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Providing value to the

customer

Operations Function is the Key

Performance

Value =Cost

(the above Value Equation was developed

by Procter and Gamble)

Performance = 1 x Quality + 2 x Speed +

3 x Flexibility

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Quality : How well goods or services meets /exceeds customer expectations.

Speed : Time needed to deliver the goods /services.

Flexibility : How easily firm can change theproduct or process to meet specific needs of

the customer.

1 2 3 are weightages ( will vary from situationto situation related to product & market )

Cost Direct Indirect

Objective Subjective

Cost to Acquire use and dispose of the goods

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Quality - you will study in detail when you study

..TQM

Understanding Time [ or Lead Time ]

* Speed * Response Time * Quickness Etc

The Interval between start and end of any

activity or series of activities

in Lead Time : Mean / Average

: Range: Variability

All are important to customers

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Categories of Lead Times

Design Lead Time

From Product Concept to design

From design to prototype

From prototype to job one

Also

From product introduction to product

revision

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Sourcing Lead Time

Supplier Selection

Supplier certification / registration

Indenting . Order Processing

Order receipt by supplier till despatch

Transit time.

Receipt / Inspection / Taking into stock

Response time to attend to problems and

revision requests.

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Manufacturing Lead Time

Order Registration.

Translation to works order.

Processing from start to end.

Putting to distribution system.

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Distribution Lead Time

Re Packing

Despatch

Transit

Installation / Commissioning

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Complaint Attending Lead

Time Registration of Complaint

Analysis

Initiating Action

Attending to complaint

Getting Feed Back

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Total Product Delivery Lead TimeIs the sum of

Design Lead Time

Sourcing Lead Time

Manufacturing Lead Time

Distribution Lead Time

Depending on the situations and inventory policy, some

or all components of lead time will be present.

TPDLT has to match customer lead time that is the

time he is ready to wait for the given product or

service. Here againwe need to consider competitors.

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Time to Market

Time taken to conceive, design, produce and

deliver a new product.

Time to product

Time taken to deliver to a customer an existing

product ( from order to delivery).

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Two time based strategies

1. Fast to market. 2. Fast to product.

Fast to marketThis is a strong and effective strategy

especially in fields where

Technology or Fashion advancement is. fast.

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Fast to Product

Is also an effective strategy to compete in market

where the customer is not ready to wait once he

decides.

This strategy incidentally also improves

performance in quality, inventory, flexibility and

cost. [ how? ]

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Lead Time to Market

Product OldTime

NewTime

Honda

AT & T

Navistar

Hewlett Packard

Cars

Phone

Trucks

Printers

5.0 years

2.0 years

5.0 years

4.5 years

2.0 years

1.0 years

2.5 years

22.0

months

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Lead Time to Product

Product Old Time New Time

General Electric Circuit breaker

boxes

3 Weeks 3 days

Motorola Pagers 3 weeks 2 hours

Hewlett Packard Test equipment 4 weeks 5 days

Brunswick Fishing reels 3 weeks 1 week

Matsushita Washing machines 360 hours 2 hours

Harley -Davidson Motorcycles 360 days < 3 days

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Time based Competition in Europe Olivetti (typewriter production) Through put

time reduced from 20 days to 3 days.

Michelin (steel cord): Setup time reduced by 90percent.

Uno a Erre (world leader in gold jewellery)Production lead time reduced by 90 percent.

Fiat Aiazione (parts of aircraft engines): Leadtime reduced by 50 percent.

Innocenti S. Eustachio (manufacturingequipment)Lead time reduced by 30 per cent.

Europa Metalli (world leader in non ferrousmetals) Set up time reduced by 70 percent.

[ these are examples of 1990s think now ]

time an enigma ?

Fl ibili

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Flexibility

An Operations Strategy

The ability of an OM System to

respond quickly to changes.

Measured by range and time to

externally and internally generated

changes.

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Externally Generated

Changes in Product

Design, volume, Mix,

Life Cycle ,

delivery Time , etc..

Internally Generated

Machine Breakdown

Absenteeism

Materials Connected

Issues

Process and technology

development

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Types of Flexibilities

Mix Flexibility Range.

products/volumeChange over flexibility From one product to

another

Modification flexibility Minor modification in

product

Volume flexibility Increase or decrease in

volume

Rerouting andprogramme flexibility

Due to breakdown andother problems

Material flexibility Variation in type and

quality of materials

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