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1

Competitive Advantage
Definition

something which is hard to copy and be sustainable in the future

2

Business AIM:
Solve Problems

try to look for a problem in market
try to find a solution to that specific problem
create a product

3

Complications

success depends on
a) P&S that serve your problem
b) communication &cost reducing
(good product but bad communication - big problem of company is the communication/ coordination between departments)

4

Most important thins in company... for success...

generate Cash Flow
Competitive Advantage is not always key to success ....
a) if you have enough market share that´s enough to succeed
b) monopoly (petrol) has much control but not competitive advantage

5

Competitive Advantage
realistic definition

"make everything as simple as possible, but not simpler"
solve problems - but keeping competitive

6

Operation Department
Key Role

links a) "Marketing" --> sources to get the idea
(manufacturing; RM; Distribution; Companies)
b) Customer (Sales -fulfil Demand - selling it to C.)

7

Operation Department
Benefits
Key Role for Business

Are those which "makes everything happen" - magic inside the box
transaction (Input-Output Transformation)
Coordination but hardly indentified
It´s very hard to be able to sell something without value (value added through Operations - make idea happen/be transformed)

8

Operation
Consequences

one which creates most cost
(gets more picked up)
finance Department gives last decisions (takes into account costs --> decides about best combination which can impact CF the best)

9

Operation Department

P&S are potential Resources
Production function is needed to actually transform resources into USEFUL GOODS (value transformation such that customer will actually buy it)

10

Government

regarded as big SH who regulates companies within country (Lobby)
extensive regulations; restrictions
lack or too much implementation --> affects way business can be conducted

11

Global Economy

economic conditions influences demands for production or services or availability of inputs
material/ labour shortage or surplus (unbalance) may influence decision management
changes in MP (age population; ethnic groups; growth; free trade etc.)
competition

12

Competition

price; reputation; Share Value
transportation/movement cost has reduced - less costly - higher competitions
worldwide communication &data information sharing - fast, effective, cheap
search new sources of supply from anywhere as easily as local sources
costless comparisons

13

Customers

adequate price
quality of P&S
stock availability
better pre-sales vs after sales
flexibility of demand

14

Valuation to Succeed

virtually impossible to be the best in every dimension
firms should think:
a) at least min. level of acceptance for each of the qualifiers
b) but should try to be the best in market for the order winners
orders for any product/market are not static!!!

15

Order Winners

characteristic which encourages customers to choose its P&S over competitors
those competitive characteristics/combination that persuade a company´s C. to choose its P&S rather than s.o else

16

Order qualifiers

minimum requirements to be considered viable competitor in the marketplace
however, being considered doesn´t mean comp. advantage (assuring order winning)

17

Examples - Orders
Ryanair

qualifier:
plane safety (everyone has it - taken for granted)
winner:
price (they have modified the whole company/plane, how they operate to fulfil demand at lowest price)

18

Stages

Introductory (Design &Availability)
Growth (Quality)
Maturity (Price; Deliver)
Decline Stage

19

Deliver Lead Time

time between order receipt to order delivery
Customer´s wish is to have DLT as short as possible

20

ENGINEER to order

longest DLT
specifications require unique engineering design of significant customisation
firm works closely with C. to design the product, which is then made from purchased material, parts, comp.
Design --> Purchase --> Manufacturer --> Assemble --> Ship

21

MAKE to order

DLT between Manufacture --> Assemble --> Ship
manufacturer starts make the product once order is receive (but has inventory beforehand, but needs to manufacturer with inventory)

22

ASSEMBLE to order

DLT (Assemble --> Ship)
product make from standard components
but has manufactured --> inventory (nearly finished)

23

MAKE to STOCK

DLT (Ship)
Previous steps (M-->A-->I) are already conclude and sells to Customer from finished good inventory

24

Make to ORDER Vs
Make to STOCK

fast: No VS Yes (inventory)
WC: Yes VS No
Stock out forecast: No VS Yes
Risk: today (C don`t want to wait) VS future (you not sure if C. will actually buy it)

25

Marketing Department

high inventory & extensive/costly distribution system so as to provide best C. service as possible
interrupt production runs so that non-inv. can be produced
maintain & increase revenues

26

Finance Department

keep investment & cost low as possible
manufacture only to C. orders

27

Production Department

keep operating costs as low as possible
make long production runs of relatively few products
maintain high inventory of RM &work.in process so production isn´t disrupted by shortages

28

PUSH - PULL Strategy

P- P Boundary
a) Push - "generic Product"
push from RM (supplier)
b) Pull - "customised Product"
Pull from End Customer

29

Push

Aim - minimise cost
Complexity - High
Focus - resource allocation
Lead Time - Long
Processes - SC planning

30

Pull

Aim - maximise Service Level
Complexity - Low
Focus - Responsiveness
Lead Time - Shot
Processes - Order Fulfilment