1. Competitiveness, Operations Strategy and Productivity

2. Competitiveness:
The extent that an organization meets the wants and needs of customers relative to others that offer similar goods or services

3. Marketing Influences Competitiveness by:
Identifiying consumer needs and desires
Pricing
Advertisement and promotion

4. Operations Influences Competitiveness Through (1 of 4):
1. Product and Service Design
2. Cost
3. Location
4. Quality and Reliability

5. Operations Influence Competitiveness Through (2 of 4):
5. Quick or Reliable Response
a. New Product Introduction Speed
b. Delivery Speed
c. Delivery Reliability
6. Service

6. Operations Influences Competitiveness Through (3 of 4):
7. Flexibility
a. in making alterations in design
b. in coping with changes in volume
c. in new product introduction
8. Inventory Management

7. Operations Influences Competitiveness Through (4 of 4):
9. Supply Chain Management
10. Service and Service Quality
11. Managers and Workers

8. Competing on Cost Eliminate all waste Invest in
Updated facilities & equipment
Streamlining operations
Training & development

9. Competing on Quality Please the customer
Understand customer attitudes toward and expectations of quality

10. Competing on Flexibility
Produce wide variety of products
Introduce new products
Modify existing products quickly
Respond to customer needs

11. Competing on Speed
Fast moves
Fast adaptations
Tight linkages

12. Why Some Organizations Fail? (1 of 2)
Too much emphasis on short-term financial performance
Failing to take advantage of strengths and opportunities
Failing to recognize competitive threats
Neglecting operations strategy

13. Why Some Organizations Fail?(2 of 2)
Too much emphasis in product and service design and not enough on improvement
Neglecting investments in capital and human resources
Failing to establish good internal communications
Failing to consider customer wants and needs

14. Mission Mission - where you are going?
The reason for existence for an organization
Provides boundaries & focus
© 1995 Corel Corp.
You might ask students to prepare for class by visiting several company web sites, and, for each company: locating the company mission, and printing a copy of the mission to bring to class. The students should also be asked to, if possible, determine the strategy used by the company to achieve its avowed mission. You might even ask that a student finding a mission statement that they believe of special interest, bring a copy of the statement on a transparency.
You might begin the class by asking students why a company’s mission is so important. Does it really convey important information, or is it, as some cynics might claim, simply an expression of wishful thinking?
Among other benefits, the mission provides an “umbrella” under which decisions should be made. This may be especially useful for a global enterprise.
If the students have obtained the mission statements of companies with which they are familiar, you might ask if their perception of the company suggests that it is fulfilling it published mission. If the answer is “No,” ask what suggests otherwise.

15. Mission of the Hard Rock Café
To spread the spirit of Rock ‘n’ Roll by delivering an exceptional entertainment and dining experience. We are committed to being an important, contributing member of our community and offering the Hard Rock family a fun, healthy, and nurturing work environment while ensuring our long-term success.

16. Mission/Strategy Mission - where you are going
Strategy - how you are going to get there; an action plan
The distinction between mission and strategy probably requires some discussion. The best approach might be to ask students, who have obtained the mission statements of companies with which they are familiar, to discuss their perception of the company strategy. There may also be companies which publish a statement of strategy as well their mission on their web site.

17. Strategy
Action plan to achieve mission (shows how mission will be achieved)
The company has a business strategy
Functional areas have strategies
© 1995 Corel Corp.

18. Mission/Goal/Strategy/Tactics
Mission: the reason for existence for an organization
Goals: Provide detail and scope of mission
Strategies: Plans for achieving organizational goals
Tactics: Actions taken to accomplish strategies. Answers the question: “How to reach the destination, following the strategy road map?”
© 1995 Corel Corp.

