BA509 Production & Operations Management

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Operations Strategy and Competitiveness

About This Lecture

This lecture covers the topics of

• Operations Strategy
• Competitive Dimensions
• Order Qualifiers and Winners
• A Framework for Manufacturing Strategy
• Service Strategy Capacity Capabilities 
• Productivity Measures

Lecture Menu

About this Lecture

Learning Objectives

Operations Strategy

Competitive Dimensions

Order Qualifiers and Winners

A Framework for Manufacturing Strategy

Service Strategy Capacity Capabilities

Productivity Measures

Summary

Review Questions

Practice Test & Answers

Required Readings
 
 

Learning Objectives

 After completing Lecture II, you will have an overview of these topics:

• Operations Strategy
• Competitive Dimensions
• Order Qualifiers and Winners
• A Framework for Manufacturing Strategy
• Service Strategy Capacity Capabilities 
• Productivity Measures

Competitive Dimensions
 
 
 
 

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

Order Qualifiers and Winners
 
 
 

Order Qualifiers and Winners:

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. 

Service Breakthroughs

• A brand name car can be an “order qualifier”
• Repair services can be “order winners” 
•    Examples: Warranty, Roadside Assistance,    Leases, etc.

A Framework for Manufacturing Strategy
 
 
 

Operations Strategy Framework

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. 

Service Strategy Capacity Capabilities 
 
 
 
 

Service Strategy Capacity Capabilities

• Process-based 
• Capacities that transforms material or information and provide advantages on dimensions of cost and quality.
• Systems-based 
• Capacities that are broad-based involving the entire operating system and provide advantages of short lead times and customize on demand.
• Organization-based
• Capacities that are difficult to replicate and provide abilities to master new technologies.

Productivity Measures
 
 
 

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?
• Answer: Could be classified as a Total Measure or Partial Measure.
• Is productivity increasing or decreasing?
• Answer: Last week’s productivity = 480/2000 = 0.24, and this week’s productivity is = 560/2400 = 0.23.
• Therefore productivity is decreasing slightly.

This lecture has introduced the following topics:

• Operations Strategy
• Competitive Dimensions
• Order Qualifiers and Winners
• A Framework for Manufacturing Strategy
• Service Strategy Capacity Capabilities 
• Productivity Measures

1.  What is an example of operations strategy?

2.  What are six competitive dimensions?

3.  What are order qualifiers?

4.  What are order winners?

5.  What are four steps for developing a manufacturing strategy?

6.  What are three classes of service strategy capacity capabilities?

7.  What are three kinds of productivity measures?
 
 

1. As identified by C. Wickham Skinner and other researchers, the basic operations strategies include which of the following:
I. Cost
II. Quality
III. Field Support
IV. Flexibility
 
A. I are basic operations strategies
B. I and II are basic operations strategies
C. II and III are basic operations strategies
D. I, II and IV are basic operations strategies
E. I, II, III and IV are all basic operations strategies

2. According to the decision making framework presented in the Chase, Aquilano, & Jacobs text, decisions related to the number of workers to employ and when to employ them are examples of:
A. Strategic decisions.
B. Tactical decisions.
C. Planning and control decisions.
D. Short-term decisions.
E. Long-term employment decisions

3. An Operations Strategy can include many issues and choices.  Which of the following is not generally considered an Operations issue?
A. The degree of vertical integration to be used by the company.
B. The mix and volume of product to be sold.
C. The size and location of the manufacturing facility.
D. Development of defect prevention plan.
E. The type and number of manufacturing machines to be ordered to meet capacity.

4. According to the decision making framework presented in the Chase, Aquilano, & Jacobs text, decisions related to the number of workers to employ and when to employ them are examples of:
A. Strategic decisions.
B. Tactical decisions.
C. Planning and control decisions.
D. Short-term decisions.
E. Long-term employment decisions

5. An Operations Strategy can include many issues and choices.  Which of the following is not generally considered an Operations issue?
A. The degree of vertical integration to be used by the company.
B. The mix and volume of product to be sold.
C. The size and location of the manufacturing facility.
D. Development of defect prevention plan.
E. The type and number of manufacturing machines to be ordered to meet capacity.

6. Productivity increases when:
A. Inputs increase while outputs remain the same
B. Inputs decrease while outputs remain the same
C. Outputs decrease while inputs remain the same
D. Inputs and outputs increase proportionately
E. None of the answers are correct

7. Which of the following factories is the most productive?  

A. Factory V1, which uses 43 units of input to produce 38 units of output 
B. Factory W15, which uses 28 units of input to produce 27 units of output
C.  Factory X3A, which uses 57 units of input to produce 58 units of output
D.  Factory Y3, which uses 120 units of input to produce 110 units of output
E.  Factory ZZ3, which uses 260 units of input to produce 240 units of output

8. Which of the following divisions of a firm is the most productive?
                            Average         Average                    Profit
             Input            Output        (%)
A.   Division A       43                     38               12.0
B.   Division B       28                     27                  8.6
C.    Division C       57                        52              9.7
D.   Division D     120                 110               10.8
E.   Division E     260                      240               11.0

9. According to the MIT commission on productivity, all of the following are causes of productivity problems in the United States EXCEPT:
A.   use of short time horizons
B.   strategic weaknesses in the U.S. companies
C.   lack of cooperation between individuals and organizations
D.   weak human resource management
E.   uncooperative labor unions particularly with respect to automation
 

10. Which of the following measures is a total productivity measure?
I. Output/Labor
II. Output/Materials
III.  Output/(Labor+Energy+Capital)
IV.  Output/Inputs

A.   I and II only
B.   II and III only
C.   III and IV only
D.   III only
E.   IV only
 
 
 

ANSWERS:
1D, 2B, 3B, 4B, 5B, 6B, 7C, 8B, 9E, 10B
 
 
 

Read chapter 2 of the text.