COMPETITIVENESS,

STRATEGY, AND
PRODUCTIVITY
Chapter 2

MIS 373: Basic Operations Management

 LEARNING OBJECTIVES

• After this lecture, students will be able to

1. List several ways that business organizations compete.
2. Discuss and compare organization strategy and operations strategy
and explain why it is important to link the two.
3. Define the term productivity and explain why it is important to
organizations and to countries.
4. Describe several factors that affect productivity.

MIS 373: Basic Operations Management 2

 Sebutkan beberapa cara organisasi bisnis bersaing.
2. Diskusikan dan bandingkan strategi organisasi dan strategi
operasi dan jelaskan mengapa penting untuk menghubungkan
keduanya.
3. Definisikan istilah produktivitas dan jelaskan mengapa itu
penting bagi organisasi dan negara.
4. Jelaskan beberapa faktor yang mempengaruhi produktivitas.

Tiga konsep terpisah, tetapi terkait yang sangat penting bagi

organisasi bisnis:
 OVERVIEW

• Three separate, but related concepts that are vitally important

to business organizations:

• Competitiveness
• Strategy
• Productivity

MIS 373: Basic Operations Management 3

 COMPETITIVENESS

• Competitiveness:
• How effectively an organization meets the needs of customers
relative to others that offer similar goods or services

• Organizations compete over:

• Price (Cost): WAL-MART
• Quality: BMW
• Response-time: UPS
• Variety (Flexibility): DELL

MIS 373: Basic Operations Management 4

 Daya saing:
relatif terhadap orang lain yang menawarkan barang atau jasa
serupa
• Organisasi bersaing untuk: • Harga (Biaya): WAL-MART
• Kualitas: BMW
• Waktu respons: UPS
• Ragam (Fleksibilitas): DELL
 OPERATIONS’ INFLUENCE ON
COMPETITIVENESS
• Product and service design
• Cost
• Location
• Quality
• Quick response Competitiveness
• Flexibility
• Inventory management
• Supply chain management
• Service
• Managers and workers
MIS 373: Basic Operations Management 5
 WHY SOME ORGANIZATIONS
FAIL
• Neglecting operations strategy.
• Failing to take advantage of strengths and opportunities,
and/or failing to recognize competitive threats.
• Putting too much emphasis on short-term financial
performance at the expense of research and development.
• Placing too much emphasis on product and service design
and not enough on process design and improvement.
• Neglecting investments in capital and human resources.
• Failing to establish good internal communications and
cooperation among different functional areas.
• Failing to consider customer needs.

MIS 373: Basic Operations Management 6

 Mengabaikan strategi operasi.
• Gagal memanfaatkan kekuatan dan peluang,
dan/atau gagal mengenali ancaman persaingan.
• Menempatkan terlalu banyak penekanan pada keuangan jangka
pendek
kinerja dengan mengorbankan penelitian dan pengembangan.
• Menempatkan terlalu banyak penekanan pada desain produk
dan layanan
dan tidak cukup pada desain proses dan perbaikan.
• Mengabaikan investasi dalam modal dan sumber daya manusia.
• Gagal membangun komunikasi dan kerjasama internal yang
baik di antara area fungsional yang berbeda.
• Gagal mempertimbangkan kebutuhan pelanggan.
 EXERCISE
• Name 10 ways that banks compete for customers.

• Hint: consider operations’ influence on competitiveness

• Product and service design
• Cost
• Location
• Quality
• Quick response
• Flexibility
• Inventory management
• Supply chain management
• Service
• Managers and workers
 Name 10 ways that banks compete for customers.
• Hint: consider operations’ influence on competitiveness • Product
and service design
• Cost
• Location
• Quality
• Quick response
• Flexibility
• Inventory management
• Supply chain management • Service
• Managers and workers
 HIERARCHICAL PLANNING
AND DECISION MAKING
Mission

