12/10/2022

Recap: The Scope of Operations and Supply Chain

Management (OSCM)

OPERATIONS & SUPPLY CHAIN

MANAGEMENT Stakeholders
MBA TERM-II “n” tier ……. 1st tier
(2022-23) 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

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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
services that meet the test of international markets
2. Managing quality
3. Process and capacity strategy  Productivity
4. Location strategy  Measure of process improvement
5. Layout strategy  ratio of output to input

6. Human resources and job design

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

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PRODUCTIVITY VS. EFFICIENCY PRODUCTIVITY VS. EFFICIENCY

 A content writer writes 800 words and in order

to do so, it takes her 8 working hours.

 Productivity:
 800/8 = 100 words/ hour

 Maybe, the content writer is expected to work 8

hours a day. But, let’s say she actually finishes
her work in 6.5 hours a day.

 Efficiency:
 standard (expected) labour hours *100 / actual hours
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 8/6.5 = 123% 6

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MEASURES OF PRODUCTIVITY MEASURES OF PRODUCTIVITY: EXAMPLE

 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

Compute the followings:

1) Labor Productivity,
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2) Machine Productivity,
3) Multifactor (Total) Productivity
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MEASURES OF PRODUCTIVITY: EXAMPLE PARTIAL MEASURES OF PRODUCTIVITY

Business Productivity Measure

Restaurant Customers (meals) per
labor hour
Retail store Sales per square foot
Chicken farm Pounds of meat per pound
of feed
Utility plant Kilowatt hours per ton
of coal
Paper mill Tons of paper per cord of
wood
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O PERATIONS S
OPERATIONS STRATEGY
TRATEGY
POSITIONING THE FIRM: COST

Positioning of the Firm  Waste elimination

 relentlessly pursuing the removal of all waste ..
 Cost [Lean]
 Speed
 Examination of cost structure
 Quality
 looking at the entire cost structure for reduction
 Flexibility potential

 Lean production
 providing low costs through disciplined operations

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POSITIONING THE FIRM: SPEED POSITIONING THE FIRM: QUALITY

 Fast moves, Fast adaptations

 Minimizing defect rates or conforming to design
specifications
 Service organizations
 always competed on speed (McDonald’s, Blinkit (formerly  Ritz-Carlton Hotels & Resorts [Marriott International]-
Grofers), and Federal Express)  Service system designed to satisfy customer
 Manufacturers  Employees empowered to satisfy a guest’s wish
 time-based competition: Make-to-order production and  Teams set objectives and devise quality action plans
efficient supply chains [JIT]  Each hotel has a quality leader
 Fashion industry
 two-week design-to-rack lead time of Spanish retailer, Zara
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POSITIONING THE FIRM: FLEXIBILITY STRATEGIES FOR COMPETITIVE ADVANTAGE

 Ability
to adjust to changes in product mix,
production volume, or design 1. Differentiation – better, or at least different (unique)
2. Cost leadership – cheaper
3. Response – more responsive
 Mass customization
 mass production of customized parts
 Dell Computers

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COMPETING ON DIFFERENTIATION EXPERIENCE DIFFERENTIATION

Uniqueness can go beyond both the physical
characteristics and service attributes to encompass
everything that impacts customer's perception of value
• Walt Disney Magic Kingdom – experience differentiation
• Hard Rock Cafe – dining experience (with music)
• Barbeque Nation
Engaging a customer with a product through imaginative
use of the five senses, so the customer “experiences” the
product
• Theme parks use sight, sound, smell, and participation
• Movie theatres use sight, sound, moving seats,
smells, and mists of rain

• Restaurants use music, live performance, smell, and

open kitchens
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COMPETING ON COST COMPETING ON RESPONSE

Provide the maximum value as perceived by customer.
Does not imply low quality.
• Speed: Amazon – 24 hr. delivery

• Southwest Airlines [USA]–

• Flexibility is matching market changes in design
• low fares and direct flights between major cities, use
innovation and volumes
secondary airports, no frills service, efficient utilization of
equipment – A way of life at Hewlett-Packard, Dell
• Walmart –
• Logistics costs, EDLP • Reliability is meeting schedules
– German machine industry, FedEx delivery
• Rajesh Exporter:
• Gold and Diamond Jewellery Manufacturer (World’s largest • Quickness in design, production, and delivery
gold refinery at Balerna, Switzerland.) SHUBH Jewellers in
– Johnson Electric, Pizza Hut
Karnataka 20 21

• Akasa Airline

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OM’S CONTRIBUTION TO STRATEGY

Achieving Competitive Advantage Through Operations

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