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Competitiveness, Strategy, and Productivity

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Competitiveness, Strategy, and Productivity

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    1. Chapter 2 Competitiveness, Strategy, and Productivity

    2. A Cold Hard Fact Better quality, higher productivity, lower costs, and the ability to respond quickly to customer needs are more important than ever and… the Bar is getting Higher

    3. Chapter Focus Competitiveness Strategy Productivity

    4. Productivity Productivity A measure of the effective use of resources, usually expressed as the ratio of output to input Productivity measures are useful for Tracking an operating unit’s performance over time Judging the performance of an entire industry or country

    5. Why Productivity Matters High productivity is linked to higher standards of living As an economy replaces manufacturing jobs with lower productivity service jobs, it is more difficult to maintain high standards of living Higher productivity relative to the competition leads to competitive advantage in the marketplace Pricing and profit effects For an industry, high relative productivity makes it less likely it will be supplanted by foreign industry

    6. Productivity Measures

    7. Productivity Calculation Example Units produced: 5,000 Standard price: $35/unit Labor input: 500 hours Cost of labor of $25/hour Cost of materials: $5,000 Cost of overhead: 2x labor cost

    8. Solution

    9. U.S. Multifactor Productivity

    10. Productivity Growth

    11. MFP Growth - Non-Farm

    12. MFP Growth - Manufacturing

    13. Service Sector Productivity Service sector productivity is difficult to measure and manage because It involves intellectual activities It has a high degree of variability A useful measure related to productivity is process yield

    14. Improving Productivity Develop productivity measures for all operations Determine critical (bottleneck) operations Develop methods for productivity improvements Establish reasonable goals Make it clear that management supports and encourages productivity improvement Measure and publicize improvements Don’t confuse productivity with efficiency

    15. Competitiveness Competitiveness: How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services Organizations compete through some combination of their marketing and operations functions What do customers want? How can these customer needs best be satisfied?

    16. McDonald’s Mission Statement McDonald's brand mission is to "be our customers' favorite place and way to eat." Our worldwide operations have been aligned around a global strategy called the Plan to Win centering on the five basics of an exceptional customer experience -- People, Products, Place, Price and Promotion. We are committed to improving our operations and enhancing our customers' experience. http://www.mcdonalds.com/corp/about/mcd_faq/student_research.html

    17. Businesses Compete Using Operations Product and service design Cost Location Quality Quick response Flexibility Inventory management Supply chain management Service Managers and workers

    18. Sample Strategies

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

    20. Strategic OM Decision Areas

    21. Quality-Based Strategies Quality-based strategy Strategy that focuses on quality in all phases of an organization Pursuit of such a strategy is rooted in a number of factors: Trying to overcome a poor quality reputation Desire to maintain a quality image A part of a cost reduction strategy

    22. Time-Based Strategies Time-based strategies Strategies that focus on the reduction of time needed to accomplish tasks It is believed that by reducing time, costs are lower, quality is higher, productivity is higher, time-to-market is faster, and customer service is improved

    23. Time-Based Strategies Areas where organizations have achieved time reductions: Planning time Product/service design time Processing time Changeover time Delivery time Response time for complaints

    24. Agile Operations Agile operations A strategic approach for competitive advantage that emphasizes the use of flexibility to adapt and prosper in an environment of change Involves the blending of several core competencies: Cost Quality Reliability Flexibility

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