Operational Effectiveness Versus Strategic Positioning by Y8AeAhA8


									Limits of Operational Effectiveness

                                                Productivity Frontier
 Quality or Lead-Time

                                                    (state of best practice)

                                TQM   LEAN


                        High                                       Low
          Transcending Trade-offs

• Skinner suggests separate “focused factories” for
  volume versus flexibility
• Achieve simultaneity by building capability successively -
  first quality, then lead-time, etc.
• Simultaneity is indicative of slack in existing processes
• Organizational and technological innovation can shift the
  productivity frontier upwards
      Investment Strategy and
     Manufacturing Capabilities
Invest in capital
     High fixed costs
     Allows speed
Invest in people
     Labor becomes a fixed cost
     Allows high quality and innovative solutions
Minimal investment in resources - outsource
     Capital and labor are variable costs
     Allow low cost production
Investment in capital and people?
              Types of Trade-offs

• Speed and volume flexibility, but high fixed cost and low work
  force commitment (Capital)
• High quality and innovative solutions (range flexibility), and high
  work force commitment, but volume inflexibility (Lifetime)
• Low cost and volume flexibility, but long lead- times and low
  work force commitment (Overtime)

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