19. Planning and Decision Making
Mission
Goals
Organizational Strategies
Functional Goals
Finance Strategies
Marketing Strategies
Operations Strategies
Tactics
Tactics
Tactics
Operating procedures
Operating procedures
Operating procedures

20. Strategy Example Mission: Live a good life
Rita is a high school student. She would like to have a career in business, have a good job, and earn enough income to live comfortably
Mission: Live a good life
Goal: Successful career, good income
Strategy: Obtain a college education
Tactics: Select a college and a major
Operations: Register, buy books, take courses, study, graduate, get job

21. Examples of Strategies
Low cost
Scale-based strategies
Specialization
Flexible operations
High quality
Service
Rapid response

22. Quality and Time Strategies
Quality-based strategies
Focuses on maintaining or improving the quality of an organization’s products or services
Quality at the source
Time-based strategies
Focuses on reduction of time needed to accomplish tasks

23. Examples of Operations Strategies
Banks, ATMs
Convenience
Location
Disneyland
Nordstroms
Superior customer service
Service
Burger King
Supermarkets
Variety
Volume
Flexibility
Express Mail, Fedex,
One-hour photo, UPS
Rapid delivery On-time delivery
Time
Sony TV
Lexus, Cadillac
Pepsi, Kodak, Motorola
High-performance
design or high quality Consistent quality
Quality
U.S. first-class postage
Motel-6, Red Roof Inns
Low Cost
Price

24. Strategy Formulation Defining a primary task
Identification of distinctive competencies
Scanning the environment and make SWOT analysis
Identification of order winners & order qualifiers
Positioning the firm

25. Strategy Formulation Step 1: Defining A Primary Task
Define what the firm is in the business of doing. Define the competitive arena

26. Strategy Formulation Step 2: Identification of Distinctive Competencies
The special attributes or abilities possessed by the organization that give it a competitive edge. What the firm does better than anyone else (critical success factors, core competencies)
Develop Distinctive Competencies based on customer needs and on what the competitors doing

27. Strategy Formulation Step 3: Environmental Scanning & SWOT Analysis
The consideration of events and trends that present threats or opportunities for a company

28. Environmental Scanning: Key External Factors
Economic conditions
Political conditions
Legal environment
Technology
Competition
Customers and Markets
Suppliers
Distributors

29. Environmental Scanning: Key Internal Factors
Resources available (human resources, facilities and equipment, financial resources)
Existing and potential products and services
Technology
Stages of life cycles of current products

30. SWOT Analysis to Strategy Formulation
Mission
Internal
External S
trengths O
pportunities
Strategy
Internal
External W
eaknesses T
hreats
Competitive
Advantage

31. Strategy Formulation Step 4: Identification of Order Qualifiers and Order Winners

32. Order Qualifiers : Defined
Order qualifiers are the basic criteria that permit the firm’s products to be considered as candidates for purchase by customers.
These are the characteristics that customers perceive as minimum standards of acceptability to be considered as a potential purchase.

33. Order Winners: Defined
Order winners are the criteria that differentiate the products and services of the firm from others’.
These are the characteristics that cause the product to be perceived as better than competitors’ products

34. A brand name car can be an “order qualifier”
Repair services can be “order winners”
Examples: Warranty, Roadside Assistance, Leases, etc

35. Strategy Formulation Step 5: Positioning the Firm
The firm’s positioning strategy defines how it will compete in the marketplace, ie. what unique value it will deliver to the customer.
Choosing one or two important things on which to concentrate and doing them extremely well.

36. Organization Strategy/Operations Strategy
The organization strategy provides the overall direction for the organization. It is broad in scope covering the entire organization
Operations strategy is the approach consistent with organization strategy that is used to guide the operations function. It is narrower in scope, dealing with the operations aspect of the organization.

37. Organization Strategy
Relates to growth rate, market share
Operations Strategy
Relates to product design; choice of location, technology, new facilities

38. Operations Role in Corporate Strategy
Provide support for overall strategy of a firm
Serve as firm’s distinctive competence
Must be consistent
Must be consistent with overall strategy

39. Strategic Planning Mission and Vision Corporate Strategy Voice of the
Business
Customer
Marketing Strategy
Operations Strategy
Financial Strategy

40. Impetus for Strategy Change
Changes in the organization
Stages inthe product life cycle
Changes in the environment

41. Global Strategy
Strategic decisions must be made with respect to globalization
What works in one country may not work in another
Strategies must be changed to account for these differences
Other issues
Political, social, cultural, and economic differences

