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William J. Stevenson
2-2 Competitiveness, Strategy, and Productivity
Competitiveness, Strategy, and Productivity
Operations Management, Eighth Edition, by William J. Stevenson Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
2-3 Competitiveness, Strategy, and Productivity
How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services
2-4 Competitiveness. Strategy. and Productivity Businesses Compete Using Marketing Identifying consumer wants and needs y Pricing y Advertising and promotion y .
Strategy.2-5 Competitiveness. and Productivity Businesses Compete Using Operations y y y y y Product and service design Cost Location Quality Quick response .
and Productivity Businesses Compete Using Operations Flexibility y Inventory management y Supply chain management y Service y .2-6 Competitiveness. Strategy.
2-7 Competitiveness. and Productivity Why Some Organizations Fail Too much emphasis on short-term financial performance y Failing to take advantage of strengths and opportunities y Failing to recognize competitive threats y Neglecting operations strategy y . Strategy.
Strategy. and Productivity Why Some Organizations Fail Too much emphasis in product and service design and not enough on improvement y Neglecting investments in capital and human resources y Failing to establish good internal communications y Failing to consider customer wants and needs y .2-8 Competitiveness.
Strategy.2-9 Competitiveness. strategies and tactics relate to decision making and distinctive competencies? . and Productivity Mission/Strategy/Tactics Mission Strategy Tactics How does mission.
and Productivity Strategy y Strategies y Plans for achieving organizational goals reason for existence for an organization the question ³What business are we in?´ y Mission y The y Mission Statement y Answers y Goals y Provide detail and scope of mission y Tactics y The methods and actions taken to accomplish strategies . Strategy.2-10 Competitiveness.
2-11 Competitiveness. Strategy. and Productivity Planning and Decision Making Figure 2.1 Mission Goals Organizational Strategies Functional Goals Finance Strategies Marketing Strategies Operations Strategies Tactics Operating procedures Tactics Operating procedures Tactics Operating procedures .
get job . take courses.2-12 Competitiveness. have a good job. and earn enough income to live comfortably Mission: y Goal: y Strategy: y Tactics: y Operations: Live a good life Successful career. good income Obtain a college education Select a college and a major Register. She would like to have a career in business. buy books. study. graduate. and Productivity Strategy Example Example 1 Rita is a high school student. Strategy.
and Productivity Examples of Strategies Low cost y Scale-based strategies y Specialization y Flexible operations y High quality y Service y .2-13 Competitiveness. Strategy.
2-14 Competitiveness. Strategy. y Price y Quality y Time y Flexibility y Service y Location . and Productivity Strategy and Tactics y Distinctive Competencies The special attributes or abilities that give an organization a competitive edge.
2 Price Quality Time Flexibility Service Location Low Cost U. Strategy. One-hour photo.2-15 Competitiveness. first-class postage Motel-6. Fedex. UPS Burger King Supermarkets Disneyland Nordstroms Banks. Kodak. ATMs . Cadillac quality Pepsi. and Productivity Examples of Distinctive Competencies Table 2. Red Roof Inns High-performance design Sony TV or high quality Consistent Lexus.S. Motorola Rapid delivery On-time delivery Variety Volume Superior customer service Convenience Express Mail.
. and Productivity Operations Strategy y Operations strategy ± The approach.2-16 Competitiveness. consistent with organization strategy. Strategy. that is used to guide the operations function.
and Productivity Strategy Formulation Distinctive competencies y Environmental scanning y SWOT y Order qualifiers y Order winners y . Strategy.2-17 Competitiveness.
2-18 Competitiveness. and Productivity Strategy Formulation y Order qualifiers y Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential purchase Characteristics of an organization¶s goods or services that cause it to be perceived as better than the competition y Order winners y . Strategy.
and Productivity Key External Factors Economic conditions y Political conditions y Legal environment y Technology y Competition y Markets y .2-19 Competitiveness. Strategy.
2-20 Competitiveness. and Productivity Key Internal Factors Human Resources y Facilities and equipment y Financial resources y Customers y Products and services y Technology y Suppliers y . Strategy.
Strategy.2-21 Competitiveness. and Productivity Quality and Time Strategies y Quality-based strategies Focuses on maintaining or improving the quality of an organization¶s products or services y Quality at the source y y Time-based strategies y Focuses on reduction of time needed to accomplish tasks .
Strategy. and Productivity TimeTime-based Strategies JAN Planning FEB MAR APR MAY JUN Designing Processing Changeover Delivery On time! .2-22 Competitiveness.
2-23 Competitiveness. Strategy. and Productivity Productivity y Productivity y A measure of the effective use of resources. usually expressed as the ratio of output to input y Productivity ratios are used for Planning workforce requirements y Scheduling equipment y Financial analysis y .
2-24 Competitiveness. Strategy. and Productivity Productivity y Partial measures y output/(single input) inputs) y Multi-factor measures y output/(multiple y Total measure y output/(total inputs) Outputs Productivity = Inputs .
2-25 Competitiveness. and Productivity Productivity Growth Productivity Growth = Current Period Productivity ± Previous Period Productivity Previous Period Productivity . Strategy.
4 Partial measures Multifactor measures Total measure Output Labor Output Output Machine Capital Output Energy Output Labor + Machine Output Labor + Capital + Energy Goods or Services Produced All inputs used to produce them . Strategy.2-26 Competitiveness. and Productivity Measures of Productivity Table 2.
and Productivity Examples of Partial Productivity Measures Table 2. Strategy.5 Labor Productivity Machine Productivity Capital Productivity Energy Productivity Units of output per labor hour Units of output per shift Value-added per labor hour Units of output per machine hour machine hour Units of output per dollar input Dollar value of output per dollar input Units of output per kilowatt-hour Dollar value of output per kilowatt-hour .2-27 Competitiveness.
2-28 Competitiveness. 2. and Productivity Example 3 7040 Units Produced Sold for $1.000 Cost of materials: $520 Cost of overhead: $2000 What is the multifactor productivity? Ans.10/unit Cost of labor of $1.20 . Strategy.
and Productivity Example 3 Solution MFP = Output Labor + Materials + Overhead (7040 units)*($1.2-29 Competitiveness. Strategy.10) $1000 + $520 + $2000 2.20 MFP = MFP = .
2-30 Competitiveness. Strategy. and Productivity Factors Affecting Productivity Capital Quality Technology Management .
and Productivity Other Factors Affecting Productivity Standardization y Quality y Use of Internet y Computer viruses y Searching for lost or misplaced items y Scrap rates y New workers y . Strategy.2-31 Competitiveness.
Strategy. and Productivity Other Factors Affecting Productivity Safety y Shortage of IT workers y Layoffs y Labor turnover y Design of the workspace y Incentive plans that reward productivity y .2-32 Competitiveness.
Strategy.3 Machine #1 Machine #2 10/hr 10/hr Bottleneck Operation 10/hr 10/hr 30/hr Machine #3 Machine #4 . and Productivity Bottleneck Operation Figure 2.2-33 Competitiveness.
2-34 Competitiveness. Strategy. and Productivity Improving Productivity Develop productivity measures y Determine critical (bottleneck) operations y Develop methods for productivity improvements y Establish reasonable goals y Get management support y Measure and publicize improvements y Don¶t confuse productivity with efficiency y .