Fluent Essays

I  have been attached the slides to know the context and the Discussion Rubric to meet expectations. MGT-530: Operation Management – Module 01/Discussion 01 Regulations:  · The writer is encouraged to use his own words.   · The writer must apply APA style guidelines.   · Support your submission with  at least four scholarly, peer-reviewed journal articles.  · Write 2 pages in length, excluding the title page, abstract, conclusion and required reference page, which are never a part of the minimum content requirements.  Carrefour is a French owned hypermarket operating in many places including Saudi Arabia. Consider Carrefour in Saudi Arabia when you, as a customer, judge the quality of the hypermarket.  Explain how quality is evaluated, and the role of technology in the customer perception of quality. Compare Carrefour’s quality and technology to another hypermarket in the area. Order the following criteria as most to least important for the successful operation of a hypermarket, and for a different industry (not a hypermarket) and explain why there are any differences and the implications for operations: ·  Customer satisfaction · Forecasting · Capacity planning · Location · Inventory management · Store layout · Scheduling Thank you for your support SEU Discussion Board Rubric Meets Expectation Approaches Expectation Below Expectation Limited Evidence No Evidence Content, Research, and Analysis 2 Points 1.5 Points 1 Point .5 Points 0 Points Content Meets Expectation - Demonstrates excellent knowledge of concepts, skills, and theories relevant to topic. Approaches Expectation - Demonstrates fair knowledge of concepts, skills, and theories. Below Expectation - Demonstrates significantly flawed knowledge of concepts, skills, and theories. Limited Evidence - Demonstrates poor or absent knowledge of concepts, skills, and theories. No Evidence - Did not participate. 2 Points 1.5 Points 1 Point .5 Points 0 Points Support Meets Expectation - Statements are well supported; posts extend discussion. Approaches Expectation - Statements are partially supported; posts may extend discussion. Below Expectation - Support is deficient; posts do not extend discussion. Limited Evidence - Statements are not supported No Evidence - Did not participate. 2 Points 1.5 Points 1 Point .5 Points 0 Points Writing Quality Meets Expectation - Writing is well organized, clear, concise, and focused; no errors. Approaches Expectation - Some significant but not major errors or omissions in writing organization, focus, and clarity. Below Expectation - Numerous significant errors or omissions in writing organization, focus, and clarity. Limited Evidence - Numerous errors or omissions—at least some major—in writing organization, focus, and clarity. No Evidence - Did not participate. 2 Points 1.5 Points 1 Point .5 Points 0 Points Timelines s Meets Expectation - Initial post made before deadline. Approaches Expectation - Initial post made 1 day late. Below Expectation - Initial post 2 days late. Limited Evidence - Initial post 3 days late. No Evidence - Did not participate. 2 Points 1.5 Points 1 Point .5 Points 0 Points Quantity Meets Expectation - Initial post and two other posts of substance. Approaches Expectation - Initial post and one other post of substance. Below Expectation - Initial post only. Limited Evidence - One post of substance to colleagues. No Evidence - Did not participate. Total Points Possible: 10 Introduction to Operations Management Chapter 1 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› You should be able to: LO 1.1 Define the terms operations management and supply chain LO 1.2 Identify similarities and differences between production and service operations LO 1.3 Explain the importance of learning about operations management LO 1.4 Identify the three major functional areas of organizations and explain how they interrelate LO 1.5 Summarize the two major aspects of process management LO 1.6 Describe the operations function and the nature of the operations manager’s job LO 1.7 Explain the key aspects of operations management decision making LO 1.8 Briefly describe the historical evolution of operations management LO 1.9 Describe the current issues in business that impact operations management LO 1.10 Explain the need to manage the supply chain Chapter 1: Learning Objectives Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Operations Management What is operations? The part of a business organization that is responsible for producing goods or services How can we define operations management? The management of systems or processes that create goods and/or provide services LO 1.1 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Goods are physical items that include raw materials, parts, subassemblies, and final products. Automobile Computer Oven Shampoo Services are activities that provide some combination of time, location, form or psychological value. Air travel Education Haircut Legal counsel Good or Service? LO 1.1 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Supply Chain Suppliers’ suppliers Direct suppliers Producer Distributor Final customers Supply chain – a sequence of activities and organizations involved in producing and delivering a good or service LO 1.1 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› The Transformation Process Inputs Land Labor Capital Information Outputs Goods Services Transformation/ Conversion Process Control Measurement and Feedback Measurement and Feedback Measurement and Feedback Value-Added Feedback = Measurements taken at various points in the transformation process Control = The comparison of feedback against previously established standards to determine if corrective action is needed Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education LO 1.1 1-‹#› Automobile Assembly, Steelmaking Products are typically neither purely service- or purely goods-based. Goods Services Home Remodeling, Retail Sales Computer Repair, Restaurant Meal Songwriting, Software Development Surgery, Teaching