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McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved 1-1

2 Chapter 2 Operations and Supply Strategy 1-2 .

3 OBJECTIVES • Operations and Supply Strategy • Competitive Dimensions • Order Qualifiers and Winners • Strategy Design Process • A Framework for Manufacturing Strategy • Service Strategy Capacity Capabilities • Productivity Measures 1-3 .

4 What is Operations and Supply Strategy? • Operations and supply strategy is concerned with setting broad policies and plan for using the resources of a firm to best support its long-term competitive strategy. 1-4 .

5 Competitive Dimensions • Cost or Price – Make the Product or Deliver the Service Cheap • 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 Its Volume • Flexibility and New Product Introduction Speed – Change It • Other Product-Specific Criteria – Support It 1-5 .

For Forexample. problems. ififwe wereduce reduce costs costsby byreducing reducingproduct product quality qualityinspections. 1-6 . example. problems. quality. 6 Dealing with Trade-offs For Forexample.we wemight mightreduce reduceproduct productquality. inspections. ifif we we improve improvecustomer customer Cost service serviceproblem problemsolving solving by bycross-training cross-training Flexibility Delivery personnel personneltotodeal dealwith withaa wider-range wider-rangeofof Quality problems. example.they theymaymay become becomeless lessefficient efficient at at dealing dealingwith with commonly commonly occurring occurringproblems.

7 Order Qualifiers and Winners Defined •Order qualifiers are the basic criteria that permit the firms products to be considered as candidates for purchase by customers •Order winners are the criteria that differentiates the products and services of one firm from another 1-7 .

8 Operations and Supply Strategy Framework 1-8 .

it can be defined as the following ratio: Outputs Inputs 1-9 . 9 What is Productivity? Defined Productivity is a common measure on how well resources are being used. In the broadest sense.

10 Total Measure Productivity Total Measure Productivity = Outputs Inputs or = Goods and services produced All resources used 1-10 .

11 Partial Measure Productivity Partial measures of productivity = Output or Output or Output or Output Labor Capital Materials Energy 1-11 .

12 Multifactor Measure Productivity Multifactor measures of productivity = Output . Labor + Capital + Energy or Output . Labor + Capital + Materials 1-12 .

productivity is decreasing slightly. and this week’s productivity is = 560/2400 = 0. So. 1-13 . Last week the same crew used only 2000 hours of labor to process 480 forms. Which productivity measure should be used? Answer: Could be classified as a Total Measure or Partial Measure. Is productivity increasing or decreasing? Answer: Last week’s productivity = 480/2000 = 0.24. 13 Example of Productivity Measurement You have just determined that your service employees have used a total of 2400 hours of labor this week to process 560 insurance forms.23.

14 End of Chapter 2 1-14 .