operations strategy

Strategic Project Management

Posted on by cesar598spr15

One of the skills that every corporate executive could have is project management, but SURELY every project manager should master the art of strategy.

As our project management class unfolds, I became more convinced that we cannot design or execute projects without the proper alignment of our objectives and resources as Project Managers with our corporate strategy. After all, projects are initiated to achieve business results. Projects should then not only be managed from the operational aspect but from the business aspect as well. Getting the job done does not seem enough anymore, rather getting the Right job done is what is needed. This mindset does not come to cancel the existing ways of doing projects but to expand the projects meaning and give them a broader reason.

To help build the Project strategy one has to identify to following projects components:

  • Perspective “Why”: Defines the reason and the motivation for the project, as well the need, environment and business opportunity. This will help understand the big picture and creates motivation among the staff.
  • Position “What”: Defines the end product of the project which will be delivered to the customer or users. How could this project contributes to our product, and why the customer will buy our product and why our product is better than what is available on the market
  • Plan “How”: This part of the project strategy explains how the objectives and competitive advantage are going to be achieved. At this level statement of work (SOW) and work break down structure (WBS), Project Matrix are developed. Shall a company want to be a first-mover, “time” will then have to be a constraint and delays cannot be accepted. On the other side if a company has the objective of being a cost leader, PM working on product design teams have to ensure that “cost” is a constraint as failing to be a cost leader might put the company’s competitive advantage under threat.

In the recent increase of project based companies, this skill has become inevitable for PM. Projects objectives seem to be giving a project its short term meaning, but its alignment with the strategy extends that meaning to a longer term.

Avoiding this truth can only lead the project to failing to add real value and build a sustainable business model.

Recently i have been involved in several retail store construction projects where it was clarified to us since the early stages of the works that time is our constraint. Opening according to the set deadlines was crucial for our company not only to meet its commitments with the landlord and franchisor but also to remain ahead or aligned with the competition.

Do you agree that projects managers should dispose of great strategic skills? Do you have any project, according to your opinion, being executed without being relevant to the company strategy?

Patanakul, P., & Shenhar, A. J. (2012). What project strategy really is: The fundamental building block in strategic project management. Project Management Journal, 43(1), 4-20. doi:10.1002/pmj.20282

Project Strategy Components

The ‘Walmarting’ of the Airline Industry

Posted on by farzana30131f14
Norwegian Air Shuttle’s ambitious plans involve some complex logistics
Norwegian Air Shuttle’s ambitious plans involve some complex logistics

Many companies choose to employ a global strategy where different pieces of the process are completed in different regions of the world. These global processes can be accomplished in numerous combinations and it is up to the company to find the most effective one.

In this article, Norwegian Air Shuttle, an airline that specializes in low-cost flights around Europe, is bringing it business model to the United States and Asia, to the dismay of U.S. airline companies.

Their strategy is a complex one that has different cost-effective parts. Norwegian is “moving its long-haul operations from Norway to Ireland, basing some of its pilots and crew in Bangkok, hiring flight attendants in the United States, and flying the most advanced jetliner in service — the Boeing 787 Dreamliner.” Other airlines have tried but failed to do a low-fare approach on long-haul flights.

Bjorn Kjos, Norwegian’s CEO, is confident that they can offer fares that are 50 percent cheaper than the competition’s, which will ultimately drive out competition. American Labor groups, “see it as a backhanded attempt to outsource cheaper labor and undercut competition” as well as taking advantage of the open-skies agreement made with the EU (even though Norway isn’t part of the EU).

“United Airlines and American Airlines said the low-cost airline wanted to skirt labor laws by resettling its long-haul operations in Dublin, while using a Singapore-based company to hire pilots on its behalf in Thailand. The result would give it ‘a competitive advantage on trans-Atlantic routes in direct competition with U.S. carriers.’”

In class, we talked about competitive advantages in relation to globalization. According to the lecture there are many reasons to globalize:

  1. Improve the supply chain
  2. Reduce costs
  3. Improve operations
  4. Understand markets
  5. Improve products
  6. Attract and retain global talent

I think that the way that Norwegian Air Shuttle is globalizing falls in line with these points and it is effectively improving supply chain, reducing costs, and improving operations better than their American counterparts. They improve the supply chain by finding the most beneficial process to establish their airline. They lower direct and indirect costs by eliminating unnecessary expenses and finding the cheapest way to provide labor, and reducing taxes and tariffs. They also improve operations by understanding differences in how business is handled in different countries, and using it to their advantage.