Goals

Organizational Strategies

Functional Goals
Finance Marketing Operations
Strategies Strategies Strategies

Tactics Tactics Tactics

Operating Operating Operating

procedures procedures procedures
MIS 373: Basic Operations Management 8
 WAL-MART DELIVERY SERVICE
SAYS TO AMAZON: 'BRING IT'
• wsj.com 10/19/2012
• In its latest bid to take on … Amazon.com this holiday season, Wal-Mart
is promising same-day delivery in some cities for orders placed online.
Called Wal-Mart To Go, the service costs $10 regardless of the size of
the order.
• The products will be shipped from the company's stores, not from a
warehouse or distribution center. … Wal-Mart is betting that its network of
thousands of stores, combined with an improved online presence … can
help it compete head to head with Amazon, which has increasingly
stressed fast, free or low-cost deliveries.
• UPS will pick up the goods and deliver them to customers
• Nearly half of Wal-Mart's online sales now come from purchases
customers make online and pick up at a store, … "We have a unique
advantage because we have the national footprint of stores combined
with our online site that enable programs like site to store, pay with cash
or pick up today,…"

MIS 373: Basic Operations Management 9

LAYANAN PENGIRIMAN WAL-MART BERKATA KEPADA AMAZON
'BRING IT• wsj.com 19/10/2012
• Dalam tawaran terbarunya untuk menghadapi ... Amazon.com
musim liburan ini, Wal-Mart menjanjikan pengiriman pada hari yang
sama di beberapa kota untuk pesanan yang dilakukan secara online
Disebut Wal-Mart To Go, layanan ini berharga $10 terlepas dari
ukuran pesanan.
• Produk akan dikirim dari toko perusahaan, bukan dari gudang ata
pusat distribusi. ... Wal-Mart bertaruh bahwa jaringan ribuan tokony
dikombinasikan dengan kehadiran online yang ditingkatkan ... dapa
membantunya bersaing langsung dengan Amazon, yang semakin
menekankan pengiriman cepat, gratis, atau berbiaya rendah.
• UPS akan mengambil barang dan mengirimkannya ke pelanggan
• Hampir setengah dari penjualan online Wal-Mart sekarang berasa
dari pembelian yang dilakukan pelanggan secara online dan diamb
di toko, ... "Kami memiliki keunggulan unik karena kami memiliki jeja
toko nasional yang digabungkan dengan situs online kami yang
memungkinkan program seperti situs untuk menyimpan, membaya
dengan uang tunai atau mengambil hari ini,..."
 HIERARCHICAL PLANNING
AND DECISION MAKING
Mission

Goals

Organizational Strategies
“Wal-Mart To Go”
Functional Goals
Finance Marketing Operations
Strategies Strategies Strategies

Tactics Tactics Tactics

Operating Operating Operating

procedures procedures procedures
MIS 373: Basic Operations Management 10
 MISSION AND GOALS

• Mission
• The reason for an organization’s existence
• Mission statement
• States the purpose of the organization
• The mission statement should answer the question of “What business
are we in?”
• The mission statement serves as the basis for organizational goals

• Goals
• Provide detail and the scope of the mission
• Goals can be viewed as organizational destinations
• Goals serve as the basis for organizational strategies

MIS 373: Basic Operations Management 11

 Misi
• Alasan keberadaan organisasi • Pernyataan misi
• Nyatakan tujuan organisasi
• Pernyataan misi harus menjawab pertanyaan “Apa bisnis kita?”
• Pernyataan misi berfungsi sebagai dasar untuk tujuan
organisasi
• Sasaran
• Berikan detail dan ruang lingkup misi
• Sasaran dapat dilihat sebagai tujuan organisasi
• Tujuan berfungsi sebagai dasar untuk strategi organisasi
 EXAMPLE MISSION
STATEMENTS
• FedEx Mission Statement
• http://about.van.fedex.com/mission-strategy-values
• FedEx Corporation will produce superior financial returns for its
shareowners by providing high value-added logistics, transportation
and related business services through focused operating companies.
Customer requirements will be met in the highest quality manner
appropriate to each market segment served. FedEx will strive to
develop mutually rewarding relationships with its employees, partners
and suppliers. Safety will be the first consideration in all operations.
Corporate activities will be conducted to the highest ethical and
professional standards.

