Chapter 2 - Competitiveness, Strategy, and Productivity : Chapter 2 - Competitiveness, Strategy, and Productivity Productivity:
A measure of output relative to input; the higher the output relative to input, the higher the productivity
Reflects the effective uses of resources
In most organizations, the operations manager is primarily responsible for productivity
Competitiveness:
How effectively an organization meets the needs of customers relative to others that offer similar goods or services
Competitiveness : Competitiveness Quality Price Time Flexibility Differentiation
Competitiveness : Competitiveness Price
charge to customers for product or service
Quality
relates to buyer’s perceptions
Product Differentiation
distinctive feature
Flexibility
ability to respond to changes
Time
example: delivery time
Causes of Poor U.S. Global Competitiveness : Causes of Poor U.S. Global Competitiveness Overemphasis on short-term financial results
Neglect of manufacturing function relative to other organizational functions
Lack of cooperation among departments
Tendency to view labor as a cost instead of a valuable resource
Overemphasis on product development at the expense of process development
Mission/Strategy/Tactics : Mission/Strategy/Tactics How does mission, strategies and tactics relate to
decision making and distinctive competencies? Strategy Tactics Mission
Mission, Strategy, and Tactics : Mission, Strategy, and Tactics Mission
The reason for existence for an organization
Mission Statement
A clear statement of purpose
Strategy
A plan for achieving organizational goals
Tactics
The actions taken to accomplish strategies
Strategy Example : Strategy Example Rita is a high school student. She would like to have a career in business, have a good job, and earn enough income to live comfortably
Mission: Live a good life
Goal: Successful career, good income
Strategy: Obtain a college education
Tactics: Select a college and a major
Operations: Register, buy books, take courses, study, graduate, get job Example 1
Planning and Decision Making : Planning and Decision Making Mission Goals Organizational strategy Functional strategies Finance Marketing Operations Tactics Tactics Tactics Finance
operations Marketing
operations Operations
operations Figure 2-1
Operations Strategy : Operations Strategy The approach, consistent with the organization strategy, that is used to guide the operations function
can have a major influence on the competitiveness of the organization
Strategy Formulation : Strategy Formulation Distinctive Competencies
The special attributes or abilities that give an organization a competitive edge.
Environmental Scanning
The considering of events and trends that present threats or opportunities for a company.
Order Qualifiers
Characteristics that customers perceive as minimum standards of acceptability
Order Winners
Characteristics of an organization’s goods or services that cause it to be perceived as better than the competition
Examples of Distinctive Competencies : Examples of Distinctive Competencies
Key External Factors : Economic conditions
Political conditions
Legal environment
Technology
Competition
Markets Key External Factors
Key Internal Factors : Human Resources
Facilities and equipment
Financial resources
Customers
Products and services
Technology
Suppliers Key Internal Factors
New Strategies : New Strategies Quality-based strategies
Focuses on quality in all phases of an organization
Quality at the source
Time-based strategies
Focuses on reduction of time needed to accomplish tasks
Time-based Strategies : Time-based Strategies Planning Processing On time! Designing Delivery
Productivity : Productivity Partial measures
output/(single input)
Multi-factor measures
output/(multiple inputs)
Total measure
output/(total inputs)
Slide 17: Measures of Productivity Table 2-4
Slide 18: Examples of Partial Productivity Measures Table 2-5
Example : Example 10,000 Units Produced
Cost of raw material: $5,000
Cost of purchased material: $25,000
500 labor hours
Labor rate: $9/hr
Sold for $10/unit What is the
labor productivity? The McGraw-Hill Companies, Inc., 1999
Example--Labor Productivity : 10,000 units/500hrs = 20 units/hour or we can arrive at a unitless figure
(10,000 unit* $10/unit)/(500hrs* $9/hr) = 22.22
Can you think of any advantages or disadvantages of each approach? Example--Labor Productivity
Example--Multifactor Productivity : Example--Multifactor Productivity MFP = Output
Labor + Materials MFP = (10,000 units)*($10/unit)
(500hr)*($9/hr) + ($5000) + ($25000) MFP = 2.90
Slide 22: Figure 2-2
Factors Affecting Productivity : Factors Affecting Productivity
Factors Affecting Productivity : Standardization
Use of Internet
Computer viruses
Searching for lost or misplaced items
Scrap rates
New workers
Cuts in health benefits Factors Affecting Productivity
Factors Affecting Productivity : Safety
Shortage of IT workers
Layoffs
Labor turnover
Design of the workspace
Incentive plans that reward productivity Factors Affecting Productivity
Negative Impacts Affecting Productivity in U.S. : Negative Impacts Affecting Productivity in U.S. Savings Rate Government
Regulations Short-run
Emphasis Service Demand
Ways Productivity Can Be Improved : Ways Productivity Can Be Improved Develop productivity measures
Determine critical (bottleneck) operations
Develop methods for productivity improvements
Establish reasonable goals
Get management support
Measure, reward and publicize improvements
Don’t confuse productivity with efficiency
Bottleneck Operation : Bottleneck Operation Figure 2-3
Improving Productivity : Improving Productivity …Then again, you can always follow the common misconception that the route to improving productivity is to get your employees to work harder...
Production : Production Craft Production - Highly skilled workers use simple flexible tools to produce small quantities of customized goods.
Mass Production - Lower-skilled workers use specialized machinery high volumes of standardized goods.
Lean Production - Uses minimal amounts of resources high volume of high-quality goods.