the problem with operational effectiveness is that best practices are easily emulated. • Strategic positioning attempts to achieves sustainable competitive advantage by preserving what is distinctive about a company.

What is Strategy? By Michael E. Porter (HBR, 1996)

• Strategy is the creation of unique and valuable position, involving a different set of activities. Serving few needs of many customers (Jeffy Lub provides only auto lubricants) Serving broad need of few customers (Bessemer Trust targets only very high-wealth clients) Serving broad needs of many customers in a narrow markets (Carmike Cinemas operates only in cities with a population under 200,000)

What is Strategy? By Michael E. Porter (HBR, 1996)

• Strategy requires you to make trade-offs in competing – to choose what not to do. Neutrogena soap is positioned more as a medicinal product than a cleansing agent. The company says “no” to sales based on deodorizing, gives up large volume, and sacrifices manufacturing efficiencies. By contrast, Maytag’s decision to extend its product line and acquire other brands represented a failure to make difficult trade-offs: boost in revenues came at the expense of return on sales.

What is Strategy? By Michael E. Porter (HBR, 1996)

• Strategy involves creating “fit” among a company’s activities. Fit has to do with the ways a company’s activities interact and reinforce one another. Fit drives both competitive advantage and sustainability: when activities mutually reinforce each other, competitors can’t easily imitate them.

Chairat Hiranyavasit, Ph.D., CPIM

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What is Strategy? By Michael E. Porter (HBR, 1996)

More than 35 years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make sure they have a good time doing it, people will fly your airline. What began as a small Texas airline has gone to become one of the largest airlines in America. Today Southwest Airline flies more than 80 million passengers a year to 62 great city across America. Chairat Hiranyavasit, Ph.D., CPIM

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What is Strategy? By Michael E. Porter (HBR, 1996)

Ten Driving Forces of Changes for the Future

Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 1: REAL-TIME REPONSIVENESS • • • • • • •

“Speed is life.” Speed in responding to changing needs of customers Speed in responding to new demand Speed of manufacturing and delivery lead time Speed of transaction Speed of approval Speed of repair

Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 1: REAL-TIME REPONSIVENESS Examples: • Get your hamburger in 60 seconds • Pizza delivered to your door in 30 minutes • Personal loan approval in 3 minutes • Mortgage loan approval in 3 days • Quick-lub service in 30 minutes • Overnight parcel delivery

Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 2: NO-HASSLE CONVENIENCE • “If you don’t make shopping easy for me, I’m not going to waste my time.” • Even though I could go right around the corner to buy business supplies, it’s easier to call and place an order. They bring it right to the door.” • Look for possibilities to provide no-hassle convenience: time frame, ease of doing business, ease of buying and return, ease of payment method, after-sale service.

Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 2: NO-HASSLE CONVENIENCE Examples: • Seven-Eleven convenience store • Home-delivered pizza • 7-24 on-line service

Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 3: AGING BOOMERS/RISING XERS • The aging baby boom • The rising generation X • Boomers and Xers have different preferences on how they spend their money. Examples: • Aging boomers => health care, travel, etc. • Rising Xers => entertainment, sport, beauty, fashion, computers, mobile phone, games, etc. Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 4: MASS CUSTOMIZED CHOICE • “Have it their way…the customer way.” Examples: • 40+ channels cable TV • MK Suki restaurant • Salad bar • Assemble to customer order at Dell

Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 5: LIFESTYLE • Look for possibilities to benefit from change in the way we live. • New lifestyles: J-kid, HIP, YUPPY, health conscious, etc. Examples: • e-Girl by KBANK • MP3 • Mobile phone • Weight control nutrition • No salt-low carb-low fat foods Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 6: DISCOUNTING • Position your business in a era of price competition. • More and more customer become cost conscious. Examples: • Discount superstore: Lotus, Big C, Makro • บ้านเอื้ออาทร

Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 7: VALUE DIFFERENTIATION • Create alternatives to price competition • Look for possibilities to add value to your products/services and profit from it. Examples: • In-stores classes or seminars for customers • Warehouse service – ships customer orders as needed • Overdraft protection • Computerized kitchen and remodeling planning • Extended warrantee Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 8: ULTRA SERVICE • “These people demand service…if they don’t get it from your company, they’ll get it from your competitor.” • Ultra service can… – overcome a competitor’s price advantage. – let a small company take on a big one-and win. – build customer loyalty that lasts for years.