Goods-service Continuum LO 1.2 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Manufacturing vs. Service Degree of customer contact Uniformity of input Labor content of jobs Uniformity of output Measurement of productivity Production and delivery Quality assurance Amount of inventory Evaluation of work Ability to patent design LO 1.2 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Every aspect of business affects or is affected by operations Many service jobs are closely related to operations Financial services Marketing services Accounting services Information services Through learning about operations and supply chains you will have a better understanding of: The world you live in The global dependencies of companies and nations Reasons that companies succeed or fail The importance of working with others Why Study Operations Management? LO 1.3 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Operations Finance Marketing Organization Basic Functions of the Business Organization LO 1.4 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Function Overlap Finance & operations Budgeting Economic analysis of investment proposals Provision of funds Marketing & operations Demand data Product and service design Competitor analysis Lead time data LO 1.4 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Operations manager Supply chain manager Production analyst Schedule coordinator Production manager Industrial engineer Purchasing manager Inventory manager Quality manager OM and Supply Chain Career Opportunities Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› APICS - The Association for Operations Management American Society for Quality (ASQ) Institute for Supply Management (ISM) Institute for Operations Research and Management Science (INFORMS) The Production and Operations Management Society (POMS) The Project Management Institute (PMI) Council of Supply Chain Management Professionals (CSCMP) OM-Related Professional Societies Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Process Management Process - one or more actions that transform inputs into outputs Three Categories of Business Processes: Upper-management processes These govern the operation of the entire organization. Operational processes These are core processes that make up the value stream. Supporting processes These support the core processes. LO 1.5 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Supply & Demand Supply Demand > Supply Demand < Supply Demand = Wasteful Costly Opportunity Loss Customer Dissatisfaction Ideal Operations & Supply Chains Sales & Marketing LO 1.5 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Process Variation Four Sources of Variation: Variety of goods or services being offered The greater the variety of goods and services offered, the greater the variation in production or service requirements. Structural variation in demand These are generally predictable. They are important for capacity planning. Random variation Natural variation that is present in all processes. Generally, it cannot be influenced by managers. Assignable variation Variation that has identifiable sources. This type of variation can be reduced, or eliminated, by analysis and corrective action. Variations can be disruptive to operations and supply chain processes. They may result in additional costs, delays and shortages, poor quality, and inefficient work systems. LO 1.5 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Scope of Operations Management The operations function includes many interrelated activities such as: Forecasting Capacity planning Facilities and layout Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities And more . . . The scope of operations management ranges across the organization. LO 1.6 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Role of the Operations Manager The Operations function consists of all activities directly related to producing goods or providing services. A primary function of the operations manager is to guide the system by decision making. System design decisions System operation decisions LO 1.6 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› System Design Decisions System design Capacity Facility location Facility layout Product and service planning Acquisition and placement of equipment These are typically strategic decisions that usually require long-term commitment of resources determine parameters of system operation LO 1.6 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› System Operation Decisions System operation These are generally tactical and operational decisions Management of personnel Inventory management and control Scheduling Project management Quality assurance Operations managers spend more time on system operation decision than any other decision area They still have a vital stake in system design LO 1.6 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Most operations decisions involve many alternatives that can have quite different impacts on costs or profits Typical operations decisions include: What: What resources are needed, and in what amounts? When: When will each resource be needed? When should the work be scheduled? When should materials and other supplies be ordered? Where: Where will the work be done? How: How will he product or service be designed? How will the work be done? How will resources be allocated? Who: Who will do the work? OM Decision Making LO 1.7 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› General Approach to Decision Making Modeling is a key tool used by all decision makers Model - an abstraction of reality; a simplification of something. Common features of models: They are simplifications of real-life phenomena They omit unimportant details of the real-life systems they mimic so that attention can be focused on the most important aspects of the real-life system LO 1.7 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Understanding Models Keys to successfully using a model in decision making What is its purpose? How is it used