Competitive Operational Strategy - Assignment Example

Competitive Operational Strategy Prepared by Submitted to Date of Submission Word Count 3142 1. Introduction The report concentrates on marketing strategies and other operational activities that enable a firm to have active presence in the market. The steps taken to intervene in the problem and the discussions about the operational strategy models are present. The suggestion of strategies is in the part 2, according to data supplied and the analysis. 2. Literature Review According to well-settled market leaders in electronic operating systems, the innovation in the electronic operating systems helps in consolidating market for any company. As per this model and successful strategy adopted by Valtronic Technologies, the electronic technology can contribute to life by refurbishing or changing the lost functions using miniatures systems. The next step after selection of technology is the excellence in presentation of a product. Many industry leaders believe that the refurbishing of lost human functions in the product is a clear way to make the product excellent in its range. The search for excellence in products involves the multidisciplinary competencies. This involves the adaptation to the human and participation in the early definition of the system with the customers. This allows any company to understand the objectives, constraints and the risks implicated to derive the final product. This strategy involves building skilled creative teams that manage number of aspects of a project. These range from definition of product to final implementation in production. Good quality management system and teamwork leads to the development of an excellent product. The improvement of knowledge and skills allows any company human resources to develop and challenge new ideas that enable them to reach objectives. (Valtronic Technologies, 2008)1 In order to reach objectives, the four-stage model is relevant to electronic industry like HES. In stage one, Hayes cites Slack and Lewis, the operations level contribution can be enhanced by enhancing the capability of operations employees. In the next stage, the operations function are made externally neutral by comparing with competitors. The next stage is to develop operations resources to excel in features and finishing offered in the product. The goals and strategy to achieve them are important at this stage. The last stage is about external supporting. The above three stages should make the operations creative and proactive. The innovation in operations is developed giving competitive advantage. (R.H. and Wheelwright K.B.C, 1988)2 In implementing this model the culture of the firm and resistance to the change are necessary to consider. One important aspect is to enhance quality in operations and products as this is less resistant to change and develops a good culture. Deming’s 14 points are helpful in enhancing the quality and in developing good culture. They try to bring quality through reduction in statistical variation and improving productivity. The 14 points involve 1. Long term commitment, 2. Building of quality into the process, 3. Developing individual inspection, 4. Innovating the purchase decisions by including the supply network, development and organisation, 5. Identifying the problems, 6. Implementing the training for quality testing, 7. Human centred approach, 8. Removal of fear in employees, 9. Elimination of barriers between departments, 10. Specific methods to demand higher productivity, 11. Enhanced performance standards 12. Workmanship 13. Development of institute education and self improvement programs, 14. Creating a management structure to take care of above mentioned points. The change that helps in implementing above points is development of e-business operations. The development of e-business operations with suppliers, manufacturers and retailers help any company to release the product at a competitive price. Participation in electronic fairs may result in being familiar to the customers and clients as the company involves both military and civil/commercial products manufacturing. (Lowson H. 2002)3 The operational strategies mentioned in four-stage model imply that logistics are important for any company that is having branches spread over different continents. Regarding strategies of logistics, the interaction between logistics and overall business strategy is important. The interaction need to happen at structure, functional and operational level. Though the activation of logistics is an internal process, the external factors affect the decisions considerably. Analysis of competitive forces, industrial systems and value chain analysis is important. Moreover, in the company that is having cross movements between various branches, the logistics decisions are crucial and need a relevant functional logistics strategy. (Enarsson, 2006)4 Lean Manufacturing Practices: The lean manufacturing practices bring innovation in operational activities and enhance operations quality. This is possible by integrating factory logic lean operations suite into its Siplace manufacturing solutions for electronic assembly. The features of lean manufacturing strategies are flexible and enable quick changeover. The next stage is to have software that can interface manufacturing execution with enterprise resource planning. This will have a follow-up link of production with actual customer demand. However, the stability is a necessity for being consistent. When a company is suffering with high inventory, the lean manufacturing strategies may help the company to improve the productivity and decrease inventory. In case of lean manufacturing, the business development vice president of Siemens ventures says that the factory logic of its products plays a key role in giving shape for lean manufacturing strategies. (Wes Iversen, 2006) 5 According to Dr. Love, the lean manufacturing strategy has its foundation in understanding how the company delivers the product to customers. As it is the core of the company’s business, the operational strategies should include the ways the products are made, the purchases made by stockholders, distribution of materials and