Ops Mgmt 2

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Competitiveness

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relates to the effectiveness of an organization in the marketplace relative to other organizations that offer similar products or services. Operations and marketing have a major impact on competitiveness.

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Strategy

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relates to the plans that determine how an organization pursues its goals. Operations strategy is particularly important in this regard.

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Productivity

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Relates to the effective use of resources, and it has a direct impact on competitiveness. Operations management is chiefly responsible for productivity.

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How does marketing influence competitiveness?

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It identifies consumer wants and needs
pricing
advertising and promotion

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Identifying customer wants/needs and how it relates to competitiveness

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This is a basic input in an organizations decision making process and central to competitiveness. The ideal is to achieve a perfect match between those wants and needs and the organization's goods and services.

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Price and quality and how they relate to organizational competitiveness

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These are key factors in consumer buying decisions. It is important to understand the trade-off decision consumers make between pricea nd quality.

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Advertising and promotion and how they relate to organizational competitiveness

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Advertizing and promotions are ways organizations can inform potential customers about features of their products or services and attract buyers.

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Operations influences competitiveness by

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1. product and service design
2. cost
3. location
4. quality
5. response time
6. flexibility
7. inventory and supply chain management
8. service

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Product and service design impacts competitiveness

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these 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. Special characteristics or features of a product or service can be a key factor in consumer buying decisions. Other key factors include innovation and the time to market for new products.

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cost and how it influences competitiveness

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If an organizations'output is a key variable that affects pricing decisions and profits. Cost reduction efforts are generally ongoing in business organizations. Productivity is an important determinant of cost. Organizations with higher productivity rates have a competitive cost advatnage. A co. may outsource to achieve lower costs, higher productivity, or better quality.

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Location and how it relates to competitiveness

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Location can be important in terms of cost and convenience for customers. Location near inputs can result in lower input costs. Location near markets can result in lower transportation costs and quicker delivery times. Convenient location is particularly important in the retail sector.

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Quality and how it relates to competitiveness

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Quality refers to materials, workmanship, design, and services. Consumers judge quality in terms of how well they think a product or service will satisfy its intended purpoeses. Customers are generally willing to pay more for a product or service if they perceive it has higher quality than that or a competitor.

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Quick response and how it relates to competitiveness

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Quick response can be a competitive advantage. One way is quickly bringing new and improved products or services to the market. Another is being able to quickly deliver existing products and services to a customer after they are ordered, and still another is quickly handling customer complaints.

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Flexibility and how it relates to competitiveness

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Flexibility is the ability to respond to change. Changes might relate to alteration 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.

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INventory management relates to competitiveness

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CAn be a competitive advantage by effectively matching supplies of goods with demand.

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Supply chain management relates to competitivness

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Involves coordinating internal and external operations (buyers and sellers) to achieve timely and cost-effective delivery of goods throughout the system.

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Service relates to competitivness

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Service might involve after sale activities that customers perceive as value added, such as delivery, setup, warranty work, and tech support. Or it may involve extra attention while work is in progress such as courtesy, keeping the customer informed, and attention to details. Service quality can be a key differentiator; and it is one that is often sustainable. Moreover, businesses rated highly by their customers for service quality tend to be more profitable, and grow faster, than businesses that are not rated highly.

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Managers and workers relation to competitiveness

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They are the heart and soul of the organization and if they are competent and motivated they can prodvide a distinct competitive edge by their skills and ideas. One often overlooked skill is answering the telephone. How complaints are handled in positive or negative image can produce a positive image.

Front 19

Why do organizations fail?

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1. Neglect operations strategy.
2. Fail to take advantage of strengths and opportunities, and/or failing to recognize competitive threats.
3. Putting too much emphasis on short-term financial performance at the expense of research and development.
4. Place too much effort on product and service design and not enough on design and improverment
5. Neglecting investments in capital and human resources
6. Failing to establish good internal communications and cooperation among different functional areas.
7. Failing to consider customer wants and needs.

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Mission

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The reason for the existence of the organization

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Mission statement

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States the purpose of an organization

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Goals

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Provide detail and scope of the statement

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Strategies

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Plans for achieving organizational goals.