to generate results? How are the results interpreted and used? What are the model’s assumptions and limitations? LO 1.7 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Models are generally easier to use and less expensive than dealing with the real system Require users to organize and sometimes quantify information Increase understanding of the problem Enable managers to analyze “What if?” questions Serve as a consistent tool for evaluation and provide a standardized format for analyzing a problem Enable users to bring the power of mathematics to bear on a problem. Benefits of Models LO 1.7 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Quantitative information may be emphasized at the expense of qualitative information Models may be incorrectly applied and the results misinterpreted This is a real risk with the widespread availability of sophisticated, computerized models are placed in the hands of uninformed users The use of models does not guarantee good decisions Model Limitations LO 1.7 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› A decision-making approach that frequently seeks to obtain a mathematically optimal solution Supported by computer calculations Often work together with qualitative approaches Quantitative Approaches LO 1.7 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Performance metrics All managers use metrics to manage and control operations Profits Costs Quality Productivity Flexibility Inventories Schedules Forecast accuracy Metrics and Trade-Offs Analysis of trade-offs A trade-off is giving up one thing in return for something else Carrying more inventory (an expense) in order to achieve a greater level of customer service LO 1.7 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› System - a set of interrelated parts that must work together The business organization is a system composed of subsystems Marketing subsystem Operations subsystem Finance subsystem The systems approach Emphasizes interrelationships among subsystems Main theme is that the whole is greater than the sum of its parts The output and objectives of the organization take precedence over those of any one subsystem Systems Approach LO 1.7 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› In nearly all cases, certain issues or items are more important than others Recognizing this allows managers to focus their attention to those efforts that will do the most good Pareto Phenomenon - a few factors account for a high percentage of occurrence of some event(s) The critical few factors should receive the highest priority This is a concept that is appropriately applied to all areas and levels of management Establishing Priorities LO 1.7 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Historical Evolution of OM Industrial Revolution Scientific management Human relations movement Decision models and management science Influence of Japanese manufacturers LO 1.8 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Pre-Industrial Revolution Craft production - System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods Some key elements of the industrial revolution Began in England in the 1770s Division of labor - Adam Smith, 1776 Application of the “rotative” steam engine, 1780s Cotton gin and interchangeable parts - Eli Whitney, 1792 Management theory and practice did not advance appreciably during this period Industrial Revolution LO 1.8 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› . Movement was led by efficiency engineer, Frederick Winslow Taylor Believed in a “science of management” based on observation, measurement, analysis and improvement of work methods, and economic incentives Management is responsible for planning, carefully selecting and training workers, finding the best way to perform each job, achieving cooperation between management and workers, and separating management activities from work activities Emphasis was on maximizing output Scientific Management LO 1.8 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› The human relations movement emphasized the importance of the human element in job design Lillian Gilbreth – applications of psychology Elton Mayo – Hawthorne studies on worker motivation, 1930 Abraham Maslow – motivation theory, 1940s; hierarchy of needs, 1954 Frederick Hertzberg – Two Factor Theory, 1959 Douglas McGregor – Theory X and Theory Y, 1960s William Ouchi – Theory Z, 1981 Human Relations Movement LO 1.8 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Decision Models & Management Science F.W. Harris – mathematical model for inventory management, 1915 Dodge, Romig, and Shewart – statistical procedures for sampling and quality control, 1930s Tippett – statistical sampling theory, 1935 Operations Research (OR) Groups – OR applications in warfare George Dantzig – linear programming, 1947 LO 1.8 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Influence of Japanese Manufacturers Refined and developed management practices that increased productivity Credited with fueling the “quality revolution” Just-in-Time production LO 1.8 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Economic conditions Innovating Quality problems Risk management Competing in a global economy Key Issues for Operations Managers Today LO 1.9 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Environmental Concerns Sustainability Using resources in ways that do not harm ecological systems that support human existence Sustainability measures often go beyond traditional environmental and economic measures to include measures that incorporate social criteria in decision making All areas of business will be affected Product and service design Consumer education programs Disaster preparation and response Supply chain waste management Outsourcing decisions LO 1.9 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Ethical Issues in Operations Ethical issues that may arise in many aspects of operations management: Financial statements Worker safety Product safety Quality The environment The community