02 Competitiveness, Strategy & Productivity

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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.