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Three basic business strategies

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1. low cost
2. responsiveness
3. differentiation from competitiors.

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Tactics

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the methods and actions taken to accomplish strategies. They are more specific than strategies, and they provide guidance and direction for carrying out actual operations. Think of tactics as the "how to" part and operations as the actual doing part of the process.

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Examples of different strategies in organizations

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1. Low cost.
2. Scale based strategies--these use capital intensive methods to achieve high output volume and low unit cost.
3. Specialization--focuses on narrow product lines or limited service to achieve quality.
4. Newness-focuses on achieving higher quality than competitors.
5. Flexible operations--focus on quick response or customization
6. High quality--Focus on achieving higher quality than competitors.
7. Service--focus on various aspects of serivce (helpful, reliable, courteous, ect.)
8. Sustainability--focus on environmentally friendly and energy efficient operations.

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Core competencies

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Special attributes or abilities that give an organization a competitive edge. Competitor competencies are important because if a competitor is able to supply higher quality products, it may be necessary to meet that higher quality as a baseline. Usually matching is not sufficient usually it is necessary to exceed.

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What is criticial to the success of a strategy?

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Strategy formulation.

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How do you formulate an effective strategy?

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To formulate an effective strategy, senior managers must take into account the core competencies of the organizations. They must scan the environment. They must determine what competitors are doing, or planning to do, and take that into account. THey must critically examine other factors that could have either positive or negative effects.

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SWOT approach

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Analysis of strengths, weaknesses, opportunities, and threats.

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Order qualifiers

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Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential for purchase.

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Order winners

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Charactteristics of an organizations goods orservices that cause it to be perceived as beter than the competition. Such as price, delivery reliability, speed of delivery, and quality an be order qualifiers or order winners.

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Environmental scanning

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The monitoring of events and trends that present threats or opportunities for a company. Generally these include competitor's activities, changing consumer needs, legal, economic, and political issues, the potential for new markets, ect.

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Key external factors which can create competitive disadvantages.

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1. Economic conditions--Including health and direction of economy, inflation and deflation, interest rates, tax laws, and tariffs.
2. Political conditions--These include favorable or unfavorable attitudes toward business, political stability or instability, and wars.
3. Legal environment-including antitrust laws, government regulations, trade restrictions, minimum wage laws, product liability laws and recent court experience, labor laws, and patents.
4. Technology-Can include rate at which product innovations are occurring, current and future process technology (equipment, materials handling) and design technology.
5. Competition-Includes the number and strength of competitors, basis of competition (price, quality, special features) and the ease of market entry.
6. Markets- This includes size, location, brand loyalties, ease of entry, potential for growth, long-term stability, and demographics.

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Key internal factors that relate to possible strengths or weaknesses

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1. Human resources-These include the skills and abilities of managers and workers special talents (such as creativity, designing, problem solving) loyalty to the organization, expertise, dedication, and experience.
2. FAcilities and equipment-Capacities, location, age, and cost to maintain or replace can have a sginificant impact on operations.
3. Financial resources-cash flow, access to additional funding, existing debt burden, and cost of capital are important considerations.
4. customers-loyalty, existing relationships, and understanding of wants/needs are important.
5. Products and services-These include existing prods and porential for new prods/services
6. Technology includes the existing stuff, ability to integrate new, and probable impact of tech on current and future ops.
7. Suppliers-supplier relationships, dependability of suppliers quality, flexibility and serivce are typical considerations.
8. Other-Other factors include patents, labor relations, company or product image, distribution channels, relationships with distributore, maintenance of facitlies and equipment, access to resources, and access to markets.

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Strategy formulation key steps

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1. LInk stragtegy directly to the organization's mission or vision.
2. Assess strengths, weaknesses, threats, and opportunities and idetify core competencies.
3. Identify order winners and order quantifiers.
4. Select one or two strategies to focus on.

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PIMS Program

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The primary role is to help managers understand and react to their business environment. PIMS does this by assisting managers as they develop and test strategies that will achieve an acceptable level of winning as defined by various strategies and financial measures.

Front 38

Supply chain strategy

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Specifies how they supply chai should function to achieve supply chain goals. It establishes how the organization should work with suppliers and policies relating to customer relationships and sustainability.