MIS 373: Basic Operations Management 12

 Pernyataan Misi FedEx
CONTOH PERNYATAAN MISI
• http://about.van.fedex.com/mission-strategy-values
• FedEx Corporation akan menghasilkan keuntungan finansial
yang unggul bagi para pemilik sahamnya dengan menyediakan
logistik, transportasi, dan layanan bisnis terkait yang bernilai
tambah tinggi melalui perusahaan-perusahaan operasional yang
terfokus. Persyaratan pelanggan akan dipenuhi dengan cara
kualitas tertinggi yang sesuai untuk setiap segmen pasar yang
dilayani. FedEx akan berusaha untuk mengembangkan
hubungan yang saling menguntungkan dengan karyawan, mitra,
dan pemasoknya. Keselamatan akan menjadi pertimbangan
pertama dalam semua operasi. Kegiatan perusahaan akan
dilakukan dengan standar etika dan profesional tertinggi.
 STRATEGY

• Strategy
• A plan for achieving organizational goals
• Serves as a roadmap for reaching the organizational destinations

• Organizations have
• Organizational strategies
• Overall strategies that relate to the entire organization
• Support the achievement of organizational goals and mission
• Functional level strategies
• Strategies that relate to each of the functional areas and that
support achievement of the organizational strategy

MIS 373: Basic Operations Management 13

 Strategi
• Sebuah rencana untuk mencapai tujuan organisasi
• Berfungsi sebagai peta jalan untuk mencapai tujuan organisasi
• Organisasi memiliki
• Strategi organisasi
• Strategi keseluruhan yang berhubungan dengan seluruh
organisasi
• Mendukung pencapaian tujuan dan misi organisasi
• Strategi tingkat fungsional
• Strategi yang berhubungan dengan masing-masing bidang
fungsional dan yang mendukung pencapaian strategi organisasi
 TACTICS AND OPERATIONS

• Tactics
• The methods and actions taken to accomplish strategies
• The “how to” part of the process

• Operations
• The actual “doing” part of the process

MIS 373: Basic Operations Management 14

 ORGANIZATIONAL STRATEGY
• Low Price
• Outsource operations to countries with low labor cost
• Use capital-intensive methods to achieve high output volume and low unit cost
• Specialization
• Focus on narrow product lines or limited services to achieve higher quality
• Responsiveness (time-based strategies)
• Strategies that focus on the reduction of time needed to accomplish tasks
• Differentiation: Variety
• Focus on customization
• Differentiation: Newness
• Focus on innovation to create new products or services
• Differentiation: Service
• Focus on various aspects of service (e.g., helpful, reliable, etc)
• Differentiation: Quality
• focus on quality in all phases of an organization in order to achieve higher quality
than competitors

MIS 373: Basic Operations Management 15

 STRATEGI ORGANISASI
• Harga rendah
• Mengalihdayakan operasi ke negara-negara dengan biaya
tenaga kerja rendah
• Gunakan metode padat modal untuk mencapai volume output
yang tinggi dan biaya unit yang rendah
• Spesialisasi
• Fokus pada lini produk yang sempit atau layanan terbatas untuk
mencapai kualitas yang lebih tinggi
• Daya tanggap (strategi berbasis waktu)
• Strategi yang berfokus pada pengurangan waktu yang
dibutuhkan untuk menyelesaikan tugas• Diferensiasi: Ragam•
Fokus pada penyesuaian• Diferensiasi: Kebaruan
• Fokus pada inovasi untuk menciptakan produk atau layanan
baru• Diferensiasi: Layanan
• Fokus pada berbagai aspek layanan (misalnya, membantu,
dapat diandalkan, dll)• Diferensiasi: Kualitas
• fokus pada kualitas di semua fase organisasi untuk mencapai
kualitas yang lebih tinggi daripada pesaing
 OPERATIONS STRATEGY

• The organizational strategy provides the overall direction for

the organization. It is broad in scope, covering the entire
organization.

