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Productivity AND Operations Strategy in a Global Enterprise

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AND Operations Strategy in a Global Enterprise Chapter 1 (Contd.) Chapter 2 Competitiveness How effectively an organization meets the needs of customers relative to ... – PowerPoint PPT presentation

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Title: Productivity AND Operations Strategy in a Global Enterprise


1
ProductivityAND Operations Strategy in a Global
Enterprise
  • Chapter 1 (Contd.)
  • Chapter 2

2
Competitiveness
  • How effectively an organization meets the needs
    of customers relative to others that offer
    similar goods or services.
  • Attributes
  • Price.
  • Quality.
  • Product or service differentiation.
  • Flexibility.
  • Time.
  • Service.
  • Location.

3
Mission / Strategy / Tactics
  • Mission
  • The reason for existence for an organization
  • Mission Statement
  • A clear statement of purpose
  • Strategy
  • A plan for achieving organizational goals
  • Tactics
  • The actions taken to accomplish strategies

4
Organizational Decision Making Hierarchy
5
Strategy Development Process
  • Corporate Strategy.
  • Specific Business Resource acquisition and
    allocation.
  • Strategic Business Units (SBUs).
  • E.g. Cara Harveys and Swiss Chalet Kelseys
    Second Cup Airline food catering and, Summit.
  • Business Strategy.
  • Market requirement Environment Organizational
    competencies.
  • Michael Porters 3 generic strategies
  • Cost Leadership.
  • Differentiation.
  • Market Segmentation.

6
Strategy Development Process
  • Functional Strategies
  • Marketing Operations Finance / Accounting HR,
    etc.
  • Operations Strategy
  • How OM function contributes to a firms ability
    to achieve competitive advantage in the market
    place.
  • Strategy Formulation involves
  • Distinctive Competencies.
  • The special attributes or abilities that give an
    organization a competitive edge.
  • Environmental Scanning.
  • Considering of events and trends that present
    threats or opportunities for a company.

7
Examples of Distinctive Competencies
8
Environmental Scanning
Environmental Analysis Identify the strengths,
weaknesses, opportunities, and threats
(SWOT). Understand the environment, customers,
industry, and competitors. External and Internal
Factors.
Determine Corporate Mission State the reason for
the firms existence and identify the product /
service it wishes to create.
Form a Strategy Build a competitive advantage,
such as low price, design or volume flexibility,
quality, quick delivery, dependability,
after-the-sale services, broad product
lines. Account for Order Winners and Order
Qualifiers.
9
Operations Strategy
  • Means Adding Value for the Customer.
  • Goal should be to maximize the value added to the
    goods and services that are provided by the firm.

Maximize Value Added
Transformation Process
Inputs (customers and/or
materials)
Outputs (goods and services)
10
Productivity A Measure of Success
  • An index that measures output (goods and
    services) relative to the input (capital, labor,
    energy, materials) used to produce them.
  • Is distinct from efficiency.
  • Can be computed for a single operation, a
    department, an organization, or an entire
    country.
  • For non-profit organizations, higher productivity
    implies lower cost.
  • For profit-based organizations, productivity
    determines the competitiveness of an
    organization.
  • A relative measure. It is the increase in
    productivity from one period to the next relative
    to the productivity in the preceding period.

11
Measures of Productivity
  • Partial Measures
  • A ratio of output to only one input (e.g. labor
    productivity, machine utilization, energy
    efficiency).
  • Multifactor Measures
  • A ratio of output to several, but not all inputs.
  • Total Productivity Measure.
  • The ratio of output to all inputs.

12
Example 1
  • The manager of a crew that installs carpeting
    has tracked the crews output over the past
    several weeks, obtaining these figures

Compute the labor productivity for each of the
weeks. Based on calculations, what can you
conclude about crew size and productivity?
Calculate the labor productivity growth for weeks
2 to 6.
13
Example 2
  • Compute the multifactor productivity measure for
    each of the weeks shown below. What do the
    productivity figures suggest? Assume 40-hour
    weeks and an hourly wage of 12. Overhead is 1.5
    times weekly labor cost. Material cost is 6 per
    kilogram. Selling price is 140 per unit.

14
Example 3
  • A company that makes shopping carts for
    supermarkets and other stores recently purchased
    some new equipment that reduces the labor content
    of the jobs needed to produce the shopping carts.
    Prior to buying the new equipment, the company
    used five workers, who produced an average of 80
    carts per hour. Labor cost was 10 per hour and
    machine cost was 40 per hour. With the new
    equipment, it was possible to transfer one of the
    workers to another department, and equipment cost
    increased by 10 per hour while output increased
    by four carts per hour.
  • a) Compute labor productivity under each system.
    Use carts per worker per hour as the measure of
    labor productivity.
  • b) Compute the multifactor productivity under
    each system. Use carts per dollar cost (labor
    plus equipment) as the measure.
  • c) Comment on the changes in productivity
    according to the two measures, and which one you
    believe is more pertinent for this situation.

15
Factors Affecting Productivity
16
Improving Productivity
  • Developing productivity measures.
  • Determine critical (bottleneck) operations.
  • The capacity of the bottleneck operation is less
    than the combined capacities of the operations
    that provide input.
  • Productivity improvements to any non-bottleneck
    operation will not affect the productivity of the
    system. Improvements in bottleneck operation will
    lead to increased productivity.
  • Develop methods for productivity improvements.
  • Establish reasonable goals.
  • Get management support.
  • Measure and publicize improvements.
  • Dont confuse productivity with efficiency.

17
Productivity in the Service Sector
  • Typically labor intensive.
  • Frequently individually processed.
  • Often an intellectual task performed by
    professionals.
  • Often difficult to mechanize.
  • Often difficult to evaluate for quality.
  • High degree of variability in requirements.
  • Almost little or no uniformity in end results.
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