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Sustainability strategy

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Society is placing increasing emphasis on corporate sustainiability practices in the form of governmental regulations and interest groups. To be successful they will need a sustainability strategy that requires elevating sustaiability to the level of organizational governance; formulating goals for products and services. for processes, and for entire supply chain. Measuring achievements and striving for improvements and possibly linking executive compensation to the achievement of sustainabilty goals.

Front 40

Global Strategy

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Strategic decisions with respect to globalization must be made. One issues companies must face is that what works in one country or region will not necessarily work in another, and strategies must be carefully crafted to take these variations into account. ANother issue is the threat of political or social upheaval.

Front 41

Operations Strategy

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The approach, consistant with the organization strategy, that is used to guide the operations function. This relates to products, processes, methods, operating resources, quality costs, lead times, and scheduling. Formulation of this strategy should take into account the realities of operations strengths and weaknesses capitalizing on strengths and dealing with weaknesses.

Front 42

Operations management people and what strategic decisions are they involved in?

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1. PRoduct and service design
2. Capacity
3. Process selection and layout
4. Work design
5. Location
6. Quality
7. Inventory
8. Maintenance
9. Scheduling
10. Supply chains
11. Projects

Front 43

Quality-based strategy

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Strategy that focuses on quality in all phases of an organization. Generally a factor in both attracting and retaining a customer. They may reflect an effort to overcome an image of poor quality. They may reflect an effort to overcome an image of poor quality or a desire to catch up with competition ect. Can be combined with another strategy.

Front 44

Time-based strategy

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Strategy that focuses on reduction of time needed to accomplish tasks. Can be such as developing new products or delivering a product or performing a service. We went to gain a competitive advantage over rivals who take more time to accomplish the same tasks.

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What are some areas where companies have achieved time reduction?

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1. Planning time -time needed to react to a competitive threat, develop strategies and elect tactics, to approve changes to facilities, and adopt new tech.
2. Product / service design.
3. Processing time
4. Changeover time
5. Delivery time
6. Response time for complaints.

Front 46

Balances Scorecard

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The balanced scorecard is a top-down management system that organizations use to clarify their vision and strategy and transform them into action. The idea was to move from a purely financial perspective of the organization and integrate other perspectives such as customers, internal business proceedures, and learning and growth. USing this method, managers develop objectives, metrics, and targets for each objective and initiatives to achieve objectives and they identify links among the various perspectives. Results are monitored and used to improve strategic performance results

Front 47

Productivity

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A measure of the effective use of resources, usually expressed as the ratio of output to input.

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Basic productivity equation

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Productivity = output / input

Front 49

Productivity growth equation

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Productivity growth = current productivity - previous productivity / previous productivity X 100

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Productivity measures and how they are useful

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PRoductivity measure are useful on a number of levels. For an individual department or organization, productivity measures can be used to track performance over time. They can be used to judge the performance of an entire industry or the productivity of a country as a whole. These productivity measures are aggressive measures. Business leaders are concerned with productivty from a competitiveness standpoint.

Front 51

Service productivity

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More difficult to measure and thus to manager because it involves intellectual activity and a high degree of variability. A useful measure closely related to productivity is process yield. Where products are involved, process yield is defined as the ration of output of good production to the quantity of raw material.

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Factors that affect productivity

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1. Methods
2. Capital
3. Quality
4. Technology
5. Management
6. Standardizing
7. Quality differences
8. Use of the internet
9. Computer viruses
10. Searching for lost or misplaced items
11. Scrap rates
12. New workers
13. Safety
14. Shortage of IT and other tech workers.
15. Layoffs
16. Labor turnover
17. Desgin of workspace
18. Incentive plans that reward productivity increases

Front 53

Key steps to improve productivity

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1. DEvelop productivity measures for all operations
2. Look at the system as a whole in deciding which operations are most critical. A productivity increase in one part of an operation that doesn't increase productivity in the system would not be effective.
3. Develop methods for achieving productivity improvements such as soliciting ideas from workers, studying how other firms have increased productivity, and reexamining the way work is done.
4. Establish goals for improvement
5. Make it clear that management supports and encourages productivity.
6. Measure improvements and publicize them.