procurement of retailers. However, the majority of the company assets are crucial in executing the operational strategies. In any industry including, the characteristics of the operations function should match with the requirements of the market to fulfil the needs of the business. As a result, understanding of ideas and methods along with knowledge about the techniques and principles is necessary to give shape to operational strategies organisation of processes. While making a lean manufacturing strategy, the consideration of operational validity is necessary as it involves the nature of the product and the way the company delivers to the customers and the needs of the customers. According to Armand Feigenbaum, who cited Dale B. and Bunney H total quality management. The total quality management will cease mass inspection of products and ensures maximum quality. Total quality management works on the principle of integrating the quality development, quality maintenance and quality improvement efforts of various departments. However, this is a system of not just testing the products but managing and organisation by making errors near zero. The integration of manufacturing and marketing activities along with offering solution based product line can be a preferred solution for increasing business and profits. The deployment of solution-based strategies to give customers the products with extra features and services is necessary for any company to decrease inventory and increase profits or profit margins, as it is successful in case of RADA electronics. Part 2 1. Introduction The nature of HES Company’s manufacturing and marketing demands Agile-manufacturing techniques. This improves competitiveness in HES activities at a time when there is shortfall of the business in civil aviation sector as mentioned in the data supplied. The decision-making at functional knowledge levels, stable unit costs, flexible manufacturing, easy access to integrated data and modular production facilities are necessary for agile-manufacturing techniques. The assembling units of HES should acquire modular production facilities. The removal of uncertainty and complexity in the manufacturing and marketing at a time of shortfall in business is a necessity for HES and involves the stage 1-in four-stage model. (R.H. and Wheelwright K.B.C, 1988) 6 Realising the importance of agile-manufacturing enables the company to know the large scale needs of the existing customers and manufacture accordingly. This involves the integration of manufacturing and marketing. The integration mentioned can result in finding the new customers or increasing the business with the existing customers by increasing supplies to them at cheaper prices when they purchase on large scale. If it is not possible, HES can offer servicing facilities for the customers, which make them to rely and depend on HES, thus guaranteeing long-term business and relation with those customers, who buy and receive service on regular basis. (D Love, 2007)7 The aspect hat needs attention is vision in manufacturing and then integrating manufacturing with marketing. 2. Vision and Manufacturing HES needs considerable amount of changes in its activities to bring innovation in manufacturing. This needs external neutrality and 2nd stage of four stage model comes to the fore for implementation. (R.H. and Wheelwright K.B.C, 1988)8 The strategies of HES have to consider social and political environment, needs of market place and opportunities created by technological environment according to the vision proposed by National Research Council of US. Previously, the company used to have substantial business, but now there is a lot of inventory that is draining the profits. According to National Research Council of US the visionary document suggests that the political environment mentioned in the area in which HES operates, the needs of market place and technological opportunities are driving force of any industry or economy. (National Research Council Staff. 1998) The social and political environment for HES is sufficient, as its major offices are located in US, UK and other European Countries. The environment in other Asian countries is not averse to European companies. The next aspect is about needs of the market. The company has to concentrate on this aspect to dispose lot of goods piled in the form of inventory, which is possible with agile and lean manufacturing techniques mentioned in parts 1 & 2 of this paper. According to the data supplied, the main reason for the lack of profits is the downfall in the market for aviation electronic products due to losses faced by small airliners. This situation demands to increase supply to big customers or to ensure cheaper supply to existing customers, so that they can try to regain hold in their sector resulting in increase of market for HES. To achieve afore-mentioned activity, HES has to decrease production costs, which needs integrating the human and technical resources that enhance workforce performance and satisfaction. The third stage of four-stage model needs implementation at this stage as internally support aim results in excellence in things. The instantaneous transformation of information is necessary to modify into useful knowledge that enables human resources to make effective decisions. The next aspect that increases the inventory capacity of the company is reducing the production waste. By doing this the company can withstand any unforeseen investment incurred on inventory due to slump in the market. Achieving the near zero production waste and product environmental impact is necessary to meet unforeseen demands in inventory or slump in the market that may result in reducing the margins. The manufacturing techniques and product features need reconfiguration to changing needs and opportunities. The development of innovative manufacturing processes and products with a focus on decreasing dimensional scale will help in attracting the economic airlines, which are facing slump in the market. The first step in achieving above-mentioned aspects is to achieve concurrency in all the operations. This involves planning, development and implementation done in parallel in contrast to sequential nature in the past. (National Research Council Staff. 