Operations Management MD021

1. Operations Management (MD021) Topic 1 Competitiveness, Strategy and Productivity

2. Agenda Competitiveness & Competing via Operations Overview of Strategy Measuring Productivity

3. Why do organizations fail to survive?

4. Many Organizations Fail Because they Ignore Operations Too much emphasis on short-term financial performance Failing to take advantage of strengths and opportunities Failing to recognize competitive threats Neglecting operations strategy 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

5. Competitiveness

6. Competitiveness

7. Businesses Can Compete in Many Ways … Including Operations Competing with Marketing Identify customer wants/needs Price appropriately Advertise/promote Competing with Operations Goods/service design Cost Facility location Quality Quick response/delivery Flexible processes Inventory management Supply Chain Management Stellar service

8. Strategy

9. Strategy Strategies Plans for achieving organizational goals Mission The reason for existence for an organization Mission Statement Answers the question “What business are we in?” Goals Provide detail and scope of mission Tactics The methods and actions taken to accomplish strategies

10. Examples of Strategies Low cost Fast Growth; Scale-based strategies Specialization Flexible operations Fastest delivery High quality Service

11. A Top-Down View of Strategy Formation

12. Operations Strategy Operations Strategy – the approach, consistent with organization strategy, that is used to guide the operations function.

13. Operations Strategy Formulation How will operations support the organization’s strategies? Identify distinctive competencies Environmental scanning SWOT Identify Order qualifiers Identify Order winners

14. Strategy and Tactics Distinctive Competencies The special attributes or abilities that give an organization a competitive edge. Price Quality Time Flexibility Service Location

15. Examples of Distinctive Competencies Employed by Firms

16. Order Qualifiers Get You In The Door, Order Winners Win The Order Order qualifiers Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential purchase Order winners Characteristics of an organization’s goods or services that cause it to be perceived as better than the competition

17. How Has Operations Strategy Changed Over Time?

18. Operations Strategy Across the Ages

19. Productivity

20. Productivity Productivity A measure of the effective use of resources Usually expressed as the ratio of output to input

21. Many Factors and Decisions Can Affect Productivity Capital Quality Technology Management decisions Standardization Use of Internet Computer viruses Searching for lost or misplaced items Scrap rates New workers Safety Shortage of IT workers Layoffs Labor turnover Design of the workspace Incentive plans that reward productivity

22. When Did Productivity Become Important to Manage? Why?

23. There Are Several Ways to Measure Productivity

24. Some Partial Productivity Measures

25. Managerial Tactics for Improving Productivity Develop productivity measures Determine critical (bottleneck) operations Develop methods for productivity improvements Establish reasonable goals Get management support for productivity programs Measure and publicize improvements