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Chapter 2

Operations Strategy and Competitiveness Operations Strategy

Competitive Dimensions

Order Qualifiers and Winners

A Framework for Manufacturing Strategy

Service Strategy Capacity Capabilities

Productivity Measures

2

Competitive Dimensions

Cost

Product Quality and Reliability

Delivery Speed

Delivery Reliability

Coping with Changes in Demand

Flexibility and New Product Introduction Speed

Other Product-Specific Criteria

3

Dealing with Trade-offs

Cost

Quality

DeliveryFlexibility

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Order Qualifiers and Winners - Terry Hill

Order qualifiers? They are the basic criteria that permit the firms products to be considered as candidates for purchase by customers Order winners? They are the criteria that differentiates the products and services of one firm from another.

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Service Breakthroughs

A brand name car can be an “order qualifier”

Repair services can be “order winners”

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8

Operations Strategy FrameworkCustomer Needs

New : Oldproduct : product

Competitivedimensions & reqs.

Quality, Dependability,Speed, Flexibility, and Price

Operations & Supplier capabilities

Technology PeopleSystems R&D CIM JIT TQM Distribution

Support Platforms

Financial management Human resource management Information management

Enterprise capabilities

OM Competitive issues

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Steps in Developing a Manufacturing Strategy 1. Segment the market according to the product

group. 2. Identify product requirements, demand

patterns, and profit margins of each group. 3. Determine order qualifiers and winners for

each group. 4. Convert order winners into specific

performance requirements.

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Distinctive CompetenciesDistinctive CompetenciesDistinctive CompetenciesDistinctive Competencies

Organizational strengths (SWOT) possessed by few competing firms

Exploiting can lead to competitive advantage

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Service Strategy Capacity Capabilities

1. Process-based – Capacities that transforms material or information

and provide advantages on dimensions of cost and quality.

2. Systems-based – Capacities that are broad-based involving the entire

operating system and provide advantages of short lead times and customize on demand.

3. Organization-based– Capacities that are difficult to replicate and provide

abilities to master new technologies.

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Measures of Productivity in OM

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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

or

Output . Labor + Capital + Materials

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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.

Which productivity measure should be used?

Is productivity increasing or decreasing?

By what percent?

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ANOTHER EXAMPLE:

OUPUT = $400,000 IN AUTO SALES

ASSUME TOTAL INPUTS TO BE:

» LABOR + MATERIALS + ENERGY + CAPITAL• WHERE:

• LABOR = $100,000• MATERIALS - $120,000• ENERGY = $50,000• CAPITAL = $ $75,000

• CALCULATE: • PARTIAL MEASURE FOR LABOR• MULTIFACTOR MEASURE FOR MATERIALS AND ENERGY• TOTAL FACTOR