Competitiveness, Strategy, and Productivity

Operations Management

Competitiveness

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

Businesses compete using marketing

• Identifying consumer wants and needs

• Pricing

• Advertising and promotion

Businesses compete using

• Operations

• Product and service design

• Cost

• Location

• Quality

• Quick response

Why some organizations fail

• Too much emphasis on short-term financial performance

• Failing to take advantage of strengths and opportunities

• Failing to recognize competitive threats

Negative Operations Strategy

• 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.

Three conditions a business must meet to be a core competency by C.K. Prahalad, and Gary Hame

• The activity must provide superior value of benefits to the customer.

• It should be difficult for a competitor to replicate or imitate it.

• It should be rare.

Strategies

Plans for achieving organizational goals

Mission

The reason for existence for an organization

Mission Statement

States the purpose of an organization and answers the question "What business are we in?"

Goals

Provide detail and scope of mission

Tactics

The methods and actions taken to accomplish strategies

Distinctive Competencies

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

Operations Strategy

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

Strategy Formulation

• Distinctive Competencies

• Environmental Scanning

• SWOT

• Order Qualifiers

• Order Winners

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. It is a characteristic that will win the bid or the customer's purchase.

Key External Factors

• Economic conditions

• Political conditions

• Legal environment

• Technology

• Competition

• Markets

Key Internal Factors

• Human Resources

• Facilitates and Equipment

• Financial resources

• Customers

• Products and services

• Technology

• Suppliers

Quality Based Strategies

• Focuses on maintaining or improving the quality of an organization's products or services

• Quality at the source.

Time-based Strategies

Focuses on reduction of time needed to accomplish tasks.

Productivity

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

• Effective and efficient utilization of resources (input) in producing goods and/services (output)

• Ratio of output produced to the input(s) used.

• Output(goods and services) relative to input (labor, material, energy, and other resources) used to produce them.

Production

Quantity of output produced

Productivity rations are used for:

• Planning workforce requirements

• Scheduling equipment

• Financial analysis