Examples: • Nordstrom Department Store • Oriental Hotel • Singapore Airline Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 9: TECHNO-EDGE • Using technology to lead the field. Examples: • Computer network to link supplies, manufacturers, distribution centers, and retailers • e-Business • e-ticket for airline • PDA Phone for salespeople Chairat Hiranyavasit, Ph.D., CPIM

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Driving Force 10: World Class Quality • Use quality as a strategic weapon Examples: • Toyota – reliable car • Ferrari – high speed sport car • Mercedes Benz – luxury car • Toyota – Just-in-Time and lean systems

Chairat Hiranyavasit, Ph.D., CPIM

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DRI VIN G

GR OWTH TH ROUGH

INN OVATIO N By Dr. Chairat Hiranyavasit School of Business Administration National Institute of Development Administration TEL: 08-1614-6910

FAX: 02-728-0258

E-Mail:[email protected] Chairat Hiranyavasit, Ph.D., CPIM

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What Strategies do Most of the Companies Adopt in Order to Close the gap?

• • • • • •

Increase marketing and sales efforts Launch traditional new product/services Cost-cutting, efficiency-enhancing initiatives Acquisition and mergers … …

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“Invention” versus “Innovation”

• Invention = Coming up with new ideas • Innovation = Bringing new ideas to life

Chairat Hiranyavasit, Ph.D., CPIM

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Happy Accident • Nutrasweet, a $2 billion a year product for G.D. Searle Company, was discovered by a researcher attempting to find a drug to treat ulcers. • Viagra, a latest blockbuster drug for Pfizer, was accidentally discovered by scientists attempting to stimulate receptors in the hearths of people with angina.

Chairat Hiranyavasit, Ph.D., CPIM

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Three Types of Innovation 1. Product Innovation 3. Process Innovation 5. Strategy Innovation

Chairat Hiranyavasit, Ph.D., CPIM

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The Innovation Opportunity Grid Product

Process

Strategy

Breakthrough

Substantial

Incremental

Chairat Hiranyavasit, Ph.D., CPIM

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McDonald Corporation’s Innovation Opportunity Grid

Product

Process

Strategy

Breakthrough

Big Mag

Franchisee Regulations Of Quality Consistency

Global Expansion

Substantial

Value Meals

Hamburger University

Opening For Breakfast

Incremental

Green Milkshakes for St. Pat’s Day

New French Fry Cooker

Boston Markets Acquisition

Chairat Hiranyavasit, Ph.D., CPIM

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Innovation Opportunity Grid Cosmetics Company

Product

Process

Strategy

Breakthrough

Beauty Nutrition And Fashion

Franchisee Quality Assurance System

International Expansion

Substantial

Skin-cared Products and Make-up Cosmetics

Supply Chain Management System

Store Expansion throughout Thailand

Incremental

Body-cared and Hair-cared Products

Bar Codes, POS, and Customer Relationship Management System

Membership Program

Chairat Hiranyavasit, Ph.D., CPIM

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Degrees of Innovation

Magnitude of Change

Breakthrough

Substantial

Incremental

Revenue and Profit Growth Chairat Hiranyavasit, Ph.D., CPIM

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WORKSHOP What do these products have in common? • 3M’s Post-it Notes • Gillette’s Sensor Razor • FedEx’s Overnight Letter • Callaway’s Big Bertha • Miller Lite • Sun Microsystems’ Unix Server • Sony’s Walkman / Sony’s Playstation • Merrill Lynch’s cash Management Account Chairat Hiranyavasit, Ph.D., CPIM

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Generating Growth Strategies 1. 2. 3. 4. 5. 6.

Look for opportunities in market positioning. Look for opportunities in customer outsourcing. Look for opportunities in understanding customer needs. Look for opportunities in reinventing your business model. Look for opportunities in redefine value-added. Rethinking how your product or service gets to the hands of customers.

Chairat Hiranyavasit, Ph.D., CPIM

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Leading Innovation 1. 2. 3. 4. 5.

Design and implement an innovation strategy Spread responsibility for making innovation happen Allocate resources and decide on levels of risk Establish innovation matrices Reward innovation

Chairat Hiranyavasit, Ph.D., CPIM

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Idea Management Models • • • • • • •

Open Door Model Suggestion System Model Continuous Improvement Model New Venture Team Model The Incubator Lab Model The Innovation Team Model The Innovation Catalyst Model

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WORKSHOP: Design the Innovation Opportunity Grid for Your Company

Product

Process

Strategy

Breakthrough

Substantial

Incremental

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CUSTOMER VALUE CHAIN CUS TOM ER VAL UE EF FEC TIVEN ESS EF FICIENC Y Analyze market and customers

Analyze industry and Formulate competitors strategies

Develop and design products/ services

Develop and design processes

Market and sell products/ services

Produce products/ services

Deliver products/ services

Collect payment

PRIMARY ACT IVIT IES Human resource management

Information management

Technology management

Accounting and financial management

Performance measurement

SUPP ORTING ACT IVIT IES All Rights Reserved by Chairat

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Product Development Stages

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Design Team Approach

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Supply Chain Management

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Design for Customer: Fitness for Use • • • • • •

