Transcript Production and Operations Management: Manufacturing and

•
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 2
Operations and Supply Strategy
2-3
OBJECTIVES
• Operations and Supply Strategy
• Competitive Dimensions
• Order Qualifiers and Winners
• Strategy Design Process
• A Framework for Manufacturing Strategy
• Service Strategy Capacity Capabilities
• Productivity Measures
2-4
What is Operations and Supply Strategy?
• Operations and supply strategy is
concerned with setting broad
policies and plan for using the
resources of a firm to best support
its long-term competitive strategy.
Strategies for Competitive Advantage
• Differentiation
• Cost leadership
• Quick response
2-6
Competitive Strategies
• Cost or Price
– Make the Product or Deliver the Service Cheap
• Quality
– Make a Great Product or Deliver a Great Service
• Delivery Speed
– Make the Product or Deliver the Service Quickly
• Delivery Reliability
– Deliver It When Promised
• Coping with Changes in Demand
– Change Its Volume
• Flexibility and New Product Introduction Speed
– Change It
• Other Product-Specific Criteria
– Support It
Developing OM Strategy
• Must understand:
– Strengths and weaknesses of
competitors, entrants, substitutes
– Environmental, technological, legal,
economic issues
– Product life cycle
– Available resources (overall and OM)
– Integration of OM strategy with Company
strategy and other functional areas
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Operations and Supply Strategy Framework
2-9
Dealing with Trade-offs
For example, if we reduce costs by reducing product
quality inspections, we might reduce product quality.
For example, if we
improve customer
service problem solving
by cross-training
personnel to deal with a
wider-range of
problems, they may
become less efficient at
dealing with commonly
occurring problems.
Cost
Flexibility
Delivery
Quality
When to Change Strategy
• Changes in the organization
• Stages in the product life cycle
• Changes in the environment
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Order Qualifiers and Winners
Defined
•Order qualifiers are the basic
criteria that permit the firms
products to be considered as
candidates for purchase by
customers
•Order winners are the criteria that
differentiates the products and
services of one firm from another
Reasons to Globalize Operations
Tangible
• Reduce costs (labor, taxes,
tariffs, etc.)
• Improve the supply chain
• Provide better goods and services
• Attract new markets
• Learn to improve operations
Intangible • Attract and retain global talent
Global Impact of Culture and Ethics
• Cultures differ! Some
accept/expect:
– variations in punctuality
– long lunch hours
– expectation of thievery
– bribery
– little protection of intellectual property
Corruption Index
1. Finland
2.
… Denmark & New Zealand (Tie)
7.
… Canada
10.
… United Kingdom
16.
… United States
18.
… Germany & Israel (Tie)
20.
… Japan
31.
… Italy
59.
… China
62.
… Egypt
71.
… India & Russia (Tie)
101. Nigeria
102. Bangladesh
9.7
9.5
9.0
8.7
7.7
7.3
7.1
5.2
3.5
3.4
2.7
1.6
1.2
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What is Productivity?
Defined
Productivity is a common
measure on how well
resources are being used. In
the broadest sense, it can be
defined as the following
ratio:
Outputs
Inputs
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Total Measure Productivity
Total Measure Productivity = Outputs
Inputs
or
= Goods and services produced
All resources used
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Partial Measure Productivity
• Partial measures of productivity =
• Output or Output or Output or Output
Labor
Capital
Materials
Energy
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Multifactor Measure Productivity
Multifactor measures of productivity =
Output
Labor
+
Capital
+
Energy
+
Materials
or
Output
Labor
+
Capital
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Example of Productivity Measurement
• You have just determined that your
service employees have used a total of
2400 hours of labor this week to
process 560 insurance forms. Last
week the same crew used only 2000
hours of labor to process 480 forms.
• Is productivity increasing or
decreasing?
• Answer: Last week’s productivity =
480/2000 = 0.24, and this week’s
productivity is = 560/2400 = 0.23. So,
productivity is decreasing slightly.
Productivity Example 1
As operations manager, you are concerned about
being able to meet sales requirements in the coming
months. You have been given the following production
report. Find the average total productivity per month
(units per hour).
Units produced
Hours worked
Per machine
# of machines
Jan
2300
Feb
1800
Mar
2800
Apr
3000
325
3
200
5
400
4
320
4
Example 1 Solution
Units Produced
Hours per machine
# of machines
Productivity
Jan
2300
325
3
Feb
1800
200
5
Mar
2800
400
4
April
3000
320
4
2.36
1.80
1.75
2.34
Productivity Example 2
For the previous data set, based on
growth in productivity between March
and April, how many units can we
expect to produce in May, if operating
resources for May are the same as
they were in April and we experience
the same gain in productivity?
Example 2 Solution
Productivity Growth Rate (from Mar to April)
PGR = P2-P1/P1
2.34-1.75/1.75=
33.93%
Therefore, for May
2.34 X 1.3393=
3.13
Productivity Example 3
Lori produces “Final Exam Care Packages”
for resale by a sorority. She is currently
working a total of 5 hours per day to produce
100 care packages.
a. What is Lori’s productivity?
b. Lori thinks that by redesigning the package
she can increase her total output to 133 care
packages per day. What would her new
productivity be?
c. What will the increase in productivity be if
Lori makes the change?
Example 3 Solution
a. 100/5 = 20 packages/hr
b. 133/5 = 26.6 packages/hr
c. (26.6-20)/20 = 33%
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End of Chapter 2