• Operations strategy is narrower in scope, dealing primarily

with the operations aspect of the organization. Operations
strategy relates to products, processes, methods, operating
resources, quality, costs, lead times, and scheduling.
• In order for operations strategy to be truly effective, it is important to
link it to organization strategy

MIS 373: Basic Operations Management 16

 Strategi organisasi memberikan arah keseluruhan untuk
organisasi. Cakupannya luas, mencakup seluruh organisasi.
• Strategi operasi lebih sempit cakupannya, terutama berkaitan
dengan aspek operasi organisasi. Strategi operasi berkaitan
dengan produk, proses, metode, sumber daya operasi, kualitas,
biaya, waktu tunggu, dan penjadwalan.
• Agar strategi operasi benar-benar efektif, penting untuk
menghubungkannya dengan strategi organisasi
 EXAMPLES OF STRATEGIES

Organizational Examples of Companies or

Strategy Operations Strategy Services
Low Price Low Cost Wal-Mart
Southwest Airlines
Responsiveness Short processing times McDonald’s restaurants
On-time delivery FedEx
Differentiation: High performance design and/or BMW
High Quality high quality processing
Consistent Quality Coca-Cola
Differentiation: Innovation 3M
Newness Apple
Differentiation: Flexibility Burger King (“Have it your way”)
Variety Volume McDonald’s (“Buses Welcome”)
Differentiation: Superior customer service Disneyland
Service IBM
Differentiation: Convenience Supermarkets
Location Banks, ATMs

MIS 373: Basic Operations Management 17

 3M
• Founded in 1902, 3M started out in the mining business as the
Minnesota Mining and Manufacturing Company.
• 3M launched the 15 percent program in 1948.
• a program at 3M that allows employees to use a portion of their paid time
to chase rainbows and hatch their own ideas.
• Thirty Percent Rule, 30% of each division’s revenues must come
from products introduced in the last four years.
• Over a 20-year period, 3M’s gross margin averaged 51% and the
company’s return on assets averaged 29%.
• Mission
• 3M is a science and technology company that creates. For decades, 3M
scientists and engineers have developed products that solve problems.
3M is also a company that cares – improving lives each day. The
mission of 3Mgives: To Improve Every Life through Innovative Giving in
Education, Community and the Environment – mirroring our corporate
vision:
• 3M Technology Advancing Every Company
• 3M Products Enhancing Every Home
• 3M Innovation Improving Every Life
 sebagai Minnesota Mining and Manufacturing Company.
• 3M meluncurkan program 15 persen pada tahun 1948.
• sebuah program di 3M yang memungkinkan karyawan
menggunakan sebagian dari waktu mereka yang dibayar untuk
mengejar pelangi dan menetaskan ide-ide mereka sendiri.
• Aturan Tiga Puluh Persen, 30% dari pendapatan setiap divisi
harus berasal dari produk yang diperkenalkan dalam empat
tahunterakhir.
• Selama periode 20 tahun, margin kotor 3M rata-rata 51% dan
laba atas aset perusahaan rata-rata 29%.• Misi
• 3M adalah perusahaan sains dan teknologi yang menciptakan.
Selama beberapa dekade, ilmuwan dan insinyur 3M telah
mengembangkan produk yang memecahkan masalah. 3M juga
merupakan perusahaan yang peduli – meningkatkan kehidupan
setiap hari. Misi 3Mgives: Untuk Meningkatkan Setiap Kehidupan
melalui Pemberian Inovatif dalam Pendidikan, Komunitas dan
Lingkungan – mencerminkan visi perusahaan kami:
• Teknologi 3M Memajukan Setiap Perusahaan
• Produk 3M Meningkatkan Setiap Rumah
 EXERCISE
• Name three companies that are not in the examples I gave,
and describe their core organizational strategies in terms of
the following options:
Wal-Mart
• Low Price Southwest Airlines
• Specialization McDonald’s
FedEx
• Responsiveness BMW
Coca-Cola
• Differentiation: Quality 3M
• Differentiation: Newness Apple
Burger King
• Differentiation: Variety Disneyland
IBM
• Differentiation: Service Supermarkets
Banks, ATMs