Performance Features Reliability Durability Maintainability Aesthetics

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Design for Manufacturability (DFM) • Design a product so that it can be made easy, fast, cheap, and no defect. – Reducing the number of separate parts

• Use as much as possible the standard and common Parts • Use modular design

– Simplify operations

• Avoid using fasteners

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Design for Environment (DFE)

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Computer-Aided Design (CAD)

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CUSTOMER VALUE CHAIN CUS TOM ER VAL UE EF FEC TIVEN ESS EF FICIENC Y Analyze market and customers

Analyze industry and Formulate competitors strategies

Develop and design products/ services

Develop and design processes

Market and sell products/ services

Produce products/ services

Deliver products/ services

Collect payment

PRIMARY ACT IVIT IES Human resource management

Information management

Technology management

Accounting and financial management

Performance measurement

SUPP ORTING ACT IVIT IES All Rights Reserved by Chairat

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Make-to-Order versus Maketo-Stock Make-to-Order • Only activated in response to an actual customer order. • Both work-in-process (WIP) and finished goods inventory kept to a minimum.

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Make-to-Stock • Process activated to meet expected or forecast demand. • Customer orders are served from target stocking level.

Supply Chain Management

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Make-to-Order

Customer places order Raw material

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Cook

Assemble

Supply Chain Management

Deliver

83

Make-to-Stock

Customer places order Raw material

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Cook

Assemble

Supply Chain Management

Finished goods

Deliver

84

Make-to-Stock (for parts) and Assemble-to-Order

Customer places order Raw material

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Cook

WIP

Assemble

Supply Chain Management

Deliver

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Product Structure Product Life Cycle Stage

I II III Few major Low volume Multiple products Process Structure products Low standardization Low volume Process Life Cycle Stage Often one of a kind Higher volume

I Job Shop

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Flexibility (high) Unit cost (high)

Paint

III Assembly Line IV Continuous Flow

Not feasible

Customized products

II Batch

IV High volume High Standardization Commodity products Effectiveness Measures:

Automobile assembly

Oil refinery

Not feasible Supply Chain Management

Flexibility (low) Unit cost (low) 86

Flexible Manufacturing System Computer control room

Tools

Conveyor

Machine

Machine

Pallet

Machine

Machine

Machine

Machine Load

Parts All Rights Reserved by Chairat

Unload Terminal

Supply Chain Management

Finished goods

87

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Supply chain is a part of a customer value chain. EF FEC TIVEN ESS EF FICIENC Y CUS TOMER VAL UE Analyze market and customers

Analyze industry and Formulate competitors strategies

Develop and design products/ services

Develop and design processes

Market and sell products/ services

Produce products/ services

Deliver products/ services

Collect payment

PRIMARY ACT IVIT IES Human resource management

Information management

Technology management

Accounting and financial management

Performance measurement

SUPP ORTING ACT IVIT IES Chairat Hiranyavasit, Ph.D., CPIM

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What is Supply-Chain? • Supply-chain is a term that describes how organizations (suppliers, manufacturers, distributors, and customers) are linked together.

Chairat Hiranyavasit, Ph.D., CPIM

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Common Problems in SupplyChain • High inventories • Poor conformance quality, high defect rate • Poor product design quality, low product performance and less features • Operations inefficiency • Slow delivery, take too long time to delivery • Unreliable delivery, cannot delivery when promise • Long lead time for new technology development and introduction, always behind competitors to launch new products • Limited flexibility, not able to cope with the changes in market place. Chairat Hiranyavasit, Ph.D., CPIM

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Results • • • • •

Chairat Hiranyavasit, Ph.D., CPIM

High costs Poor quality Poor customer services Lower sales Lower profit / Higher loss.

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Common Causes of the Problems • • • • • • •

Lack of data Poor data accuracy Poor planning Poor decision making Poor cooperation inside and outside the firm Lack of discipline Fear of change

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What is Supply-Chain Management? • Supply-Chain Management is a total system approach to managing the entire flow of information, materials, products, services, and cash from suppliers through manufacturers, distributors, and retailers to the end customers.

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Objectives of Supply-Chain Management • Maximize customer values:

– by designing and producing high, consistent product / service quality that meet the customers’ requirements. – by delivering products / services fast and always on-time.

• Minimize costs

– by reducing and eliminating any things which are more than absolutely required to create values to the customers.

