STRATEGY Chapter--2

(Source: Text book-Chase and Jacobs – OSCM,

chapter -2 )
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OPERATIONS AND SUPPLY CHAIN STRATEGY

 Operations and supply chain strategy: Setting broad policies and

plans for using the resources of a firm – must be integrated with
corporate strategy

▪ Corporate strategy provides overall direction and coordinates

operational goals with those of the larger organization

▪ Can be viewed as part of a planning process that coordinates

operational goals with those of the larger organization

(Source: Text book-Chase and Jacobs – OSCM, chapter -2 )

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THE TRIPLE BOTTOM LINE

 (Source: Text book-Chase and Jacobs – OSCM, chapter -2 )
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COMPETITIVE DIMENSIONS
 Cost- “ Make the product or deliver the service inexpensively”

 Quality - “Make a great product or deliver a great service”

 Delivery Speed- “Make the product or deliver the service quickly”

 Delivery reliability -”Deliver it when promised”

 Coping with changes in demand -”Change the volume”

 Flexibility and New Product Introduction Speed -“Change it”

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THE NOTION OF TRADE-OFF

 Operation cannot excel on all competitive dimensions

simultaneously
 Key performance areas are to be identified and concentrated
as strategic competitive dimension
 This may a times creates trade -offs like high quality is viewed
as a trade-off to low cost

 Straddling : When a firm seeks to match what a competitor is

doing by adding new features, services or technologies to
existing activities. This creates a trade -off.
 IKEA’S Strategy

 (Source: Text book-Chase and Jacobs – OSCM, chapter -2 )

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ORDER QUALIFIERS AND WINNERS

 Order qualifiers are the basic criteria that permit the

firms products to be considered as candidates for
purchase by customers
“what qualifies an item to be considered for purchase”

 Order winners are the criteria that differentiates the

products and services of one firm from another
“what wins the order”
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PRODUCTIVIT Y

 Productivity is a measure of how well resources are used

𝑂𝑢𝑡𝑝𝑢𝑡𝑠
 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 =
𝐼𝑛𝑝𝑢𝑡𝑠
 Productivity is a relative measure
▪ Must be compared to something else to be meaningful
▪ Operations can be compared to each other
▪ Firms can be compared to other firms or themselves over time
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PRODUCTIVIT Y MEASURES

 Partial productivity measures compare output to a single

input
 Multifactor productivity measures compare output to a group
of inputs
 Total productivity measures compare output to all inputs
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EXAMPLE

 An electronic manufacturing company uses multiple inputs in its

manufacturing process. The required inputs as per the output are
given below.
Total units produced 5,00,000
Energy Cost Rs. 20,000
Labor hours 20,000
Labor rate Rs.25 per hour
Cost of material Rs. 50,000

The company is in the process of measuring its productivity. To

support the task calculate the following.

1 . Partial/Single factor productivity of each input (Energy, Labor,

Material) of rupee spent
2. Calculate multifactor productivity : Labor and Material
3. Calculate total productivity of all inputs