Operation Management chapter 2 Productivity
- 1. Competitiveness, Strategy, and Productivity McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
- 2. You should be able to: 1. List the three primary ways that business organizations compete 2. Explain five reasons for the poor competitiveness of some companies 3. Define the term strategy and explain why strategy is important 4. Discuss and compare organization strategy and operations strategy, and explain why it is important to link the two 5. Describe and give examples of time-based strategies 6. Define the term productivity and explain why it is important to organizations and countries 7. Provide some reasons for poor productivity and some ways of improving it 2-2 Student Slides
- 3. Competitiveness: How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services Organizations compete through some combination of their marketing and operations functions • What do customers want? • How can these customer needs best be satisfied? Student Slides 2-3
- 4. 1. Product and service design 2. Cost 3. Location 4. Quality 5. Quick response 6. Flexibility 7. Inventory management 8. Supply chain management 9. Service 10. Managers and workers 2-4 Student Slides
- 6. Mission The reason for an organization’s existence Goals Provide detail and the scope of the mission Goals can be viewed as organizational destinations Strategy A plan for achieving organizational goals Serves as a roadmap for reaching the organizational destinations Student Slides 2-6
- 7. Core Competencies The special attributes or abilities that give an organization a competitive edge To be effective core competencies and strategies need to be aligned Student Slides 2-7
- 8. Effective strategy formulation requires taking into account: Core competencies Environmental scanning SWOT Successful strategy formulation also requires taking into account: Order qualifiers Order winners 2-8 Student Slides
- 9. Operations strategy The approach, consistent with organization strategy, that is used to guide the operations function. Decision Area What the Decisions Affect Product and service design Costs, quality, liability, and environmental issues Capacity Cost, structure, flexibility Process selection and layout Costs, flexibility, skill level needed, capacity Work design Quality of work life, employee safety, productivity Location Costs, visibility Quality Ability to meet or exceed customer expectations Inventory Costs, shortages Maintenance Costs, equipment reliability, productivity Scheduling Flexibility, efficiency Supply chains Costs, quality, agility, shortages, vendor relations Projects Costs, new products, services, or operating systems Student Slides 2-9
- 10. Decision Area What the Decisions Affect Product and service design Costs, quality, liability, and environmental issues Capacity Cost, structure, flexibility Process selection and layout Costs, flexibility, skill level needed, capacity Work design Quality of work life, employee safety, productivity Location Costs, visibility Quality Ability to meet or exceed customer expectations Inventory Costs, shortages Maintenance Costs, equipment reliability, productivity Scheduling Flexibility, efficiency Supply chains Costs, quality, agility, shortages, vendor relations Projects Costs, new products, services, or operating systems Student Slides 2-10
- 11. Time-based strategies Strategies that focus on the reduction of time needed to accomplish tasks It is believed that by reducing time, costs are lower, quality is higher, productivity is higher, time-to-market is faster, and customer service is improved Quality-based strategy Strategy that focuses on quality in all phases of an organization Pursuit of such a strategy is rooted in a number of factors: Trying to overcome a poor quality reputation Desire to maintain a quality image A desire to catch up with the competition A part of a cost reduction strategy Student Slides 2-11
- 12. Productivity A measure of the effective use of resources, usually expressed as the ratio of output to input Productivity measures are useful for Tracking an operating unit’s performance over time Judging the performance of an entire industry or country Student Slides 2-12
- 13. Partial Measures Output Single Input ; Ouput Labor ; Output Capital Multifactor Measures Output Multiple Inputs ; Ouput Labor +Machine ; Output Labor +Capital+Energy Total Measure Goods or services produced All inputs used to produce them Input Output = ty Productivi Student Slides 2-13
- 15. 1. Develop productivity measures for all operations 2. Determine critical (bottleneck) operations 3. Develop methods for productivity improvements 4. Establish reasonable goals 5. Make it clear that management supports and encourages productivity improvement 6. Measure and publicize improvements Don’t confuse productivity with efficiency Student Slides 2-15