1998)9 Concurrence of conceptualisation, design and production of products and services is a necessary to reduce time- to-market and to encourage innovation. The third stage of four-stage model continues here to operate to mane the manufacturing processes concurrent. When HES introduces concurrent manufacturing enterprises, the product support, delivery, servicing and end of life disposition are the aspects that need consideration in the manufacturing and marketing processes. This needs networking of manufacturing and marketing processes to make informed decisions. The decisions taken are according to knowledge and experience of both manufacturing and marketing units. The manufacturing processes should make space to receive feedback during the lifetime of the products in improving and innovating the product. The revolution in interaction of the people in all levels of organisation is crucial in concurrent manufacturing, which results in agile manufacturing techniques. This results in teamwork, which involves interactions. (National Research Council Staff. 1998) HES need new social relationships, communication skills, and a new corporate culture in which expertise and expertise work concurrently with ability to use knowledge effectively. It does not mean that HES is not using expertise in its culture and is not working concurrently, but the changes in the market place need new expertise and new operational strategies. The shortening of the time between conception of product and realisation will enable the company to push into the market before it is outdated. This may result in lessening the inventory in the long run. In an era of rapid appearing and disappearing of market opportunities, HES has to develop the new products within a short time and the design of the processors required needs lesser time than in the past. In first step to decrease inventory, the company needs to plan small lot or batch sizes as the customers (here commercial and military organisations) are demanding the products according to their present needs. Agility is necessary for the company to respond quickly to the needs of the customers. Due to rapid advance in electronic technologies, the commercial airliners and military instalments demand rapid change in product quality and features offered. The company can tackle this demand by updating the supplied product to the customer according to the present necessities and this is possible with agile and concurrent manufacturing technologies. This will help the company in meeting the needs of the customers in a timely manner and conserving them. This will reduce financial risks and inventory needs. (National Research Council Staff. 1998)10 After reducing the financial risks and inventory needs, the concurrence of operations regarding design and marketing is necessary for global trade that involves sales and marketing strategies. Then the integration of marketing and production takes place at the next step. 3. Global Trade The strategies regarding cross border trade is important in case of HES as it is having units in Malaysia, South Africa, Poland, UK and US. As per the record of HES, there is no stumbling in cross border trade, but the piling up of inventory is due to the fall of business regarding aviation sector. This requires the fourth stage in four-stage model that involves external support for achieving creative and proactive operational functions. This makes company to develop unique competencies to gain over the competitors and to have consistency in future. In general, the cross border movements benefit the company according to the maturity in strategies and management capabilities. In the data supplied about HES, the company informs that it preferred Africa for cheap labour, Malaysia for input in electronic and software, Poland for mechanical assemblies and UK for creative designing. The benefits accrued due to afore-mentioned aspects should overcome the costs incurred by cross border movements. This requires in having a business of supplying orders in large scale as the small-scale orders accrue more costs in cross border movements. In addition to optimising the cross border movements HES has to rise its opportunities by capturing new markets and expand strategic sourcing and generating higher margin business models. To achieve reasonable margins in sale of products, HES should maintain competitiveness during weak economic conditions. The effective management of supply chain can bring down the inventory needs. The logistics costs also will come down if the company is supplying orders at large scale with reduced time to market period that is involved between source and the customer. (Accenture, 2008) 11 The global trade involves three aspects: global sourcing, global manufacturing and global distribution. The activities or HES include all the above three. The global sourcing involves dealing with foreign suppliers, managing international logistics and managing risk. HES has to deal international logistics to transfer components and assembled units from Malaysia, Poland, South Africa to UK and US as number of customers are present in these two countries and Euro area. (Charles J. Corbett, 2001 ) The next aspect of global manufacturing deals with facility location. As the company is having software, component and assembling units in Malaysia, Singapore, Poland and South Africa it can coordinate the network of the units and can find new customers in the developing countries especially in Asia. This is because, after 1995 developing economies are recording a fast economic growth and many industries regarding electronics and airlines are coming up. The above-mentioned environment gives an opportunity for HES to find new customers for its electronic products. The company can use its existing network in Asian and African Countries to find new market base. (Charles J. Corbett, 2001 )12 4. Marketing and Increasing Profitability Marketing can be made easy and needs integration with production to increase customer base and profitability. However, the redefined core business activities need solution based activities, rather than product based ones. In the