There are also strategies for competitive advantage: differentiation, cost-leadership, and response. I believe that the Norwegian Air Shuttle company is competing on cost; they are they are providing the maximum value as perceived by the customer at the lowest cost and it is creating the most demand.

Do you think that the way Norwegian Air Shuttle handles their business model is considered a strategic competitive advantage or is it an unfair advantage? Why?

Source:  Long-Haul Expansion by a Norwegian Carrier Upsets U.S. Airlines

Get in the Shower if it All Goes Wrong

Posted on by janelle30113f14

The worst think about working on a project, especially when you’re the manager, is when you can feel it failing. Both you and you team know you are losing your grasp on it and you feel powerless to stop it. Whether it be in a school project, or at work most of us know that feeling.  This is a hard pill to swallow because it means accepting that there is a problem with the path that has been taken.

So how do you get past this? How do you revive a team like that? Should you scrap the project all together losing all the time, energy, and resources put into it? Or should you power through with a bad plan just so you can finish? Maybe you could complain loudly, but ultimately do nothing to change the situation. I’ll admit I have occasionally been that person. It’s not something I’m proud of.

While these steps might be easy to do they aren’t always the best course of action. Here are some simple tips to get your project back on track:

Identify the problem

To fix the problem you have to know the problem. Take a step back and evaluate the situation, you need to understand exactly what went wrong and when. Now you have a starting point to build upon.

Get in the shower

Literally or figuratively clean yourself off! Rid yourself of the bad feelings you previously had towards the project. While this tip might seem unessential, it is actually quite important. If you refuse to let go of your past failures with the project it will make moving forward virtually impossible, it can hinder your ability to come to the table with an open mind ready for a fresh start.

Talk to your team

Communication is key. To get your team back on track everyone needs to be on board and working towards the same goal. This is not a time to try and place blame. Make sure everyone knows their role and how it contributes to the bigger picture. If possible, encourage an open line of communication to eliminate a breakdown in the project due to a breakdown in communication.

Reboot

Learn from your mistakes and refocus yourself. Based on your identification of the problem create a new plan that solves it. “Issue a revised scope statement, obtain the funding, reset the schedule and obtain appropriate approvals. You have been given a new lease on your project” (Cutting).

This list is by no means comprehensive and these are only beginning steps to fix a bigger problem. But start here and you’ll be on the right track to saving your project.

How could you expand on this list? What tips do you have for saving a project? What doesn’t work? How do you know when a project is no longer salvageable?

Sources:

http://www.projectsmart.co.uk/how-to-really-fix-a-failing-project.php

http://fortune.com/2013/11/22/4-steps-to-turning-around-a-troubled-project/

World’s Largest Vehicle Manufactures

Posted on by spr1334rzaveri

Toyota Motor Corporation is Japanese globally automaker headquartered in, Japan. Toyota Motor Corporation has about 325,905 employees working worldwide and was third-largest automobile manufacture in 2011 by production behind General Motors and Volkswagen Group. Toyota Motor Corporation is in top eleventh largest company in the world by revenue. The world’s largest vehicle manufactures, Toyota Car Company was having issues with recall. This issue is going around all over the world as well as in USA, Europe and China. This issue makes the consumer loss their confidence and as well as corporate image dropped. Toyota Motor Corporation their recall was nearly one million vehicles around the world, on top to replace damaged parts that could cause drivers to lose control of the steering wheel. There were total of 10 models affected, including the popular Prius. Prius recall more than 200,000. Due to defective gas pedals Toyota lost a lot of customers. But, to be in market and not to lose customer they are still in game.

Toyota Motor Corporation blamed that the floor mats was the problem, then it came to the gas pedal was the actual cause. But, when car owners they don’t know personally what was causing the gas pedal to accelerate and stick, without releasing. Not only Toyota had recall problems, but cars like Honda and Nissan recall over 3 million vehicles globally due to air bag problems. Not only these two cars had recall problems with their airbag, Toyota recall 1.3 million cars due to this airbag problem. Toyota FJ Cruiser recall affects seat belt retractors on 209,000 vehicles. Still, the numbers are getting bigger and bigger.

