Differentiation Strategy

Differentiation is a process by which a company distinguishes itself from its competitors and their offerings. The process includes adding a set of differentiators which are meaningful and adds value for the customer. The differences should be perceived by the customer as important, distinctive, superior and affordable. Nonetheless, they have to make the company’s offerings i. e the products and services profitable. To derive competitive advantage the study of the processes to adapt innovations which should be of such nature as being preemptive is important.

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Here, we are not considering the situation of an entirely new product but those which are already contributing to the company revenues and the threat of competitors has to be met. According to Miland Lele (Miland M. Lele, Creating Strategic Leverage: New York, John Wiley 1992) companies have different potential in terms of maneuverability along with target market, place(channels), promotion and price. These are affected by the company’s position in the market, the industry structure.

BCG has classified ( Philip Kotler) four types of industries and the approaches available, depending on the cell the particular industry fits into. Tools for implementation of Operations All functions in the organisation including administration, finance, materials, purchase, marketing, production, logistics, communication and others, can be considered operations. The reason is all of them use some inputs like materials or information either on a person to person basis or through a flow line.

They are required to use some process and convert them into outputs usable in the next stage of the value chain. For example, when an invoice is received for payment, it contains information about a material or a service, the person who needed it, the price to be paid, the supplier, transportation, insurance, quantity, tax to be paid, etc. The bills payable section will have to verify data regarding the above, seek inspection reports from the quality control department/user department to certify the bill for payment.

Before actual payment is made verification of the terms of payment, availability of funds etc are done You will notice that information is sought or given, materials received and transferred, papers/instructions are received / issued for initiating activities. All these are also operations. However, for our study we will limit our focus to operations involving manufacture. We identify a set of specialized techniques – call them tools which can be standardized for ease of implementation and control.

Implementation of Operations Implementation is the process of executing the planned operations. Estimating, routing and loading are the planning processes and dispatching and progressing are processes which are conducted while the manufacturing is going on. We call the former planning and the latter controlling function. Put together they are considered implementation. Estimating gives the quantities to be made at each workstation depending on the sales forecast, provision for buffer stock, quantities bought out, or services outsourced, likely shortfalls etc.

It is done on the basis of capacity. The next step, routing, determines the sequence of operations and the machines that do them so that work flow as determined by the processes is smooth resulting in minimum inventory. Scheduling is mainly concerned with allocating time slots for different jobs. It specifies as to when jobs start and end at particular workstations. The purpose is to prevent imbalances among work centers and utilize labor hours in such a way that established lead times are maintained.

Dispatching is concerned with actually moving the materials with tools, jigs and fixtures to specific machines along with drawings and ensuring inspections at specific nodes, so that the materials move in the supply chain, Expediting is mainly to ensure that all the above are being done properly. Reports are generated and any bottleneck that gets created is removed. Tools for implementation GANTT charts are used to record progress comparing the actual against the planned activities and keep track of the flow of the material.

Line balancing and line of balance are two more tools to ensure that machining centers are loaded as uniformly as possible to prevent build up stocks at intermediate stages. Simulation models are used to predict utilization of machines and production levels. Various inventory models help us to determine when to order and how many to order and also give us an insight to the risks and opportunities that come up for our consideration. Proper maintenance and analysis of records help us to see the gaps that have crept into the operations system.

Learning that happens across functions will make the tools used more realistically and increase efficiency. Many ERP software, especially SAP have many modules that store, sort and analyze data and make them available to the staff across the globe in many plants enabling managers to streamline their operations. Software specific to functions, applications or organization can be obtained. Microsoft Operations Manager 2005 is a useful tool in this regard.


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