• Go online and find the mission statements of the three

companies. Are their strategies aligned with their mission
statements?
 Sebutkan tiga perusahaan yang tidak ada dalam contoh yang
saya berikan, dan jelaskan strategi organisasi inti mereka dalam
pilihan berikut:
• Harga rendah
• Spesialisasi
• Daya tanggap
• Diferensiasi: Kualitas
• Diferensiasi: Kebaruan • Diferensiasi: Ragam
• Diferensiasi: Layanan
• Online dan temukan pernyataan misi dari ketiga perusahaan
tersebut. Apakah strategi mereka selaras dengan pernyataan misi
mereka?
Wal-Mart Southwest Airlines McDonald's FedEx
BMW
Coca-Cola
3M
apel
Burger King Disneyland
Bank Supermarket IBM, ATM
 STRATEGY FORMULATION

• Three common approaches

• Michael Porter's five forces model
• Environmental scanning (SWOT)
• Balanced Scorecard

MIS 373: Basic Operations Management 20

 PORTER'S FIVE FORCES MODEL
Source:
http://www.quickmba.com/strategy/porter.shtml SUPPLIER POWER
Supplier concentration
Importance of volume to supplier
Differentiation of inputs
Impact of inputs on cost or differentiation
Switching costs of firms in the industry
Presence of substitute inputs
Threat of forward integration
Cost relative to total purchases in industry
THREAT OF NEW ENTRANTS DEGREE OF RIVALRY THREAT OF SUBSTITUTES
Barriers to Entry Exit barriers Switching costs
Absolute cost advantages Industry concentration Buyer inclination to substitute
Proprietary learning curve Fixed costs/Value added Price-performance
Access to inputs Industry growth trade-off of substitutes
Government policy Intermittent overcapacity
Economies of scale Product differences
Capital requirements Switching costs
Brand identity Brand identity
Switching costs Diversity of rivals
Access to distribution Corporate stakes
BUYER POWER
Bargaining leverage
Buyer volume
Buyer information
Brand identity
Price sensitivity
Product differentiation
MIS 373: Basic Operations Management Substitutes available 21
Buyers' incentives
PORTER ON HIS FIVE
FORCES MODEL
 SWOT

• Environmental scanning (SWOT)

• Internal Factors
• Strengths and Weaknesses
• External Factors
• Opportunities and Threats

MIS 373: Basic Operations Management 23

 SWOT: KEY INTERNAL FACTORS
1. Human Resources
• Skills of workforce, expertise, experience, loyalty to the organization
2. Facilities and equipment
• Capacities, locations, age, maintenance costs
3. Financial resources
• Cash flow, access to additional funding, debt, cost of capital
4. Customers
• Loyalty, wants and needs
5. Products and services
• Existing, potential for new ones
6. Technology
• Existing, ability to integrate new and its impact on current and future operations
7. Suppliers
• Relationships, dependency, quality, flexibility, service
8. Other
• Labor relations, company image, distribution channels etc.

MIS 373: Basic Operations Management 24

 Sumber daya manusia
• Keterampilan tenaga kerja, keahlian, pengalaman, loyalitas
kepada organisasi
Fasilitas dan peralatan
• Kapasitas, lokasi, usia, biaya pemeliharaan
Sumber keuangan
• Arus kas, akses ke pendanaan tambahan, utang, biaya modal
Pelanggan
• Loyalitas, keinginan dan kebutuhan
Produk dan layanan
• Yang sudah ada, potensial untuk yang baru
Teknologi
• Yang sudah ada, kemampuan untuk mengintegrasikan yang
baru dan dampaknya pada operasi saat ini dan masa depan
Pemasok
• Hubungan, ketergantungan, kualitas, fleksibilitas, layanan
Lainnya
• Hubungan tenaga kerja, citra perusahaan, saluran distribusi, dll.
 SWOT: KEY EXTERNAL FACTORS
1. Economic conditions
• Health and directions of the economy, inflation, deflation, interest rates,
taxes, tariffs.
2. Political conditions
• Attitude towards business, political stability, wars
3. Legal environment
• Antitrust laws, regulations, trade restrictions, minimum wages laws,
liability laws, labor laws, patents
4. Technology
• Innovations rate, future process technology, design technology
5. Competition
• Number and strength of competitors, basis of competitions (price,
quality etc.)
6. Markets
• Size, location, brand loyalty, ease of entry, growth potential, long term
stability, demographics.

