Title: Productivity AND Operations Strategy in a Global Enterprise
1ProductivityAND Operations Strategy in a Global
Enterprise
- Chapter 1 (Contd.)
- Chapter 2
2Competitiveness
- 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.
3Mission / 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
4Organizational Decision Making Hierarchy
5Strategy 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.
6Strategy 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.
7Examples of Distinctive Competencies
8Environmental 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.
9Operations 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)
10Productivity 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.
11Measures 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.
12Example 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.
13Example 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.
14Example 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.
15Factors Affecting Productivity
16Improving 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.
17Productivity 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.