Trends in Operations

Management
 Business Trends that have
an Impact on OM
1. Growth of service sector
2. Productivity changes
3. Global competitiveness
4. Quality, time, and
technological change
5. Environmental, ethical, and
diversity issues
 1. Service Sector Growth
Services may be divided into three
main groups such as:
a. Government ( local, regional,
national)
b. Wholesale and retail sales
c. Other services ( transportation,
public utilities, real estate,
etc.)
 2. Productivity Changes
Productivity – the ratio of outputs (
goods/services) to inputs ( wages, cost
of production, etc.)
Productivity = Output
Input
Measures of Productivity
1. Single Productivity
Labor productivity – an index of
the output per person or hour worked
 Example:
Three employees processed 600
insurance policies last week. They
worked 8 hours per day, 5 days per
week.
Labor productivity = 600 policies
( 3 employees)(40 hours/employee)

= 5 policies/hour
2. Multifactor productivity – an index
of the output provided by more than
one of the resources used in
production
Example:
A team of workers made 400 units of a
product, which is valued by its
standard cost of P10 each. The
accounting department reported that
for this job the actual costs were P400
for labor, P1,000 for materials, and
P300 for overhead.
Multifactor productivity
= (400 units) ( P10/unit)
P400+ P1,000 + P300
= P4,000
P1,700
= 2.35
 3. Global Competition
Strong global competition affects
industries everywhere. In order to
prosper, they must view customers,
suppliers facility locations, and
competitors in global terms.
 4. Competition based on quality,
time, and technology
- Quality = Part of the success of
foreign competitors has been their
ability to provide products and services
of high quality at reasonable prices.
- Time = Firms compete on the basis
of filling orders earlier than the
competition, introducing products and
services quickly, and reaching the
market first.
- Technological change = affects the
design of new products and services
and the production processes.
Technology is important in linking the
firms internally and externally with
customers and strategic partners.
- The right choices and effective
management of technology can give a
firm a competitive advantage.
 5. Environmental, ethical, and
Work-force Diversity issues
Firms, to be more ethical in doing
business;
-have responsibilities that go beyond
producing goods and services at a
profit;
- Help solve important social
problems;
- Respond to a broader constituency
than shareholders alone;
- Have impacts beyond simple
marketplace transactions; and
- Serve a range of human values
that go beyond economic values.