MIS 373: Basic Operations Management 25

 Kondisi perekonomian
• Kesehatan dan arah ekonomi, inflasi, deflasi, suku bunga,
pajak, tarif.
Kondisi politik
• Sikap terhadap bisnis, stabilitas politik, perang
Lingkungan hukum
• Undang-undang antimonopoli, peraturan, pembatasan
perdagangan, undang-undang upah minimum, undang-undang
pertanggungjawaban, undang-undang perburuhan, paten
Teknologi
• Tingkat inovasi, teknologi proses masa depan, teknologi desain
Kompetisi
• Jumlah dan kekuatan pesaing, dasar persaingan (harga,
kualitas, dll.)
Pasar
• Ukuran, lokasi, loyalitas merek, kemudahan masuk, potensi
pertumbuhan, stabilitas jangka panjang, demografi.
 BALANCED SCORECARD
• The idea of Balanced Scorecard (BSC) is to move away from
a purely financial perspective of the organization and
integrate other perspectives such as customers, internal
business processes, and learning and growth.
Lag
Balanced Scorecard measure
• Financial
• How should we appear to our Objective Measure Target
shareholders?
Improve Survey Up 20%
• Consumer
consumer score
• How should we appear to our
customers? satisfaction and Delivery < 4 days
• Internal Business Process loyalty by 20% time
• What business process must we
excel at?
• Learning & Growth
• How will we sustain our ability to Leading
change/improve? measure
MIS 373: Basic Operations Management 26
• Bagaimana seharusnya kita tampil di hadapan para pemegang
saham kita?
• Konsumen
• Bagaimana seharusnya kita tampil di hadapan pelanggan kita?
• Proses Bisnis Internal
• Proses bisnis apa yang harus kita kuasai?
• Pembelajaran & Pertumbuhan
• Bagaimana kita akan mempertahankan kemampuan kita untuk
berubah/meningkatkan?
Objektif
Meningkatkan kepuasan dan loyalitas konsumen sebesar 20%
Ukuran
Skor survei
Ukuran keterlambatan
Kartu catatan angka
Target
Naik 20%
Waktu pengiriman
< 4 hari
 BALANCED SCORECARD

MIS 373: Basic Operations Management 27

 STEPS IN STRATEGY
FORMULATION
1. Link strategy directly to the organization's mission or vision
statement.
2. Assess strengths, weaknesses, threats and opportunities, and
identify core competencies.
• Core competencies: The special attributes or abilities that give an
organization a competitive edge
3. Identify order winners and order qualifiers.
• Order winners: Characteristics of an organization’s goods or services
that cause it to be perceived as better than the competition
• Order qualifiers: Characteristics that customers perceive as minimum
standards of acceptability for a product or service to be considered as a
potential for purchase
4. Select one or two strategies (e.g., low cost, speed, customer
service) to focus on.

MIS 373: Basic Operations Management 28

 Link strategy directly to the organization's mission or vision
statement.
2. Assess strengths, weaknesses, threats and opportunities, and
identify core competencies.
• Core competencies: The special attributes or abilities that give
an organization a competitive edge
3. Identify order winners and order qualifiers.
• Order winners: Characteristics of an organization’s goods or
services that cause it to be perceived as better than the
competition
• Order qualifiers: Characteristics that customers perceive as
minimum standards of acceptability for a product or service to be
considered as a potential for purchase
4. Select one or two strategies (e.g., low cost, speed, customer
service) to focus on.
 PRODUCTIVITY

• Productivity
• A measure of the effective use of resources, usually expressed as the
ratio of output to input

Outputs
Productivity =
Inputs

• Productivity measures are useful for

• Tracking an operating unit’s performance over time
• Judging the performance of an entire industry or country

MIS 373: Basic Operations Management 29

 Produktifitas
• Ukuran penggunaan sumber daya yang efektif, biasanya
dinyatakan sebagai rasio output terhadap input
• Ukuran produktivitas berguna untuk
• Melacak kinerja unit operasi dari waktu ke waktu
• Menilai kinerja seluruh industri atau negara
• wsj.com 1/12/2012
• “The Factory Floor Has a
Ceiling on Job Creation ”

• Factories have been

producing more with
fewer workers.