increasingly competitive market, the profitability will increase with the decrease of inventory, decrease of time from production to delivery and making the product as part of the package by valued added services offered with the products. As a first step to increase profitability by decreasing inventory, the company can decrease time from production to delivery and thus can start production after taking order from the customer. This enables the company to customised products along with maintaining low inventory. The next step is strategy regarding offering solutions. This is part of the fourth stage in four-stage model. At this step, HES can achieve unique feature in operations and products, to gain upper hand over the competitors. (R.H. and Wheelwright K.B.C, 1988)13 In a rapidly increasing technological prowess of different aircrafts, the airlines industry and the military need new types of electronic products. As it is difficult to achieve higher margins by delivering new products without getting breakeven with older ones, the company can offer updating the components supplied. By entering into the contract for updating them periodically, the company can charge for products with a reasonable margin and can get future market for the company in the form of updating the supplied goods periodically. The afore-mentioned type of solution based business activity helps company to cope up with rapid changing technologies environment in electronics and aviation sectors. ( RADA Electronic Industries, 2003)14 Sales and Marketing Strategy: As HES is specialised in avionics the company can focus on avionics for the military market with testing solutions for the commercial and military markets. The company has to expand the product line by adding new products featuring new technology and applications. The company should offer its customers to update its older supplies to them by updating to newer versions. This materialisation of this idea is possible with integration of marketing and production activities. The customer base can be increased by including the products in solutions and integrated systems. As RADA electronic Industries has successfully applied this strategy to increase marketing and profitability, it is suggestible to HES as it is having the same line of products and is supplying components for commercial as well as military needs. The development of product solutions and integrated systems is possible by establishing marketing channels with system integrators and major manufacturers. In addition to the afore-mentioned activities, the identification of large potential markets is necessary. Research points out that there is huge market in military and unmanned combat air vehicle sectors. As HES is having units manufacturing and assembling the afore-mentioned units, it can concentrate on identification of large potential markets like growing military expenditure in developing countries. Number of defence industries in US, Israel and European countries need testing solutions and company can use its present establishments to offer the services regarding testing solutions. (RADA Electronic Industries, 2003)15 5. Recommendations The recommendations regarding manufacturing is to adopt agile and lean manufacturing techniques to reduce production costs resulting in increasing of profitability or withstanding the decreasing profit margins. The second recommendation is to integrate marketing and production to make customised products at extra cost that is customer specific. This gives company a fixed base of customers who rely on the company for longer periods for updating the products supplied by the company. The last and important recommendation is to adopt solution based business activities that involve integrated training solutions, advanced fleet maintenance management solutions, integrated weapon management solutions ( as HES is having military customers also), automatic testing solutions and manufacturing services. Introducing four-stage model in the activities of the company helps in changing according to the needs of the customer. The total quality management brings about innovative and quality enhancing changes in the management. References: 1. Valtronic Technologies, 2008, Your Challenge our Passion, [online] available from [30 April 2008] 2. Lowson H. 2002, Strategic Operations Management: The New Competitive Advantage, [online] 1st edition, Kentucky: Routledge. Available from [30th April 2008] 3. Enarsson, 2006, Future Logistics Challenges, [online], 1st Edition, Copenhagen Business School Press: DK. Available from [30 April 2008] 4. Wes Iversen, 2006, Siemens Integrates Lean Software for Electronics Manufacturing, [online] edition information not available, Chicago: Automation World, Available from [30 April 2008] 5. D Love , 2007, Operations Strategy, Systems & Implementation, [Online] Edition Information not available, Birmingham: Aston University, Available from [3rd May 2008] 6. National Research Council Staff. 1998, Visionary Manufacturing Challenges for 2020 [Online], I edition, Washington, DC, USA: National Academies Press, 1998. p 13. http://library.neumont.edu:2051/lib/nulibraries/Doc?id=10041123&ppg=29 7. National Research Council Staff. 1998, Visionary Manufacturing Challenges for 2020 [Online], I edition, Washington, DC, USA: National Academies Press, 1998. p 14. http://library.neumont.edu:2051/lib/nulibraries/Doc?id=10041123&ppg=30 [3rd May 2008] 8. Accenture, 2008, Global Trade: Are High Tech Manufacturers' Supply Chains Up To the Challenge? [Online], 12th Edition, Washington D.C: Accenture, Available from [5th May 2008] 9. Charles J. Corbett, 2001, Global Operations Strategy, [Online], edition information not available, Anderson Graduate School of Management: UCLA, Available from [5th May 2008] 10. RADA Electronic Industries, 2003, RADIF Annual Transition Report, [Online], edition information not available, Edgar Online: Norwalk, Available from < http://sec.edgar-online.com/2003/06/30/0001169232-03-004408/Section5.asp> [7th May 2008] 11. R.H. and Wheelwright K.B.C. (1988) Dynamic Manufacturing: creating the learning organization, [Online], edition information not available, Free Press; Collier Macmillan; London. Read More