Competitiveness, Strategy, and Productivityriped.utcc.ac.th/.../01/2-Competitiveness-strategy-an… · · 2016-01-13Operations Management UTCC Competitiveness, Strategy, and Productivity

Operations Management UTCC

Competitiveness, Strategy, and Productivity

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อาจารย์ ดร.อศัวิณ ปสุธรรม Email: [email protected]


Competitiveness

How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services

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Businesses Compete Using Marketing

• Identifying consumer wants and/or needs

• Pricing

• Advertising and promotion

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• Product and service design • Cost of the outputs • Location • Quality • Quick response

• Flexibility • Inventory management • Supply chain management • Service • Human resources

Businesses Compete Using Operations

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Why Organizations Fail • Putting too much emphasis on short term financial

performance at the expense of R&D • Failing to take advantage from SWOT analysis • Neglecting operations strategy • Failing to establish good internal communications

and cooperation among different functional areas • Failing to consider customer wants and needs

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Strategy

Strategy Tactic Mission Vision

How does vision, mission, strategy and tactic relate to decision making and distinctive competencies?

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Strategy • Vision

– The organizational goals • Mission

– The reason for existence for an organization • Mission Statement

– Answers the question “What business are we in?” • Strategies

– Plans for achieving organizational goals • Tactics

– The methods and action plans taken to accomplish strategies 2-7


Organization Strategy

• Strategies: Roadmaps for reaching the destinations

• Organization strategies: overall strategies should support the goals and mission of the organization

• Functional strategies: should support the overall strategies of the organization

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Hierarchical Relationship Vision

Mission

Organizational Strategies

Functional Goals Finance Strategies

Marketing Strategies Operations Strategies

Tactics Tactics Tactics

Operating Procedures Operating Procedures Operating Procedures

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Examples of Strategies

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

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Distinctive Competencies

• The special attributes or abilities that give an organization a competitive edge

• Factors that consider for distinctive competencies - Price - Flexibility - Quality - Service - Time - Location

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Examples of Strategies Factor Operations Strategy Companies

Price Low cost ???

Quality High quality Consistent quality

??? ???

Time Rapid delivery On-time delivery

??? ???

Flexibility Variety Volume

??? ???

Service Superior customer service ???

Location Convenience ???

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Strategy Formulation

• To formulate an effective strategy, senior managers much consider the distinctive competencies of the organization, and they must scan the environment

• SWOT analysis

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Successful Strategy

• Order qualifiers : potential customer perceive as minimum standards of acceptability for purchase

• Order winners : perceived as better than competitor

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• External factors – Economic conditions – Political conditions – Legal environment – Technology change – Competition – Markets

• Internal factors – Human resources – Facilities and equipment – Financial resources – Customers – Products and services – Technology – Suppliers – Other

Environment Scanning

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Operations Strategy

• The approach, consistent with organization strategy, that is used to guide the operations function

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Quality and Time strategies

• Quality-based strategies focus on maintaining or improving the quality of a organization’s products or services.

• Quality is a factor in both attracting and retaining customers.

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Quality and Time strategies

• Time-based strategies focus on reducing the time required to accomplish various activities

• develop new products or services and market them

• respond to change in custom demand • deliver a product or perform a service

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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

Productivity = Outputs

Inputs

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Productivity

• Partial measures • output / single input

• Multi-factor measures • output / multiple inputs

• Total measure • output / total inputs

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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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Examples of Partial Productivity Measures

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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 Dollar value of output per machine hour

Machine Productivity

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

Labor Productivity


Problem

The manager of a crew that installs carpeting has tracked the crew’s output over the past several weeks, obtaining these figures: Compute the productivity for each of the weeks

Week Crew size Yards installed

1 4 960 2 3 702 3 4 968 4 2 500 5 3 696 6 2 500

240 234 242 250 232 250

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Problem

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7,040 Units Produced Cost of labor: $1,000 Cost of materials: $520 Cost of overhead: $2,000

What is the multifactor productivity?


Problem

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MFP = Output Labor + Materials = 7040 units $1000 + $520 = 4.63 units per dollar of input


Productivity Growth

Current Period Productivity – Previous Period Productivity Previous Period Productivity

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Problem

A manager checked production records and found that a worker produced 160 units while working 40 hours. In the previous week, the same worker produced 138 units while working 36 hours. Did the worker’s productivity increase, decrease, or remain the same? Explain

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Solution

• Current period productivity = 160/40 = 4 units/hr.

• Previous period productivity = 138/36 = 3.83 units/hr.

• Productivity growth = current-previous/previous = (4-3.83)(100)/3.83 = increase 4.3 % in productivity

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Factors Affecting Productivity

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Capital Quality

Technology Management


Other Factors Affecting Productivity

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• Standardization • Quality differences • 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


Improving Productivity • Develop productivity measures for all operations • Look at the system as a whole in deciding which operations

are most critical • Develop methods for achieving productivity improvements • Establish reasonable goals for improvement • Make it clear that management supports and encourages

productivity improvement • Measure improvements and publicize them

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Competitiveness, Strategy, and Productivityriped.utcc.ac.th/.../01/2-Competitiveness-strategy-an… · · 2016-01-13Operations Management UTCC Competitiveness, Strategy, and Productivity

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