14/10/2021

Recap: The Scope of Operations and Supply Chain

Management (OSCM)

OPERATIONS & SUPPLY CHAIN

MANAGEMENT Stakeholders
MBA TERM-II “n” tier ……. 1st tier
(2021-22) suppliers suppliers Distributors Customers

Operations
SESSION 2 Management

INTRODUCTION TO OPERATIONS Strategic Logistics

MANAGEMENT Sourcing
Supply Chain Management

Dr. Devendra Kumar Pathak

(Ph.D., IIT Delhi)
Assistant Professor, 2
Operations Management & Decision Sciences,
Indian Institute of Management (IIM) Kashipur

RECAP: TEN STRATEGIC OM DECISIONS PRODUCTIVITY AND COMPETITIVENESS

Decision
 Competitiveness
1. Design of goods and services  degree to which a nation can produce goods and
2. Managing quality services that meet the test of international markets
3. Process and capacity strategy
4. Location strategy  Productivity
5. Layout strategy  Measure of process improvement
6. Human resources and job design  ratio of output to input

7. Supply-chain management
 Output
8. Inventory management
 sales made, products produced, customers served,
9. Scheduling meals delivered, or calls answered
10. Maintenance
 Input
3 4
 labor hours, investment in equipment, material
usage, or square footage

1
 14/10/2021

PRODUCTIVITY VS. EFFICIENCY MEASURES OF PRODUCTIVITY

 Partial productivity measures (Single Factor) compare

output to a single input
 Multifactor productivity measures compare output to a
group of inputs
 Total productivity measures compare output to all inputs

2-6

MEASURES OF PRODUCTIVITY: EXAMPLE MEASURES OF PRODUCTIVITY: EXAMPLE

Compute the followings:

1) Labor Productivity,
2) Machine Productivity, 7 8
3) Multifactor (Total) Productivity

2
 14/10/2021

PARTIAL MEASURES OF PRODUCTIVITY O PERATIONS S

OPERATIONS STRATEGY
TRATEGY

Positioning the Firm

Business Productivity Measure
 Cost
Restaurant Customers (meals) per labor hour
 Speed
Retail store Sales per square foot
 Quality
Chicken farm Pounds of meat per pound of feed
 Flexibility
Utility plant Kilowatt hours per ton of coal

Paper mill Tons of paper per cord of wood

9 10

POSITIONING THE FIRM: COST POSITIONING THE FIRM: SPEED

 Waste elimination  Fast moves, Fast adaptations

 relentlessly pursuing the removal of all waste

 Examination of cost structure  Service organizations

 looking at the entire cost structure for reduction  always competed on speed (McDonald’s, LensCrafters, and
potential Federal Express)

 Manufacturers
 Lean production  time-based competition: build-to-order production and efficient
 providing low costs through disciplined operations supply chains

 Fashion industry
 two-week design-to-rack lead time of Spanish retailer, Zara

11 12

3
 14/10/2021

POSITIONING THE FIRM: QUALITY POSITIONING THE FIRM: FLEXIBILITY

 Minimizing defect rates or conforming to design

 Ability to adjust to changes in product mix,
specifications
production volume, or design

 Ritz-Carlton Hotels & Resorts-

 Mass customization
 Service system designed to satisfy customer
 mass production of customized parts
 Employees empowered to satisfy a guest’s wish
 Dell Computers
 Teams set objectives and devise quality action plans
 Each hotel has a quality leader

13 14

STRATEGIES FOR COMPETITIVE ADVANTAGE COMPETING ON DIFFERENTIATION

1. Differentiation – better, or at least different Uniqueness can go beyond both the physical
characteristics and service attributes to encompass
2. Cost leadership – cheaper everything that impacts customer's perception of value
3. Response – more responsive
• Walt Disney Magic Kingdom – experience differentiation
• Hard Rock Cafe – dining experience (with music)

15 16

4
 14/10/2021

EXPERIENCE DIFFERENTIATION COMPETING ON COST

Provide the maximum value as perceived by customer.

Engaging a customer with a product through imaginative Does not imply low quality.
use of the five senses, so the customer “experiences” the
product • Southwest Airlines – secondary airports, no frills service,
• Theme parks use sight, sound, smell, and participation efficient utilization of equipment
• Walmart – Logistics costs
• Movie theatres use sight, sound, moving seats,
smells, and mists of rain • Rajesh Exporter: Gold and Diamond Jewellery
Manufacturer (World’s largest gold refinery at Balerna,
• Restaurants use music, live performance, smell, and Switzerland.)
open kitchens
17 • Akasa Airline 18

COMPETING ON RESPONSE OM’S CONTRIBUTION TO STRATEGY

Achieving Competitive Advantage Through Operations

• Speed: Amazon – 24 hr. delivery

• Flexibility is matching market changes in design

innovation and volumes
– A way of life at Hewlett-Packard

• Reliability is meeting schedules

– German machine industry, FedEx delivery

• Quickness in design, production, and delivery

– Johnson Electric, Pizza Hut
19 20