Operations Management Competitiveness, Operations strategy and Productivity

Transcription

1 1/11/2018 Operations Management Competitiveness, Operations strategy and Productivity

2 Session 2 Leaning outcome Understand the importance of Competitiveness, Strategy, and Productivity in todays global business environment. Explain the relationships of Competitiveness, Strategy, and Productivity in todays business Explain the Key factors to be considered when developing winning operations strategy in an organization.

3 Session 2 - Coverage 1. Overall Business Strategy to Operations Strategy 2. Operations Decisions 3. Competitive Dimensions 4. Order Qualifiers and Winners 5. Productivity as a Measure of Competitiveness

4 The three separate but related topics that are vitally important to business organizations. Competitiveness - The effectiveness of an organization in the marketplace relative to other organizations that offer similar products or services Strategy - The plans that determine how an organization pursues its goals. Productivity - the effective use of resources

5 What is Competitiveness? Competitiveness - How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services.

6 How do organizations compete? 1. Identifying consumer wants and/or needs in an organization s decision-making process in providing goods and/or services. 2. Understand the trade-off decision consumers make between price and quality (The key factors in consumer buying decisions) 3. Effective advertising and promotion for their products or services to attract and retain customers.

7 What is strategy? Organizational strategy is providing direction for, and alignment of, the goals and strategies of the functional units. Define the position of the organization relative to its environment Move the organization closer to its long-term goals.

8 There are three basic business strategies Low cost. Responsiveness. Differentiation from competitors.

9 Strategic Planning Mission and Vision Corporate Strategy Marketing Strategy Operations Strategy Financial Strategy The mission statement answers the question What business are we in?

10 Hierarchical organizational decision making process

11 Operations Strategy Involves decisions that relate to design of a process and infrastructure needed to support the process. the decisions which shape the long-term capabilities of the company s operations and their contribution to overall strategy through the on-going reconciliation of market requirements and operations resources

12 The Operations function can provide a competitive advantage through its performance at the five competitive objectives Cost Dependability Flexibility Speed Quality

13 Different competitive factors imply different performance objectives Competitive factors If the customers value these... Low price High quality Fast delivery Reliable delivery Innovative products and services Wide range of products and services Performance objectives Then, the operations will need to excel at these... Cost Quality Speed Dependability Flexibility (products and services) Flexibility (mix) Ability to change the timing or quantity of products and services Flexibility (volume and/or delivery)

14 Market Competitive Priorities Corporate strategy Goals Core competencies Environmental responses New products/services Global strategies Market analysis Segmentation Needs assessment New Product SWOT & Porter s 5 Forces Existing New New Product for New Market Existing product for New Market Existing New product for existing market Existing product existing market

15 Strategy and Decisions Corporate strategy Market analysis Competitive priorities Capabilities Operations strategy Services Standardized services Assemble-to-order Customized services Manufacturing Make-to-stock Assemble-to-order Make-to-order Process decisions Quality decisions Capacity, location, and layout decisions Operating decisions

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17 Strategic Operations Management Decisions

18 Examples of operations strategies

19 Examples of operations strategies

20 Two important factors the organizations must take into account in formulating a successful strategy: 1. Order qualifiers 2. Order winners.

21 Order Qualifiers Defined Order qualifiers are the basic criteria that permit the firms products to be considered as candidates for purchase by customers A brand name car can be an order qualifier

22 Order Winners Defined Order winners are the criteria that differentiates the products and services of one firm from another Repair services can be order winners Examples: Warranty, Roadside Assistance, Leases, etc

23 Productivity Defined Productivity is a common measure on how well resources are being used. In the broadest sense, it can be defined as the following ratio: Outputs Inputs

24 Total Measure Productivity Total Measure Productivity = Outputs Inputs or = Goods and services produced All resources used

25 Partial Measure Productivity Partial measures of productivity = Output or Output or Output or Output Labor Capital Materials Energy

26 Multifactor Measure Productivity Multifactor measures of productivity = Output. Labor + Capital + Energy or Output. Labor + Capital + Materials

27 Example Output: Sales value of production Input: Labour Raw materials and supplies Capital Other Calculate, 1. Total productivity 2. Partial Measurement 3. Multifactor ratios

28 Example 2 A garment manufacturing company has provided the following data (Rs 000) Material Labour Energy Other expenses By -Products Sales value of the main production Calculate, 1. Total productivity ratio 2. Material, Labour and Energy partial productivity ratios 3. Multifactor productivity ratios Operations Management

29 Factors that affect Productivity Methods Capital Quality Technology Management

30 Improving Productivity Develop productivity measures Look at the system as a whole Develop methods for productivity improvements Establish reasonable goals Measure improvements

31 Session Title :Competitiveness, Operations strategy and Productivity 1. Overall Business Strategy to Operations Strategy 2. Operations Decisions 3. Competitive Dimensions 4. Order Qualifiers and Winners 5. Productivity as a Measure of Competitiveness

32 Essential Reading Chapter 2 Operations Management 12 th Edition by William J. Stevenson Published by McGraw-Hill Education (2015)

33 Review Questions 1. Define the competitiveness of an organization. 2. List several ways that business organizations compete in the market 3. Name several reasons why business organizations fail.

34 Review Questions Identify various operations management activities carried out in an organization. Discuss the how these activities are affected by the operations strategy of the organization. (Use an organization like Cargill in your answer.)