42. Strategic Decisions in Operations
Products
Processes, Technology
Capacity
Job design
Quality
Facilities
Sourcing
Services
Operating Systems

43. Some Strategic OM Decisions and their effects
Decision Area
Affects
Product and service design
Costs, quality liability and environmental
Capacity
Cost structure, flexibility
Process selection and layout
Costs, flexibility, skill level, capacity
Work design
Quality of work life, employee safety, productivity
Location
Costs, visibility
Quality
Ability to meet or exceed customer expectations

44. Productivity

45. What is Productivity?
Productivity is a common measure of how well resources are being used.
Productivity =
Output
Input

46. Typical Impacts of Productivity Improvement
As productivity improved Costs were decreased Wages increased
Parts per man hour 95
100
105
110
115
Year A
Year B
Year C
Cost per unit decreased
$1.50
$1.75
$2.00
$2.25
Year A
Year B
Year C
Average worker's annual cash compensation increased
24000
25000
26000
27000
Year A
Year B
Year C

47. Measures of Productivity (1 of 2)
Partial measures
output/(single input)
Multi-factor measures
output/(multiple inputs)
Total measure
output/(total inputs)

48. Measures of Productivity (2 of 2)
Partial Output Output Output Output measures Labor Machine Capital Energy
Multifactor Output Output
measures Labor + Machine Labor + Capital + Energy
Total Goods or Services Produced
measure All inputs used to produce them

49. Examples of Partial Productivity Measures
Units of output per kilowatt-hour
Dollar value of output per kilowatt-hour
Energy Productivity
Units of output per dollar input
Dollar value of output per dollar input
Capital Productivity
Units of output per machine hour
Value-added per machine hour
Machine Productivity
Units of output per labor hour
Units of output per shift
Value-added per labor hour
Labor Productivity

50. Typical Measures of Productivity
Restaurant
Customers (meals) per labor hour
Retail store
Sales per square foot
Chicken farm
Lbs of meat per lb. of feed
Utility plant
Kilowatts per ton of coal
Paper mill
Tons of paper per cord of wood

51. Measurement Problems
Quality differences may distort productivity measurements
External elements may cause an increase or decrease in productivity
Precise units of measure may be lacking
Technological differences may lead to misleading results.

52. Productivity Growth Productivity Growth =
Current Period Productivity – Previous Period Produc.
Previous Period Productivity
Productivity Growth is a key factor in a contry’s rate of inflation and the standard of living of its people

53. Process Yield
Process yield is the ratio of output of good product to input
Defective product is not included in the output
Service example:
Ratio of cars rented to cars available to rent

54. Productivity improves when firms:
Become more efficient
Downsize
Expand
Retrench
Achieve breakthroughs

55. Factors Affecting Productivity (1 of 3)
Standardization
Quality
Technology
Use of Internet, fax machines, , computerized billing, software
Searching for lost or misplaced items
Scrap rates
Labor turnover, layoffs, new workers
Safety
Bottlenecks

56. Factors Affecting Productivity (2 of 3)
Methods
Design of the workspace
Incentive plans that reward productivity
Capacity utilization
Location
Layout
Inventory
Scheduling

57. Factors Affecting Productivity (3 of 3)
Shortage of IT workers and other technical workers
Equipment breakdowns
Part and material shortages
Inadequate investment in training & education of the employees

58. Key Steps for Improving Productivity
Develop productivity measures
Determine critical (bottleneck) operations
Develop methods for productivity improvements
Establish reasonable goals
Get management support
Measure and publicize improvements
(Don’t confuse productivity with efficiency)

59. Service Productivity Typically labor-intensive
Frequently individually processed
Often an intellectual task is performed by professionals
Often difficult to mechanize or automate

60. Productivity in the ‘90s – 7 – 6 – 5 – 4 – 3 – 2 – 1 – 0 – -1 – -2 –
| | | | | | | | | | | |
‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘ –
7 –
6 –
5 –
4 –
3 –
2 –
1 –
0 –
-1 –
-2 –
-3 –
United States
Germany
Japan