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Supply-Chain Management Framework S U P P L I E R S

Chairat Hiranyavasit, Ph.D., CPIM

M D A I Information Flow N R T U E R F CollaborativeI Planning Flow T A A B C I U T Material, Product, L T and Service Flow U E O R R R E S R CashS Flow S Operations Management for Competitive Advantage

C U S T O M E R S

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Information Flow

Chairat Hiranyavasit, Ph.D., CPIM

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Collaborative Planning Activities

Chairat Hiranyavasit, Ph.D., CPIM

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Enterprise Resource Planning (ERP) System PLANNING

SUPPLIERS

BUY

MAKE

AP

COSTING

FA

Chairat Hiranyavasit, Ph.D., CPIM

GL

SELL

CUSTOMERS

AR PR

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Just in Time Inventory Replenishment System

Chairat Hiranyavasit, Ph.D., CPIM

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การแสดงตัวอย่างการทำางานของ Toyota Production System

Chairat Hiranyavasit, Ph.D., CPIM

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การแสดงตัวอย่างการทำางานของ Toyota Production System

Chairat Hiranyavasit, Ph.D., CPIM

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การแสดงตัวอย่างการทำางานของ Toyota Production System

Chairat Hiranyavasit, Ph.D., CPIM

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การแสดงตัวอย่างการทำางานของ Toyota Production System

Chairat Hiranyavasit, Ph.D., CPIM

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Kanban System

Chairat Hiranyavasit, Ph.D., CPIM

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WAL-MART

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Supply Chain Management

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Corporate Profile

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Supply Chain Management

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Supply Chain Management

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Supply Chain Management

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Volkswagen in Brazil

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DELL • • • •

DELL uses low cost - rapid response strategy DELL takes customer orders via Internet, telephone, and fax. DELL sends customer orders to the distributor nearest to the customer. The distributor assembles PCs according to customer orders, then tests and delivers them to the customers. • Suppliers that make component parts for DELL link their computers with DELL’s so they can check DELL’s inventories on-line. The suppliers restock the warehouse and manage their own inventories. • DELL keeps the part costs and inventories low (13 days versus 25 for Compag) and sell at prices 10 to 15% below those of competitors. All Rights Reserved by Chairat

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Supply Chain Network – Cement Thai Home Mart

Customers Suppliers

DC Rangsit

Customers HUB (Lampang, Nonesomboon, Thungsong)

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Supply Chain Management

Customers

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Hub & Spoke

Lampang Nonesomboon DC.Rangsit

Regional Hubs Distribute Goods to Customers by Window Delivery.

Thung Song

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Order Processing

ORDERS

Salesma n

SAP

SAP

• E-Ordering • Call Center

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CTL

Carrier

Supply Chain Management

Dealer

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E-Ordering System

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E-Payment

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Supply Chain Management

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ด้านบริหารการจัดส่ง TRANSPORTATION MANAGEMENT SYSTEM

Logistics Planning

Transportation

Shipping

Order Processing

Transportation Management

Sales & Marketing

Accounting Warehousing

✦ จัดการกับคำาสั่งซื้อของลูกค้า ✦ การวางแผนเส้นทางการขนส่ง All Rights Reserved by Chairat

Order Tracking

✦ การทำาบัญชีค่าขนส่ง ✦ ติดตามสถานะของคำาสัง่ ซือ้ ของลูกค้า Supply Chain Management

117

การติดตามสถานะจัดส่ง ✦ สามารถทราบตำาแหน่งของรถขนส่งเป็น latitude,longitude ✦ ทราบความเร็วของรถ ( Real Time ) ✦ ทำาให้ระบบการจัดส่งเป็นไปอย่างถูกต้องและมีประสิทธิภาพ มากขึน้ Satellite

Online

Transportation

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Communication Network

Logistics Planning Center

Dealer End users

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CUSTOMER VALUE CHAIN FRAMEWORK Cu stomer Valu e Eff ectiv eness Effic iency Analyze market and customers

Analyze industry and Formulate competitors strategies

Develop and design products/ services

Develop and design processes

Market and sell products/ services

Produce products/ services

Deliver products/ services

Collect payment

PRIMARY ACT IVIT IES Human resource management

Information management

Technology management

Accounting and financial management

Performance measurement

SUPP ORTING ACT IVIT IES Chairat Hiranyavasit, Ph.D., CPIM

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IMP VA R O L U V ED E

CO NTI NUOUS QU ALI TY IMPRO VEMEN T

LEVEL 4: Quality as Strategic Weapon – Strategic Quality Management

LEVEL 2: Reduce Defects – Quality Control System

RED U

CED

CO ST

S

LEVEL 3: Eliminate Defects – Zero Defect System

LEVEL 1: Detect defects – Inspection System LEVEL 0: No Formal Quality System Chairat Hiranyavasit, Ph.D., CPIM

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THE END Thank You Chairat Hiranyavasit, Ph.D., CPIM

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