To chase the maximum profit and cost minimization, suppliers pay more attention on how to reduce cost. By using raw materials quality Toyota Motor Corporation was over confidence with their suppliers, that they changed their design without taking permission. Toyota Motor Corporation their biggest suppliers changed the pedal design that leading to the pedal problem.

Toyota Motor Corporation lack of an effective quality control cause them recall happening. They did not do enough test of their design before they produced. Their biggest mistake was they did not use quality check after the production they did not even do better quality check. This is a big embarrassment for the world’s largest automobile manufacture, that lack of negligence and having over confidence could cause them big problem in future.

Now the big question is that, let’s see that tomorrow morning you sit in your car to drive to work or anywhere and you are driving, down the road and suddenly you notice that your car breaks are not working fine. What would be your reaction? Are you still going to keep buying the same car brand you were buying before? What do you think that Toyota Motor Corporation should do to keep their name back in world’s largest automobile manufacture?

Sources:

  1. http://www.caranddriver.com/news/toyota-recall-scandal-media-circus-and-stupid-drivers-editorial
  2. http://money.cnn.com/2013/06/05/news/toyota-recall/index.html
  3. http://en.wikipedia.org/wiki/Toyota
  4. http://www.nydailynews.com/news/money/toyota-recalls-2-17-million-cars-jammed-accelerator-pedals-article-1.135025
  5. http://crownheights.info/general/25720/toyota-recalls-sienna-minivans/
  6. http://topics.nytimes.com/top/news/business/companies/toyota_motor_corporation/index.html

 

Boeing, flying high once again?

Posted on by Dom

After 15 months and millions of dollars spent, the Boeing 787 Dreamliner has resumed commercial flights. The groundbreaking jet, introduced in July 2003 was dubbed as the next generation airplane that would revolutionize the way air travel operated. Soon after preliminary flights, major aircraft corporations began to notice technical and mechanical issues that affected the reliability of the jet. These problems resulted in flights being delayed and cancelled. In January, two 787s owned by Japanese airlines experienced burning batteries that would later ground all 787s.

Prior to the grounding, delivered 787s logged a reliability rating of 97.7% (23 delays/cancellations out of 1000 flights). This result was comparable to the long tested and proven 777 that that 787 aims to replace. As technology expands, systems become more intricate and coincide with higher rates of failure. The 787 is an example of new age lithium-ion batteries, electrical systems, and computer systems that alter service requirements. This plane alone requires 10 times more power during startup than traditional Boeing planes, computer and electrical systems to be turned on three hours before each flight, and scheduled maintenance in between each flight.

During this downtime Boeing continuously has been mass producing these airplanes to fill the 800+ orders that have been filed from 50+ customers. By April 2013, 50 planes have been built and delivered to their respective companies. However, this plane does retain more positives than negatives, thus accounting for the 800+ orders. With this new technology, the planes will be able to be serviced in as little as 45 minutes. This will allow for companies to keep their planes in the air instead of on the ground. In addition, new light weight materials have been used and new fuel efficient engines fitted on the wings that allow for longer distance flights without using more fuel.

Aboard the new computer system, Boeing has also included a transmitter that will upload the airplane’s data to a world-wide network managed by Boeing’s facilities near Seattle. This system will track each jet’s information, making it easier for mechanics to fix any issues that may have occurred during a flight. This system will also allow for Boeing to monitor necessary maintenance updates as well as be able to ground any planes that it deems unsafe to fly.

Years behind schedule and plagued with problems, the Boeing 787 did not have a successful start. Boeing executives believe that in the future years to come, this plane will be more reliable than the 777 and project a reliability rating of 99+%. The 787 is a key example of problems during the operations strategy of a company and their ability to overcome difficult situations that result in millions of dollars of losses. At this point the 787 is operational, but if similar problems occur in the future, Boeing may lose potential orders.

With so many problems occurring with the 787, do you believe that its main competitor (Airbus) may be regarded as a safer investment?

What do you believe lies in the future for the 787? Will it continue to experience more problems or will it beat the projected 99+% reliability?

Works Cited
Ostrower, Jon, and Andy Pasztor. “Dreamliner’s Other Issues Draw Attention; Boeing and Airlines Try to Improve More Systems After Fixing Battery Flaws.” Wall Street Journal (Online): n/a. May 20 2013. ProQuest. Web. 22 May 2013.

