Operations Management - BMS 4/OM... · Operations Management 12th Edition by William J. Stevenson...
Transcript of Operations Management - BMS 4/OM... · Operations Management 12th Edition by William J. Stevenson...
Session 2 – Leaning outcome
• Understand the importance of Competitiveness, Strategy, and Productivity in todays global business environment.
• Explain the relationships of Competitiveness, Strategy, and Productivity in todays business
• Explain the Key factors to be considered when developing winning operations strategy in an organization.
Session 2 - Coverage
1. Overall Business Strategy to Operations Strategy
2. Operations Decisions
3. Competitive Dimensions
4. Order Qualifiers and Winners
5. Productivity as a Measure of Competitiveness
The three separate but related topics that are vitally important to business organizations.
Competitiveness - The effectiveness of an organization in the
marketplace relative to other organizations
that offer similar products or services
Strategy - The plans that determine how an organization
pursues its goals.
Productivity - the effective use of resources
What is Competitiveness?
Competitiveness - How effectively an organization meets
the wants and needs of customers
relative to others that offer similar
goods or services.
1. Identifying consumer wants and/or needs in an
organization’s decision-making process in
providing goods and/or services.
2. Understand the trade-off decision consumers
make between price and quality (The key factors in
consumer buying decisions)
3. Effective advertising and promotion for their
products or services to attract and retain
customers.
How do organizations compete?
What is strategy?
Organizational strategy is providing direction for, and
alignment of, the goals and strategies of the functional
units.
Define the position of the organization relative to its
environment
Move the organization closer to its long-term goals.
• Low cost.
• Responsiveness.
• Differentiation from competitors.
There are three basic business strategies
Mission
and Vision
Corporate
Strategy
Operations
Strategy
Marketing
Strategy
Financial
Strategy
Strategic Planning
The mission statement answers the question “What business are we in?”
Operations Strategy
•Involves decisions that relate to design of a process and infrastructure needed to support the process.
‘… the decisions which shape the long-term
capabilities of the company’s operations and
their contribution to overall strategy through
the on-going reconciliation of market
requirements and operations resources …’
The Operations function can provide a competitive
advantage through its performance at the five competitive
objectives
Cost
Dependability
Flexibility
Quality
Speed
Different competitive factors imply different performance objectives
Competitive factorsIf the customers value these ...
Performance objectivesThen, the operations will need
to excel at these ...
Low price Cost
High quality Quality
Fast delivery Speed
Reliable delivery Dependability
Innovative products and services Flexibility (products and services)
Wide range of products and services Flexibility (mix)
Ability to change the timing or quantity of products and services
Flexibility (volume and/or delivery)
Competitive PrioritiesCorporate strategy• Goals
• Core competencies
• Environmental responses
• New products/services
• Global strategies
Market analysis• Segmentation
• Needs assessment
New Product for New Market
Existing product for New Market
New product for existing market
Existing product existing market
New ExistingProduct
New
ExistingMa
rke
t
SWOT&
Porter’s 5 Forces
Strategy and Decisions
Operations strategy
• Process decisions
• Quality decisions
• Capacity, location, and layout decisions
• Operating decisions
Market analysis
Competitive priorities
Corporate strategy
Services Manufacturing
• Standardized services
• Assemble-to-order
• Customized services
• Make-to-stock
• Assemble-to-order
• Make-to-order
Capabilities
Two important factors the organizations must take into account in formulating a successful strategy:
1. Order qualifiers
2. Order winners.
Order Qualifiers
•Defined• Order qualifiers are the basic criteria that permit
the firms products to be considered as candidates for purchase by customers
•A brand name car can be an “order qualifier”
Order Winners
•Defined• Order winners are the criteria that differentiates the
products and services of one firm from another
• Repair services can be “order winners”
• Examples: Warranty, Roadside Assistance,Leases, etc
Productivity
•Defined
Productivity is a common measure on how wellresources are being used. In the broadest sense, itcan be defined as the following ratio:
OutputsInputs
Total Measure Productivity
Total Measure Productivity = OutputsInputs
or
= Goods and services produced
All resources used
Partial Measure Productivity
• Partial measures of productivity =
Output or Output or Output or OutputLabor Capital Materials Energy
Multifactor Measure Productivity
• Multifactor measures of productivity =
Output .Labor + Capital + Energy
or
Output .Labor + Capital + Materials
Example 1
2014 2015
Output: Sales value of production 82000 95000
Input: LabourRaw materials and suppliesCapitalOther
22000800070003500
350001500012000
5000
Calculate,
1. Total productivity
2. Partial Measurement
3. Multifactor ratios
Example 2
Operations Management
A garment manufacturing company has provided the following
data.
2016 - (Rs 000)
Material 50000
Labour 65000
Energy 25000
Other expenses 10000
By -Products 15000
Sales value of the main production 185000
Calculate,
1. Total productivity ratio
2. Material, Labour and Energy partial productivity ratios
3. Multifactor productivity ratios
Improving Productivity• Develop productivity measures
• Look at the system as a whole
• Develop methods for productivity improvements
• Establish reasonable goals
• Measure improvements
1. Overall Business Strategy to Operations Strategy
2. Operations Decisions
3. Competitive Dimensions
4. Order Qualifiers and Winners
5. Productivity as a Measure of Competitiveness
Session Title :Competitiveness, Operations strategy and Productivity
Essential Reading
Chapter 2
Operations Management 12th Edition by William J. Stevenson Published by McGraw-Hill Education (2015)
1.Define the competitiveness of an organization.
2.List several ways that business organizations
compete in the market
3.Name several reasons why business
organizations fail.
Review Questions