Operations Management chapter 2

Competitiveness

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

Mission

The reason for the existence of an organization.

Mission statement

States the purpose of an organization. The mission statement should answer the question of "What business are we in?

Goals

Provide detail and scope of the mission.

Strategies

Plans for achieving organizational goals. Org. strategies have a major impact on what the org. does and how it does it. Serves as a road map for reaching the organizational destinations. Orgs. contain both Organizational strategies and Functional level st

Tactics

The methods and actions taken to accomplish strategies. More specific than strategies and they provide guidance and direction for carrying out actual operations. This is the "how to" of the organization.

Operations

The actual "doing" part of the process

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

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.

Order Qualifiers

Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential for purchase. What do you have to do to get your foot in the door.

Order Winners

Characteristics of an organization's goods or services that cause it to be perceived as better than the competition, things that set you apart from the competition

Environmental Scanning

The considering of events and trends that present threats or opportunities for a company. Environmental Scanning is needed to identify Internal Factors - Strengths and Weaknesses and External Factors - Opportunities and Threats (SWOT)

Key External Factors

Economic conditions
Political conditions
Legal environment
Technology
Competition
Markets

Key Internal Factors

Human Resources
Facilities and equipment
Financial resources
Customers
Products and services
Technology
Suppliers

Operations strategy

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

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.

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 (improving quality in everything we touch and do):
Trying to overcome a poor quality reputation
Desire to maintain a quality ima

Productivity

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

What are productivity measures are useful for?

Tracking an operating unit's performance over time
Judging the performance of an entire industry or country

Why does production matter?

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 co

Productivity

Productivity = Output/Input

Partial Measures

Output/Single Input ; Output/Labor ; Output/Capital

Multifactor Measures

Output/Multiple Inputs ; Output/Labor + Machine ; Output/Labor +Capital +Energy

Total Measure

Total goods or services produced/All Inputs used to produce them

Productivity Growth

Productivity Growth = ((Current Productivity - Previous Productivity)/Previous Productivity) x 100%

Multifactor Productivity

Output/Labor +Materials +Overhead

How to improve productivity

1. Develop productivity measures that are meaningful, and for all operations
2. Determine critical (bottleneck, things keeping you from improving) operations
3. Develop methods for productivity improvements
4. Establish reasonable goals (doable goals but

Process Yield

A useful measure related to productivity

Service sector productivity

Difficult to measure and manage because:
It involves intellectual activities
It has a high degree of variability

Hierarchical Planning

Mission TO Goals TO Organizational Strategies TO Functional Strategies TO Tactics

Why do some organizations fail?

Neglecting operations strategy
Failing to take advantage of strengths and opportunities
Failing to recognize competitive threats
Too much emphasis in product and service design and not enough on improvement
Neglecting investments in capital and human reso

Businesses Compete Using Operations

1. Product and service design
2. Cost
3. Location
4. Quality
5. Quick response
6. Flexibility
7. Inventory management
8. Supply chain management
9. Service
10. Managers and workers

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