Best Buy Questions Whether New Management Strategy Can Steer the Company Back on Track

Posted on by spr1322cleahy

best-buy

Best Buy has to rethink it’s management plan because it is losing business. From a sales perspective, it has not been doing as well as it once was, and in this economy, it is really taking a toll on the business. The number one reason for the drop in sales is due to inexperienced sales associates who can not adequately tend to customer’s questions and needs. One retailer analyst, Gary Balter, referred to the franchise as “that blue and gold store where the salesperson usually can’t help you.”  This does not send out a good message to consumers nor help to turn this around. So what is Best Buy going to change in it’s operation strategy? Clearly, what they are doing now is not working.

One possible solution is that the Vice President is trying to turn this around by starting to implement product knowledge education into the company. If the number one reason for lack of sales is the sales people, then that is where the VP should start. By training the employees properly and quizzing them on the products, they can be more helpful to the customers who are asking the questions. Giving incentives for reaching sales goals is another great way to boost sales and invigorate energy out on the sales floor. Scheduling the strongest employees on weekends, when Best Buy stores are at their busiest, is another smart approach that the company has begun to implement.

One problem that Best Buy faces is it’s online competition. Twenty percent of Best Buy’s business comes through online purchases, but it’s competitors have a one-up on them. Running online operations is costly, far higher than other websites because of the high labor costs and long-term leases that come along with the fourteen-hundred existing retail stores. Another issue that pops up with the retail locations is the fact that many of the people that walk in the door are “browsers,” not “buyers.” Many will seek out different products yet resort to purchasing online or not at all, causing some stores to go out of business. There has been no improvement with store closures yet, but with the new strategy implementation taking place, customer satisfaction has gone up a bit recently.

Amongst other problems, staff turnover is higher than ever, historically speaking. The average staff turnover to date is about sixty percent, increasing from thirty five percent in previous years.

It is always a sad thing to see American companies go out of business. Hopefully, the VP’s plan works because as we’ve learned, understanding the marketplace and customers needs, wants, and demands is a crucial element in the success of maintaining a business. Operating costs are a key factor to take into consideration as well. Do you think Best Buy has a chance?

References:

http://online.wsj.com/article/SB10001424127887324743704578444733449436900.html

http://www.google.com/search?hl=en&site=imghp&tbm=isch&source=hp&biw=1440&bih=686&q=best+buy&oq=best+buy&gs_l=img.3..0l10.822.2889.0.3173.8.7.0.1.1.0.148.471.6j1.7.0…0.0…1ac.1.14.img._SW2SohCc8k#imgrc=sCo_DVyj7x89mM%3A%3BJu5F4ITQI9zFAM%3Bhttp%253A%252F%252Fwww.savingadvice.com%252Fimages%252Fblog%252Fbest-buy.png%3Bhttp%253A%252F%252Fwww.savingadvice.com%252Farticles%252F2007%252F06%252F28%252F101581_12-tips-for-getting-the-best-price-at-best-buy.html%3B800%3B551

Go Ahead, Drink on the Job!

Posted on by spr1314bwashington

Many companies would frown upon an employee enjoying a drink during the workday but The Life is Good Company would beg to differ. The Life is Good Company is a Boston-based apparel and accessories brand that aims to be unique and fresh. They have focused their efforts on improving employee productivity in a totally new way. No they didn’t try a cash incentive program, prizes, or extra vacation days, they thought having a tavern in the office would increase productivity.

The Life is Good Company is in the process of installing a tavern in the middle of their office. The tavern will include a stage, to host live music, shuffleboard, billiards, and a basketball hoop with enough space to hold at least 260 people.  They want to have a comfortable place where employees can “put their feet up and relax” while doing their work. Hungry? Grab a booth, food, and hold an informal meeting. The boss says it’s okay.

The Life is Good Company isn’t promoting people to be drunk, driving while drunk, or alcoholism. They just want their employees to be comfortable and productive at work. They would even say having a tavern is appropriate to their brand. Most of The Life is Good Company employees often grab a drink after work, so why not let them do it at the office?

