Dr. Rameez Khalid, PMP, CQSSBB Faculty, Department of Management

Institute of Business Administration, Karachi

Competitiveness

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Businesses Compete Using Marketing

• Identifying consumer wants and needs • Pricing • Advertising and promotion

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Businesses Compete Using Operations

• Product and service design • Cost • Location • Quality – how much a product/service satisfies its intended purpose

• Quick response

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Businesses Compete Using Operations

• Flexibility – ability to respond to changes

• Inventory management • Supply chain management • Service and service quality • Managers and workers

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Why Some Organizations Fail

• Too much emphasis on short-term financial performance

• Failing to take advantage of strengths and opportunities

• Neglecting operations strategy • Failing to recognize competitive threats

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Why Some Organizations Fail

• 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

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Mission/Strategy/Tactics

How does mission, strategies and tactics relate to decision making and distinctive competencies?

Strategy Tactics Mission

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Strategies

• Low cost • Scale-based strategies • Specialization • Flexible operations • High quality • Service

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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

Operations Strategies

2-12

Strategy Formulation

• Distinctive competencies • Environmental scanning • SWOT • Order qualifiers • Order winners

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• 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

Strategy Formulation

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Operations Strategy

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Productivity

• Productivity – A measure of the effective use of resources,

usually expressed as the ratio of output to input

• Productivity ratios are used for – Planning workforce requirements – Scheduling equipment – Financial analysis

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Productivity

• Partial measures – output/(single input)

• Multi-factor measures – output/(multiple inputs)

• Total measure – output/(total inputs)

Productiv ity = Outputs Inputs

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Productivity Growth

Current Period Productivity – Previous Period Productivity Previous Period Productivity

Productivity Growth =

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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

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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 machine hour

Machine Productivity

Units of output per labor hour Units of output per shift Value-added per labor hour

Labor Productivity

Partial Productivity Measures

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7040 Units Produced Cost of labor of $1,000 Cost of materials: $520 Cost of overhead: $2000

What is the multifactor productivity?

Productivity: Problem

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MFP = Output Labor + Materials + Overhead

MFP = (7040 units) $1000 + $520 + $2000

MFP = 2.0 units per dollar of input

Productivity: Solution

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Factors Affecting Productivity

Capital Quality

Technology Management

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• Standardization • Quality • Use of Internet • Computer viruses • Searching for lost or misplaced items • Scrap rates • New workers

Other Factors Affecting Productivity

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• Safety • Shortage of IT workers • Layoffs • Labor turnover • Design of the workspace • Incentive plans that reward productivity

Other Factors Affecting Productivity

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Outsourcing

• Higher productivity in another company is a key reason organizations outsource work

• Improving productivity may reduce the need for outsourcing

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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

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REFERENCES

•Operations Management William J. Stevenson

•Operations Management Barry Render & Jay Heizer

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