• Output for each hour of

work, or productivity, is
up an extraordinary 40%
as factories have
adopted new
technologies and
production processes.
 wsj.com 12/12/2012
• “Lantai Pabrik Memiliki Plafon pada Penciptaan Pekerjaan ”
• Pabrik telah
memproduksi lebih banyak dengan lebih sedikit pekerja.
• Output untuk setiap jam kerja, atau produktivitas, naik luar biasa
40% karena pabrik telah mengadopsi teknologi dan proses
produksi baru.
 WHY DOES PRODUCTIVITY
MATTERS?
Brynjolfsson, E., and Hitt, L. M. 1998. Beyond the productivity
paradox. Communications of the ACM 41(8) 49–55.

• Productivity growth determines our living standards and the

wealth of nations. This is because the amount a nation can
consume is ultimately closely tied to what it produces.

• By the same token, the success of a business generally

depends on its ability to deliver more real value for
consumers without using more labor, capital, or other inputs.

MIS 373: Basic Operations Management 31

 Brynjolfsson, E., dan Hitt, L. M. 1998. Di luar paradoks
produktivitas. Komunikasi ACM 41(8) 49–55.
• Pertumbuhan produktivitas menentukan standar hidup kita dan
kekayaan bangsa. Ini karena jumlah yang dapat dikonsumsi
suatu negara pada akhirnya terkait erat dengan apa yang
dihasilkannya.
• Dengan cara yang sama, keberhasilan bisnis pada umumnya
bergantung pada kemampuannya untuk memberikan nilai yang
lebih nyata bagi konsumen tanpa menggunakan lebih banyak
tenaga kerja, modal, atau input lainnya.
 MEASURES OF PRODUCTIVITY
Outputs
Productivity =
Inputs

MIS 373: Basic Operations Management 32

 EXAMPLES OF PARTIAL
PRODUCTIVITY MEASURES

Partial Productivity Examples

Measures
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
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

MIS 373: Basic Operations Management 33

 EXERCISE
Units produced: 5,000 Hint:
Standard price: $30/unit The key of this calculation is to convert
Labor input: 500 hours all the elements to their dollar values.
Cost of labor: $25/hour
Cost of materials: $5,000 What’s the dollar value of the
output / labor / material / overhead?
Cost of overhead: 2x labor cost
Output
Multifactor Productivity =
Labor +Material +Overhead
5,000 units $30/unit
=
(500 hours $25/hour) + $5,000 + (2(500 hours $25/hour))
$150,000
=
$42,500 What is the implication of an
= 3.5294 unitless measure of productivity?
 PRODUCTIVITY GROWTH

Current productivity − Pervious productivity

Productivity Growth = × 100%
Pervious productivity

• Example: Labor productivity on the ABC assembly line was

25 units per hour in 2009. In 2010, labor productivity was 23
units per hour. What was the productivity growth from 2009
to 2010?
23 − 25
Productivity Growth = × 100% = −8%
25

MIS 373: Basic Operations Management 35

 SERVICE SECTOR
PRODUCTIVITY
Service sector productivity is difficult to measure
and manage because
It involves intellectual activities
It has a high degree of variability

Measurement Difficulties
Retailors
Quality Versus Quantity
Nurses

MIS 373: Basic Operations Management 36

 PRODUKTIVITAS SEKTOR JASA
Produktivitas sektor jasa sulit diukur dan dikelola karena
Melibatkan aktivitas intelektual Memiliki tingkat variabilitas yang
tinggi
Kesulitan Pengukuran Pengecer
Kualitas Versus Kuantitas Perawat
 HEALTH CARE PRODUCTIVITY
• Kocher, Robert, and Nikhil R. Sahni. "Rethinking health care labor."
New England Journal of Medicine 365.15 (2011): 1370-1372.
• Of the $2.6 trillion spent in 2010 on health care in the United States, 56% consisted
of wages for health care workers.
• the “output” is the volume of activity — including all encounters, tests, treatments,
and surgeries — per unit of cost
 HEALTH CARE PRODUCTIVITY
• IBM Healthcare Industry: 2020 Vision
• adoption of new practices • reduce tests and costs
• drug effectiveness evaluation • personalized medicine
• risk prediction & prevention • patient education & empowerment
 FACTORS AFFECTING
PRODUCTIVITY
Methods