Hiring and firing workers Closing facilities Workers’ rights LO 1.9 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› The Need for Supply Chain Management In the past, organizations did little to manage the supply chain beyond their own operations and immediate suppliers which led to numerous problems: Oscillating inventory levels Inventory stockouts Late deliveries Quality problems LO 1.10 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Supply Chain Issues The need to improve operations Increasing levels of outsourcing Increasing transportation costs Competitive pressures Increasing globalization Increasing importance of e-business The complexity of supply chains The need to manage inventories LO 1.10 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 1-‹#› Competitiveness, Strategy, and Productivity Chapter 2 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 1 You should be able to: LO 2.1 List several ways that business organizations compete LO 2.2 Name several reasons that business organizations fail LO 2.3 Define the terms mission and strategy and explain why they are important LO 2.4 Discuss and compare organization strategy and operations strategy, and explain why it is important to link the two LO 2.5 Describe and give examples of time-based strategies LO 2.6 Define the term productivity and explain why it is important to organizations and to countries LO 2.7 Describe several factors that affect productivity Chapter 2: Learning Objectives Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 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 LO 2.1 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 3 This chapter focuses on three separate, but related ideas that are vitally important to business organizations Competitiveness Strategy Productivity Chapter Focus LO 2.1 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 4 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? LO 2.1 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 5 Identifying consumer wants and/or needs Pricing and quality Advertising and promotion Marketing’s Influence LO 2.1 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 6 Product and service design Cost Location Quality Quick response Flexibility Inventory management Supply chain management Service Managers and workers Businesses Compete Using Operations LO 2.1 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 7 Neglecting operations strategy Failing to take advantage of strengths and opportunities and/or failing to recognize competitive threats Too much emphasis on short-term financial performance at the expense of R&D Too much emphasis in product and service design and not enough on process design and improvement Neglecting investments in capital and human resources Failing to establish good internal communications and cooperation Failing to consider customer wants and needs Why Some Organizations Fail LO 2.2 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 8 Hierarchical Planning Mission Goals Organizational strategies Tactics Functional strategies LO 2.3 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 9 Mission The reason for an organization’s existence It answers the question “What business are we in?” Goals Provide detail and the scope of the mission Goals can be viewed as organizational destinations Strategy A plan for achieving organizational goals Serves as a roadmap for reaching the organizational destinations The organizational strategy guides the organization by providing direction for, and alignment of, the goals and strategies of the functional units The organizational strategy is a major success/failure factor Mission, Goals, and Strategy LO 2.3 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 10 Mission Mission The reason for an organization’s existence Mission statement States the purpose of the organization The mission statement should answer the question of “What business are we in?” LO 2.3 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 11 FedEx Mission Statement FedEx Corporation will produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx Corporation will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards. LO 2.3 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 12 Goals The mission statement serves as the basis for organizational goals Goals Provide detail and the scope of the mission Goals can be viewed as organizational destinations Goals serve as the basis for organizational strategies LO 2.3 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 13 Strategies Strategy A plan for achieving organizational goals Serves as a roadmap for reaching the organizational destinations Organizations have Organizational strategies Overall strategies that relate to the entire organization Support the achievement of organizational goals and mission Functional level strategies Strategies that relate to each of the functional areas and that support achievement of the organizational strategy LO 2.3 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 14 Tactics and Operations Tactics The methods and actions taken to accomplish strategies The “how to” part of the process Operations The actual “doing” part of the process LO 2.3 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 15 Core Competencies Core competencies The special attributes or abilities that give an organization a competitive edge To be effective core competencies and strategies need to be aligned LO 2.3 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 16 Organizational Strategy Operations Strategy Examples of Companies or Services Low Price Low cost U.S. first-class postage Wal-Mart Responsiveness Short processing times On-time delivery McDonald’s restaurants FedEx Differentiation: High Quality High performance design and/or high quality processing Consistent quality Sony TV Coca-Cola Differentiation: Newness Innovation 3M, Apple Differentiation: Variety Flexibility Volume Burger King (Have it your way”) McDonald’s (“Buses Welcome”) Differentiation: Service Superior