An area The Life if Good Company is trying to improve might just the area that disappears. The book states that labor productivity will increase due to “healthier, better-educated, and better nourished labor force” and poor diets are a major downfall to productivity. Having a glass of red wine a few times a week is good for your diet but will these people really be drinking red wine? Beer and hard liquor are not conducive to a healthy diet. Having a tavern in the office will encourage people to drink. Many people are social drinkers. Having a bar will distract people from working and increase socialization. Product organization may suffer because it requires management and attention.

The operations management team is not being socially responsible or ethical. The workplace has the potential to be a harmful environment to co-workers and prospective business partners. The ability to measure productivity will be increasingly hard as more employees spend time in the tavern.

Another area that could see a decline in growth is quality management. The increase in alcohol could lead to a decrease in quality. The product could suffer because a questionable product could be produced. Many people who drink think certain ideas are better than others maybe that is why a tavern is being installed at The Life is Good Company.

Do you think having a tavern in the office will increase productivity? Is having a tavern in the office ethical and socially responsible? What possible management issues will the Life is Good Company run into because of having a tavern in the office? Can a tavern in the office have a positive influence on the company’s brand image?

Sources:

Why I’m Building An Tavern at the Office : http://blogs.wsj.com/atwork/2013/05/10/why-im-building-a-tavern-at-my-company/?mod=WSJ_Management_At_Work

Don’t Have Enough Cash For a Washing Machine? SEARS Can Help!

Posted on by spr1314jvillagomez

Many people nowadays don’t have enough cash on hand to make large purchases such as a washing machine or a refrigerator. For example, a newly married couple may find it difficult to purchase all the items they need for their new home all at once. Although most people would turn to credit cards to make such purchases, others are a bit intimated to do so. As a result, Sears Holding Corp. has recently launched a “lease-to-own” service, which will allow customers to purchase these items without credit. What this means is that instead of using a credit card as it is most commonly seen, people will be able to pay for the items they purchase over time whether it be electronics, furniture and/or mattresses. How is Sears doing this? The company partnered with WhyNotLeaseIt, a New Hampshire-based leasing service that allows customers to make monthly or bimonthly payments until the item they purchased is completely paid off.

This new service Sears is rolling out will be available by the end of May and will be an alternative to its current layaway service, which does not allow customers to take their items home until they are fully paid off. By using this service people will not have to wait and hope they qualify for a Sears credit card or wait weeks until they finish paying it off using the layaway service.

Sears is hoping that the introduction of this new service will help them boost their customer base after years of sluggish sales.

At the top of the list of the ten operations management decisions is the “design of goods and services”. The introduction of this new leasing service certainly falls under this category. However, the success from this service will also be dependent on other strategies that operations managers will have to think about. For example, should they consider a different layout strategy to make the items they offer more attractive? Perhaps placing signs throughout the store will make this leasing service more attractive to customers. Further, it is important to note that these big-ticket items also require constant maintenance, hence operations managers need to maintain inventory in the best condition to prevent any loss in value or have them end up on the “clearance” section. Managing quality also comes into play with the introduction of the leasing service. Operations managers need to decide whether they will be leasing the items they currently carry or will introduce new items that are better quality but more pricy because customers may decide that it is worth it to get an item of better quality since they wont have to worry about the cost right away.

Do you think the introduction of this new service will give Sears some competitive advantage?  What other OM decisions will Sears have to take as a result of the implementation of this program?

Continue reading “Don’t Have Enough Cash For a Washing Machine? SEARS Can Help!” →

Be GREEN, or be SQUARE!

Posted on by suhanip301s12

More and more customers now are looking for companies to be transparent, but it’s kind of hard to be competitive and sustainable at the same time.  Companies are now using value chain processes to get the job done fast.  They are not only focusing on suppliers but also taking into account By-Product-Synergy, which is “taking waste from one part of the production process and using that waste in order to generate a new product.” But how can companies become more sustainable if only “80 percent of management uses just 20% of the available opportunities?!”  The remaining 80 percent is where management needs to focus the rest of their energy.

It’s crucial for management to set goals and assess their risks, thereafter they can easily seek out opportunities for future improvement.  The first step to become a transparent company is to implement a sustainability program, and of course to develop a strategy.  The next step is to identify the companies “main processes and map data throughout the value chain.”  By using life-cycle-assessment software, the companies will have a more clear idea of how to lower their costs.

