Chapter 2 Operations Strategy and Competitiveness

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Presentation transcript:

Chapter 2 Operations Strategy and Competitiveness Competitive Dimensions Order Qualifiers and Winners A Framework for Manufacturing Strategy Service Strategy Capacity Capabilities Productivity Measures

Competitive Dimensions Cost Product Quality and Reliability Delivery Speed Delivery Reliability Coping with Changes in Demand Flexibility and New Product Introduction Speed Other Product-Specific Criteria

Dealing with Trade-offs Cost Quality Delivery Flexibility

Order Qualifiers and Winners - Terry Hill They are the basic criteria that permit the firms products to be considered as candidates for purchase by customers Order winners? They are the criteria that differentiates the products and services of one firm from another. 6

Service Breakthroughs A brand name car can be an “order qualifier” Repair services can be “order winners”

Operations Strategy Framework Customer Needs New : Old product : product Competitive dimensions & reqs. Quality, Dependability, Speed, Flexibility, and Price Operations & Supplier capabilities Technology People Systems R&D CIM JIT TQM Distribution Support Platforms Financial management Human resource management Information management Enterprise capabilities OM Competitive issues 8

Steps in Developing a Manufacturing Strategy 1. Segment the market according to the product group. 2. Identify product requirements, demand patterns, and profit margins of each group. 3. Determine order qualifiers and winners for each group. 4. Convert order winners into specific performance requirements.

Distinctive Competencies Organizational strengths (SWOT) possessed by few competing firms Exploiting can lead to competitive advantage

Service Strategy Capacity Capabilities Process-based Capacities that transforms material or information and provide advantages on dimensions of cost and quality. Systems-based Capacities that are broad-based involving the entire operating system and provide advantages of short lead times and customize on demand. Organization-based Capacities that are difficult to replicate and provide abilities to master new technologies.

Measures of Productivity in OM

Total Measure Productivity Total measure Productivity = Outputs Inputs or = Goods and services produced All resources used 17

Partial Measure Productivity Partial measures of productivity = Output or Output or Output or Output Labor Capital Materials Energy 17

Multifactor Measure Productivity Multifactor measures of productivity = Output . Labor + Capital + Energy or Labor + Capital + Materials 17

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. Last week the same crew used only 2000 hours of labor to process 480 forms. Which productivity measure should be used? Is productivity increasing or decreasing? By what percent?

ANOTHER EXAMPLE: CALCULATE: OUPUT = $400,000 IN AUTO SALES ASSUME TOTAL INPUTS TO BE: LABOR + MATERIALS + ENERGY + CAPITAL WHERE: LABOR = $100,000 MATERIALS - $120,000 ENERGY = $50,000 CAPITAL = $ $75,000 CALCULATE: PARTIAL MEASURE FOR LABOR MULTIFACTOR MEASURE FOR MATERIALS AND ENERGY TOTAL FACTOR