Operations Management: Competitiveness, Strategy, and Productivity PDF

OPERATIONS MANAGEMENT: COMPETITIVENESS, STRATEGY, AND PRODUCTIVITY ABIOG, MARK RAINIER ALARCON, JAN RITZI LEY T. ALEJANDRO, SHERILYN P. AMBROCIO, ANDREA NICOLE  TABLE OF CONTENTS: COMPETITIVENESS PRODUCTIVITY WHY SOME ORGANIZATIONS FAIL...

OPERATIONS MANAGEMENT: COMPETITIVENESS, STRATEGY, AND PRODUCTIVITY ABIOG, MARK RAINIER ALARCON, JAN RITZI LEY T. ALEJANDRO, SHERILYN P. AMBROCIO, ANDREA NICOLE  TABLE OF CONTENTS: COMPETITIVENESS PRODUCTIVITY WHY SOME ORGANIZATIONS FAIL COMPUTING PRODUCTIVITY FACTORS THAT AFFECT PRODUCTIVITY MISSION AND STRATEGIES IMPROVING PRODUCTIVITY STRATEGIES AND TACTICS STRATEGY FORMULATION STRATEGIC OPERATIONS MANAGEMENT DECISION AREAS COMPETITIVENESS Business organizations compete through some combination of price, delivery time, and product or service differentiation. HOW MARKETING INFLUENCES COMPETITIVENESS: Identifying consumer wants and/or needs is a basic input in an organization's decision-making process, and central to competitiveness. Price and quality are key factors in consumer buying decisions. Advertising and promotion are ways organizations can inform potential customers about features of their products or services, and attract buyers, HOW OPERATIONS INFLUENCES COMPETITIVENESS: Product and service design should reflect joint efforts of many areas of the firm to achieve a match between financial resources, operations capabilities, supply chain capabilities, and consumer wants and needs. Cost of an organization's output is a key variable that affects pricing decisions and profits. Location can be important in terms of cost and convenience for customers. Consumers judge quality in terms of how well they think a product or service will satisfy its intended purpose. Quick response can be a competitive advantage. One way is quickly bringing new or improved products or services to the market. Another is being able to quickly deliver existing products and services to a customer after they ordered, and another is quickly handling customer complaints. Flexibility is the ability to respond to changes. Changes might relate to alterations in design features of a product or service, or to the volume demanded by customers, or the mix of products or services offered by an organization. High flexibility can be a competitive advantage in a changeable environment. Inventory management can be a competitive advantage by effectively matching supplies of goods with demand. Service might involve after-sale activities customers perceive as value added, or it might involve extra attention while work is in progress.  WHY ORGANIZATIONS FAIL? Neglecting operations strategy. Failing to take advantage of strengths and opportunities, and/or failing to recognize competitive threats. Neglecting investments in capital and human resources. Failing to establish good internal communications and cooperation among different functional areas. Failing to consider customer wants and needs. MISSION AND STRATEGIES MISSION An organization’s mission is the reason for its existence. The mission statement serves as the basis for organizational goals. Goals serve as a foundation for the development of organizational strategies. Organizational strategy is important because it guides the organization. Strategies can be the main reason for the success or failure of an organization. THREE BASIC BUSINESS STRATEGIES: Low Cost Responsiveness Differentiation from competitors STRATEGIES AND TACTICS Goals are the destinations while strategies are the roadmaps for reaching the destination. Organizational strategies are the overall strategies of the organization, while the functional strategies are the ones that are used by each functional area of the organization. TACTICS are the methods and actions used to accomplish strategies. DIFFERENT ORGANIZATION STRATEGIES: Low Cost Specialization Flexible Operations High Quality Sustainability STRATEGY FORMULATION SWOT Analysis - Strengths, Weaknesses, Opportunities, and Threats Michael Porter’s Five Forces Model The threat of new competition The threat of substitute products and services The bargaining power of customers The bargaining power of suppliers The intensity of competition ORDER QUALIFIERS those characteristics that potential customer perceive as minimum standards of acceptability for a product to be considered for purchase. ORDER WINNERS characteristics of an organization’s goods or tservices that causes them to be perceived as better than the competition. ENVIRONMENTAL SCANNING is the monitoring of events and trends that present either threats or opportunities for the organization. SUPPLY CHAIN STRATEGY OPERATION STRATEGY specifies how the supply chain function to provides the overall direction for the achieve supply chain goals. organization. It is a broad scope, covering the entire organization. SUSTAINABILITY STRATEGY placing increasing emphasis or corporate sustainability practices in the form of governmental regulations and interest groups. GLOBAL STRATEGY involves exporting and importing products.  