Operations Management IV PRODUCT PLANNING AND COMPETITIVE PRIORITIES

Transcription

1 Operations Management IV PRODUCT PLANNING AND COMPETITIVE PRIORITIES

2 Learning Outcomes At the end of this section you must be able to: Identify how organizations compete. Develop a strategy Compare Japanese & South African operations strategies. Calculate & evaluate four types of production plans.

3 Competitiveness Why must companies be competitive? Definition-How effectively an organization meets the needs of customers relatively to others that offer similar goods or service. Sell their goods or service Establish and maintain market share Stay in business Make a reasonable profit

4 HOW DO ORGANISATION COMPETE? Price- Amount a customer is willing to pay for a product or service. The lower the price the lower the profit margin. Quality- Buyers perception on how well the product/service will serve its purpose. Product Differentiation- Special features Flexibility- Ability to respond to changes Time- How quickly a product or service is delivered to the customer

5 GIVE AN EXAMPLE UNDER EACH OF THE ABOVE CATEGORIES. Price Quality Differenti ation Flexibility Time Organization Explain How

6 WHY DO ORGANISATIONS LOSE ITS COMPETITIVE EDGE? Too much emphasis on short term Financial Performance at the expenses of research and development. Fail to take advantage of strengths and opportunities or fail to recognize competitive threats and weaknesses Neglect investment in human or technological resources Fail to establish good internal communication and cooperation amongst different functional areas. Emphasize product design and not process design Neglect Operation strategy Unable to recognize customer wants and needs.

7 Strategy/Mission/ Tactics WHAT IS A STRATEGY Long term impact of an Organization s plan for achieving its goals. MISSION The reason for existence of an organization MISSION STATEMENT A clear statement of purpose that services as a guide for decision making. TACTICS Methods and action taken to accomplish strategies DISTINCTIVE COMPETENCIES Special attributes or abilities that give an Organization a Competitive edge.

8 Case Study Question 1: If you the manager of Pick n Pay, formulate a strategy, Mission statement, Tactics and Distinctive competencies you would use to regain market share. Strategy Mission Tactics Distinctive Competencies

9 FACTORS THAT AFFECT OUR ABILITY TO COMPETE: External Factors include: Economic conditions- Direction of the economy, inflation, interest rate, tax loans and tariffs. Political Factor- Government, attitudes towards business, political stability, conflicts, crime Legal environment- govt. regulations, trade restrictions, labour laws Technology-Product innovation, process/ design technology Competition-Number and strength of competitors, ease of market entry Markets- Size, location, brand loyalties, potential for growth, demographics.

10 Think Point Explain what impact the call for the nationalization of mines & banks will have on the South African economy? Positives Negatives

11 Internal Factors include: Human Resources- Skills and abilities of staff, expertise, experience, loyalty. Facilities and Equipment- Capacities, location, age etc Financial Resources-Cash flow, access to funding, debt, cost of capital. Customers- Loyalty, existing relationship Product and service-flexibility Technology-ability to integrate new technology Suppliers-relationships, dependability, quality Other- labour relations, company or product image, distribution channels, access to resources/markets.

12 Activity As a manager of an SMME, explain how you would plan & control internal factors of competitiveness:

13 QUALITY AND TIME STRATEGIES: Quality- based strategies focus on satisfying the customer by introducing quality into all areas of the company, e.g. design, production and after sale service. Time-based strategies focus on reducing the time required to complete various jobs, e.g. (develop new products, marketing them; respond to changes in customer demand, delivery of a product/service. If you can reduce the time, then the costs will decrease and productivity will increase.

14 Times can be reduced in the following ways:- Planning time Time needed to react to a competitive threat, to develop new strategies and select tactics, to approve proposed changes to facilities, introduce new technologies, e.t.c. Product/service design time- time needed to develop and market new or redesigned products/services. Processing time time needed to produce goods/services, e.g.: scheduling, repairing equipment, wasted efforts (scrap), stock. Quality, training, etc. Change over time- time needed to change from producing one type of product to another-includes new equipment. Delivery time- the time needed to full orders Response time for complaints- Customers complaints about quality, timing of deliveries, incorrect quantities.

15 Japanese Manufacturing Strategies Low labour cost strategy- immediately after the war; they exploited the (then) inexpensive labour pool. Scale based strategy- used capital intensive methods to achieve higher labour productivity and lower unit costs. Focused factory Strategy- used smaller factories that focused on a few product lines- led to specialization and higher quality. Flexible Factories Strategy- reduced the time to bring out new products/services. Used flexible equipment that allowed volume and design changes- led to product variety. Reduced set up/start up times.

16 What lessons can we learn from the Japanese?

17 Environmental Scanning To consider the events and trends That presents threats or opportunities For a company e.g. competitors activities changing consumer needs legal, economic and environmental issues potential for new markets could be global, national, regional or local technological changes

18 Benchmarking This is an approach that some companies use to compare their operations with those of other companies (preferably the best in the world). It is partly concerned with being able to judge how well an operation is doing. Benchmarking involves selecting a demonstrated standard of products, services, costs or practices that represent the very best performance for processes or activities very similar to your own. The steps for developing benchmarks are: Determine what to benchmark. Form a benchmark team. Identify benchmarking partners. Collect and analyze benchmarking information. Take action to match or exceed the benchmark

19 TYPES OF BENCHMARKING Internal benchmarking is a comparison between operations or parts of operations which are within the same organization. External benchmarking is a comparison between an operation and other operations which are part of a different organization. Non-competitive benchmarking is benchmarking against external organizations which do not compete directly in the same markets. Competitive benchmarking is a comparison directly between competitors in the same or similar markets. Performance benchmarking is a comparison between the levels of achieved performance in different operations. Practice benchmarking is a comparison between an organization s operations practices, or ways of doing things, and those adopted by another operation.

20 Activity: Case Study Question 2: What would you benchmark for Pick n Pay

21 Activity: Case Study Question 3: Give an example of how you would use the types of benchmarking for Pick n Pay Type of Benchmark Internal Example External Non-Competitive Competitive Performance Practice