Capital Quality

INCREASE:
Calculators, Computers,
Faxes, copiers, Internet Technology Management
search engines, Voice
mail, cell phones, email REDUCE:
inflexibility, high costs,
mismatched operations,
non-work activities

MIS 373: Basic Operations Management 39

 PRODUCTIVITY & TECHNOLOGY
• NPR 4/30/13 When It Comes To Productivity, Technology
Can Hurt And Help
• With instant messages buzzing, emails pinging and texts ringing, how
can employers increase productivity in the workplace? Software
companies are tackling the problem, tracking employees' computer
time to find ways to improve their efficiency.
• Desk workers, creative workers, …
Dengan pesan instan berdengung, email ping dan teks berdering,
bagaimana pengusaha dapat meningkatkan produktivitas di
tempat kerja? Perusahaan perangkat lunak sedang mengatasi
masalah tersebut, melacak waktu komputer karyawan untuk
menemukan cara meningkatkan efisiensi mereka.
• Pekerja meja, pekerja kreatif, ...
 PRODUCTIVITY PARADOX
• Brynjolfsson, E., and Hitt, L. M. 1998. Beyond the productivity
paradox. Communications of the ACM 41(8) 49–55.

• IT investment does not appear to

have a strong impact on productivity.
• Explanations for the Paradox
1. Mismeasurement of outputs and inputs,
• ATMs reduce the number of checks banks
process so, by some measures, banking output
and productivity decrease.
• The increases in convenience ATMs have created
go uncounted in conventional productivity metrics,
while their costs are counted.
2. Lags due to learning and adjustment

MIS 373: Basic Operations Management 41

 PRODUCTIVITY PARADOX • Brynjolfsson, E., and Hitt, L. M.
1998. Beyond the productivity
paradox. Communications of the ACM 41(8) 49–55. • IT
investment does not appear to
have a strong impact on productivity. • Explanations for the
Paradox
1. Mismeasurement of outputs and inputs,
• ATMs reduce the number of checks banks process so, by some
measures, banking output and productivity decrease.
• The increases in convenience ATMs have created go uncounted
in conventional productivity metrics, while their costs are counted.
2. Lags due to learning and adjustment
 IMPROVING PRODUCTIVITY

1. Develop productivity measures for all operations

2. Determine critical (bottleneck) operations
3. Develop methods/technologies 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

MIS 373: Basic Operations Management 42

 IMPROVING PRODUCTIVITY
1. Developproductivitymeasuresforalloperations
2. Determine critical (bottleneck) operations
3. Developmethods/technologiesforproductivity improvements
4. Establishreasonablegoals
5. Make it clear that management supports and encourages
productivity improvement
6. Measureandpublicizeimprovements
Don’t confuse productivity with efficiency
 KEY POINTS
• Competitive pressure often means that business organizations
must frequently assess their competitors' strengths and
weaknesses, as well as their own, to remain competitive.
• Strategy formulation is critical because strategies provide direction
for the organization, so they can play a role in the success or
failure of a business organization.
• Functional strategies and supply chain strategies need to be
aligned with the goals and strategies of the overall organization.
• The three primary business strategies are low cost,
responsiveness, and differentiation.
• Productivity is a key factor in the cost of goods and services.
Increases in productivity can become a competitive advantage.

MIS 373: Basic Operations Management 43

 Competitive pressure often means that business organizations
must frequently assess their competitors' strengths and
weaknesses, as well as their own, to remain competitive.
• Strategy formulation is critical because strategies provide
direction for the organization, so they can play a role in the
success or failure of a business organization.
• Functional strategies and supply chain strategies need to be
aligned with the goals and strategies of the overall organization.
• The three primary business strategies are low cost,
responsiveness, and differentiation.
• Productivity is a key factor in the cost of goods and services.
Increases in productivity can become a competitive advantage.