STRATEGIC OPERATIONS MANAGEMENT DECISION AREAS  QUALITY AND TIME STRATEGIES traditional strategies of business organizations have tended to emphasize cost minimization or product differentiation. TWO FACTORS OF QUALITY AND TIME STRATEGIES: QUALITY - BASED: focus on maintaining or improving the quality of an organization. TIME - BASED: focus on reducing the time required to accomplish various activities in a process. Organizations have achieved time and reduction in some of the following: Planning Time Product/ Service design time Processing Time Changeover Time Response time for Complaints Agile Operations: is a strategic approach for competitive advantage the emphasizes the use of flexibility to adapt and prosper in an environment change. PRODUCTIVITY PRODUCTIVITY is an index that measures output (goods and services) relative to the input (labor, materials, energy, and other resources) used to produce it. Output Productivity = Input Productivity is particularly important for organizations that use a strategy of low cost, because the higher the productivity, the lower the cost of the output. PRODUCTIVITY RATIO Productivity ratios can be computed at many levels: for departments, for individual operations, for entire enterprises, or even for entire nations. These ratios are crucial planning and management tools for businesses. Productivity ratios serve multiple vital purposes in commercial situations. Workforce Planning: Calculating the required manpower complement by taking into account the productivity of the current workforce. Equipment Scheduling: Making the best use of equipment and machinery to increase productivity and decrease downtime. Financial Analysis: Comparing outputs with inputs used to determine profitability and cost-effectiveness.  Current Productivity - Previous Productivity Productivity Growth = x 100 Previous Productivity 84 - 80 Productivity Growth = x 100 = 5% 80 PRODUCTIVITY RATIO IS IMPORTANT FOR: Nonprofit Organizations Profit Based Organizations Nation / Country COMPUTING PRODUCTIVITY Productivity measures can be based on: Partial Productivity: Single Input Output Output Output Labor Machine Machine Multifactor Measures: More than one input Output Output Labor + Machine Labor + Capital + Energy Total Measures: All inputs Goods or services produced Output All inputs used to produce them Machine WHY PRODUCTIVE MEASURES ARE IMPORTANT? It can be used to track performance over time. It can also be used to judge the performance of an entire industry or the productivity of a country as a whole. It also serves as the scorecards of the effective use of resources. FACTORS THAT AFFECT PRODUCTIVITY Standardizing processes and procedures wherever possible to reduce variability can have a significant benefit for both productivity and quality. Quality differences may distort productivity measurements. Use of the Internet can lower costs of a wide range of transactions, thereby increasing productivity. Computer viruses can have an immense negative impact on productivity. Searching for lost or misplaced items wastes time, hence negatively affecting productivity FACTORS THAT AFFECT PRODUCTIVITY New workers tend to have lower productivity than seasoned workers. Labor turnover has a negative effect on productivity; replacements need time to get up to speed. Design of the workspace can impact productivity. For example, having tools and other work items within easy reach can positively impact productivity. Incentive plans that reward productivity increases can boost productivity IMPROVING PRODUCTIVITY Develop productivity measures for all operations. Measurement is the first step in managing and controlling an operation Develop methods for achieving productivity improvements, such as soliciting ideas from workers (perhaps organizing teams of workers, engineers, and managers). Establish reasonable goals for improvement. Make it clear that management supports and encourages productivity improvement. Consider incentives to reward workers for contributions. Measure improvements and publicize them. Thank you! ABIOG, MARK RAINIER ALARCON, JAN RITZI LEY T. ALEJANDRO, SHERILYN P. AMBROCIO, ANDREA NICOLE