1. PRODUCTIVITY, COMPETITIVENESS, AND STRATEGY
Introduction to Operations Management

2. Introduction to Operations Management
Productivity
Partial measures
output/(single input)
Multi-factor measures
output/(multiple inputs)
Total measure
output/(total inputs)
Introduction to Operations Management

3. Measures of Productivity
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
Introduction to Operations Management

4. Introduction to Operations Management
Example
10,000 Units Produced
Sold for $10/unit
500 labor hours
Labor rate: $9/hr
Cost of raw material: $5,000
Cost of purchased material: $25,000
What is the
labor productivity?
Introduction to Operations Management

5. Example--Labor Productivity
10,000 units/500hrs = 20 units/hour
or we can arrive at a unitless figure
(10,000 unit*$10/unit)/(500hrs*$9/hr) = Can you think of any advantages or disadvantages of each approach?
Introduction to Operations Management

6. Example--Multifactor Productivity
MFP = Output
Labor + Materials
MFP = (10,000 units)*($10)
(500)*($9) + ($5000) + ($25000)
MFP = 2.90
Introduction to Operations Management

7. Factors Affecting Productivity
Capital
Quality
Technology
Management
Introduction to Operations Management

8. Improving Productivity
Develop productivity measures
Determine critical operations
Develop methods for productivity improvements
Establish reasonable goals
Get management support
Measure and publicize improvements
Don’t confuse productivity with efficiency
Introduction to Operations Management

9. Introduction to Operations Management
Bottleneck Operation
Operation
Operation
Bottleneck
Operation
Operation
Operation
Introduction to Operations Management

10. Introduction to Operations Management
Competitiveness
Price
Flexibility
Quality
Differentiation
Time
Introduction to Operations Management

11. Mission/Strategy/Tactics
How does mission, strategies and tactics relate to
decision making and distinctive competencies?
Introduction to Operations Management

12. Introduction to Operations Management
Strategy
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
Introduction to Operations Management

13. Introduction to Operations Management
Strategy Example
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
Introduction to Operations Management

14. Planning and Decision Making
Mission
Goals
Organizational strategy
Functional strategies
Finance
Marketing
Operations
Tactics
Tactics
Tactics
Finance
operations
Marketing
operations
Operations
operations
Introduction to Operations Management

15. Introduction to Operations Management
Strategy Formulation
Distinctive Competencies
The special attributes or abilities that give an organization a competitive edge.
Environmental Scanning
The considering of events and trends that present threats or opportunities for a company.
Introduction to Operations Management

16. Introduction to Operations Management
New Strategies
Quality-based strategies
Focuses on quality in all phases of an organization
Quality at the source
Time-based strategies
Focuses on reduction of time needed to accomplish tasks
Introduction to Operations Management

17. Time-based Strategies
JAN
FEB
MAR
APR
MAY
JUN
Planning
Designing
Processing
Changeover
On time!
Delivery
Introduction to Operations Management

18. Introduction to Operations Management
Production
Craft Production - Highly skilled workers use simple flexible tools to produce small quantities of customized goods.
Mass Production - Lower-skilled workers use specialized machinery high volumes of standardized goods.
Lean Production - Uses minimal amounts of resources high volume of high-quality goods.
Introduction to Operations Management