A similar approach was taken by ThyssenKrupp (FWB: TKA), a German elevator company.  Since ThyssenKrupp uses a considerable amount of steel in the manufacturing process, they thought the operational aspect had the greatest environmental impact. To their surprise,  the “company’s elevators themselves left a greater carbon footprint then their manufacture or any of the company’s other operations.”

As a result, ThyssenKrupp dramatically changed their product line after implementing a sustainability program.  They made the following changes to their products and services:

  • Elevators use LED lights which reduce energy consumption by 80%, and automatic fan and light shutoff which reduces CO2 emissions by 193,000 tons per year.
  • Getting rid of harmful chemicals used to manufacture the elevator.
  • Using petroleum based biodegradable fluid, with a vegetable-based option called “enviromax.”
  • Elevators are equipped with regenerative technology, meaning that the energy generated from the braking system is put back into the building.

In a way the article gives motivation to other companies who are taking their first steps towards becoming a transparent company.  It gives them few ideas and pointers on “unlocking supply-chain opportunities.” It’s important for different industries to decipher various ways to be more environmental friendly.  After all, there is more to being sustainable than just showing off your environmental initiatives.

Do you think ThyssenKrupp can take additional measures to make their company more sustainable?  Or better yet, are there any companies that you want to see become transparent in the near future? How would they need to change there operations?

Links:

http://www.thyssenkruppelevator.com/Sustainability/products-services

http://www.greenbiz.com/blog/2013/04/26/whirlpool-thyssenkrupp-supply-chain-transparency?page=0%2C1

http://opsmgt.edublogs.org/2012/06/28/transforming-waste-into-profit/

 

My Old Kentucky Home: Lexus Production Moves to US

Posted on by spr1322mjamil

This past week Toyota announced that it will begin producing its Lexus luxury car in the United States for the first time. The company will invest over $500 million to move production of the Lexus ES 350 luxury sedan to its existing plant in Georgetown, Kentucky. Until now the plant in Kentucky, Toyota’s oldest and largest in the United States, produced the flagship Toyota Camry, as well as the Avalon and Venza. The Lexus ES 350 shares underpinnings with the Camry and Avalon, making the transition somewhat easier. This aspect is just one of several strategic implications of the move of Lexus production to the United States.

While it’s parent is fully Japanese, Lexus is an American child, for many years the luxury car was available only in the United States. This focus on the American market led Lexus to the top of luxury car sales every year from 2000 to 2010. In recent years, however, Toyota has watched BMW and Mercedes Benz pass it in luxury car sales and showing little evidence of slowing down. In my opinion this factor played a role in Toyota finally deciding to move the production of Lexus to the United States. As the president of Toyota, Akio Toyoda, said, the company plans to “give regions greater autonomy to make the products their customers want.” By moving the production of the ES 350 to the United States, I believe Toyota will be able to more closely monitor how Lexus is doing compared to BMW and Mercedes Benz. The company can also make production changes more effectively and efficiently at its plant in Kentucky. This high involvement with its target consumers should aid Lexus as it tries to regain its spot as the top luxury car in the United States. The move of production also helps protect Toyota from the Japanese economy and possible disastrous production issues.

From an operations management viewpoint, I think that Toyota is much better off by moving the production of the Lexus to the United States. The ES 300 is essentially an American car, it is not nearly as popular in Japan as it is in the US, therefore it made little sense to have it produced half a world away from where it was being sold. There are no economic benefits since there is an exchange rate penalty for Japanese automakers. Additionally, the 2011 earthquake and tsunami in Japan had devastating effects on production. This disaster revealed just how vulnerable Toyota and other Japanese automakers are, and in my opinion, played a key role in Toyota moving the production of Lexus to the United States. By having all of it’s operations and production in one place, Toyota can become more efficient and continue being a leading automaker.

Do you think it was a good decision by Toyota to move the production of Lexus to the United States?

Will this lead other foreign carmakers to move to America and what affect will that have on the production of American cars?

 

Sources

http://www.nbcnews.com/business/toyota-investing-over-500m-launch-us-lexus-production-1B9519106

http://www.nytimes.com/2013/04/20/business/toyota-will-make-lexus-es-350-in-kentucky.html?_r=0

http://www.bloomberg.com/news/2013-04-19/toyota-to-make-lexus-in-kentucky-amid-localization-push.html