customer service Disneyland IBM Differentiation: Location Convenience Supermarkets; mall stores Sample Operations Strategies LO 2.4 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 17 Effective strategy formulation requires taking into account: Core competencies Environmental scanning SWOT Successful strategy formulation also requires taking into account: Order qualifiers Order winners Strategy Formulation LO 2.4 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 18 Order qualifiers Characteristics that customers perceive as minimum standards of acceptability for a product or service to be considered as a potential for purchase Order winners Characteristics of an organization’s goods or services that cause it to be perceived as better than the competition Strategy Formulation (cont.) LO 2.4 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 19 Environmental scanning is necessary to identify Internal factors Strengths and weaknesses External factors Opportunities and threats Environmental Scanning LO 2.4 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 20 Economic conditions Political conditions Legal environment Technology Competition Markets Key External Factors LO 2.4 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 21 Human resources Facilities and equipment Financial resources Customers Products and services Technology Suppliers Other Key Internal Factors LO 2.4 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 22 Operations Strategy Operations strategy The approach, consistent with organization strategy, that is used to guide the operations function LO 2.4 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 23 Strategic OM Decision Areas Decision Area What the Decisions Affect Product and service design Costs, quality, liability, and environmental issues Capacity Cost, structure, flexibility Process selection and layout Costs, flexibility, skill level needed, capacity Work design Quality of work life, employee safety, productivity Location Costs, visibility Quality Ability to meet or exceed customer expectations Inventory Costs, shortages Maintenance Costs, equipment reliability, productivity Scheduling Flexibility, efficiency Supply chains Costs, quality, agility, shortages, vendor relations Projects Costs, new products, services, or operating systems LO 2.4 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 24 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 desire to catch up with the competition A part of a cost reduction strategy Quality-Based Strategies Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 25 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 Time-Based Strategies LO 2.5 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 26 Areas where organizations have achieved time reductions: Planning time Product/service design time Processing time Changeover time Delivery time Response time for complaints Time-Based Strategies (cont.) LO 2.5 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 27 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 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 28 The Balanced Scorecard Approach A top-down management system that organizations can use to clarify their vision and strategy and transform them into action Develop objectives Develop metrics and targets for each objective Develop initiatives to achieve objectives Identify links among the various perspectives Finance Customer Internal business processes Learning and growth Monitor results Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 29 The Balanced Scorecard Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 30 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 LO 2.6 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 31 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 LO 2.6 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 32 Productivity Measures LO 2.6 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 33 What is the multifactor productivity? Productivity Calculation Example Units produced: 5,000 Standard price: $30/unit Labor input: 500 hours Cost of labor: $25/hour Cost of materials: $5,000 Cost of overhead: 2x labor cost LO 2.6 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 34 Solution What is the implication of an unitless measure of productivity? LO 2.6 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 35 Productivity Growth Example: Labor productivity on the ABC assembly line was 25 units per hour in 2014. In 2015, labor productivity was 23 units per hour. What was the productivity growth from 2014 to 2015? LO 2.6 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 36 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 Where products are involved Ratio of output of good product to the quantity of raw material input Where services are involved, process yield measurement is often dependent on the particular process: Ratio of cars rented to cars available for a given day Ratio of student acceptances to the total number of students approved for admission Service Sector Productivity LO 2.6 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 37 Factors Affecting Productivity Capital Methods Technology Management Quality LO 2.7 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 38 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 LO 2.7 Copyright ©2018 McGraw-Hill Higher Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education 2-‹#› 39   Partial Measures Output Single Input ; Ouput Labor ; Output Capital   Multifactor Measures Output Multiple Inputs ; Ouput Labor + Machine ; Output Labor + Capital + Energy   Total Measure Goods or services produced All inputs used to produce them Input Output = ty Productivi   Multifactor Productivity = Output Labor + Material + Overhead $25/hour)) hours (2(500 + $5,000 + $25/hour) hours (500 $30/unit units 5,000 = ´ ´ ´ 3.5294 = 500 , 42 $ $150,000 =   Productivity Growth = Current productivity - Previous productivity Previous productivity ´ 100 %   Productivity Growth = 23 - 25 25 ´ 100 % = - 8 %