Operations

Management

SARAH JANE R. CUSI

Instructor
 Competitiveness & Strategy
Competitiveness - how effectively an
organization meets the wants and needs of
customers relative to others that offer similar
goods or services.

Marketing influences competitiveness in

several ways including identifying consumer
wants and needs, pricing, and advertising and
promotion.
 Marketing
1. Identifying consumer wants and/or needs is a basic
input in an organization’s decision-making process, and
central to competitiveness. The ideal is to achieve a perfect
match between those wants and needs and the
organization’s goods and/or services.
2. Price and quality are key factors in consumer buying
decisions. It is important to understand the trade-off
decision consumers make between price and quality.
3. Advertising and promotion are ways organizations can
inform potential customers about features of their
products or services, and attract buyers.
 Operations
qProduct and service design - special characteristics or features
of a product or service can be a key factor in consumer buying
decisions. Other key factors include innovation and the time-to-
market for new products and services.
qCost - key variable that affects pricing decisions and profits.
qLocation - can be important in terms of cost and convenience
for customers.
qQuality - refers to materials, workmanship, design, and service.
qQuick response - quickly bringing new or improved products or
services to the market, quickly deliver existing products and
services to a customer after they are ordered, and quickly
handling customer complaints.
qFlexibility - the ability to respond to changes
 Operations
qInventory management - effectively matching supplies of
goods with demand.
qSupply chain management - involves coordinating internal
and external operations (buyers and suppliers) to achieve
timely and cost-effective delivery of goods throughout the
system.
qService - involve after-sale activities customers perceive as
value-added, such as delivery, setup, warranty work, and
technical support.
qManagers and workers - the people at the heart and soul of
an organization, and if they are competent and motivated,
they can provide a distinct competitive edge by their skills
and the ideas they create.
 Why Some Organizations Fail
Organizations fail, or perform poorly, for a variety of reasons. Being aware of
those reasons can help managers avoid making similar mistakes. Among the
chief reasons are the following:

q Neglecting operations strategy.

q Failing to take advantage of strengths and opportunities, and/or failing to
recognize competitive threats.
q Putting too much emphasis on short-term financial performance at the
expense of research and development.
q Placing too much emphasis on product and service design and not enough
on process design and improvement.
q Neglecting investments in capital and human resources.
q Failing to establish good internal communications and cooperation among
different functional areas.
q Failing to consider customer wants and needs.
 MISSION AND STRATEGIES
Mission - the reason for the existence of an organization

Mission Statement - states the purpose of an

organization

Goals - provide detail and scope of the mission.

Strategies - plans for achieving organizational goals

ü Low cost
ü Responsiveness
ü Differentiation from competitors
 Strategies and Tactics

Tactics - the methods and

a

actions taken to accomplish

strategies.
Planning and decision making are hierarchical
in organizations
Example:
Rita is a high school student in Southern
California. She would like to have a career in business,
have a good job, and earn enough income to live
comfortably.
A possible scenario for achieving her goals might look
something like this:
Mission: Live a good life.
Goal: Successful career, good income.
Strategy: Obtain a college education.
Tactics: Select a college and a major; decide how to
finance college.
Operations: Register, buy books, take courses, study.
 Here are some examples of different strategies an
organization might choose from:
ü Low cost. Outsource operations to third-world countries that have low labor
costs.
ü Scale-based strategies. Use capital-intensive methods to achieve high output
volume and low unit costs.
ü Specialization. Focus on narrow product lines or limited service to achieve
higher quality.
ü Newness. Focus on innovation to create new products or services.
ü Flexible operations. Focus on quick response and/or customization.
ü High quality. Focus on achieving higher quality than competitors.
ü Service. Focus on various aspects of service (e.g., helpful, courteous, reliable,
etc.).
ü Sustainability. Focus on environmental-friendly and energy-efficient
operations.
Strategy
Formulation a
Strategy Formulation
SWOT - analysis of strengths, weaknesses, opportunities, and
threats.

Order qualifiers - characteristics that customers perceive as

minimum standards of acceptability 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.

Environmental scanning - The monitoring of events and trends

that present threats or opportunities for a company
 External Factors
1. Economic conditions
2. Political conditions
3. Legal environment
4. Technology
5. Competition
6. Markets
 Internal Factors
1.Human resources
2.Facilities and equipment
3.Financial resources
4.Customers
5.Products and services
6.Technology
7.Suppliers
8.Other
 Supply Chain Strategy -
specifies how the supply chain
should function to achieve supply
chain goals.
Sustainability Strategy - society
is placing increasing emphasis on
corporate sustainability practices in
the form of governmental regulations
and interest groups.
Global Strategy - strategic
decisions with respect to
globalization
 Operations strategy - the approach, consistent with the
organization strategy, that is used to guide the operations
function.
Strategic Operations Management
Decision Areas
Quality and Time
Strategies

Quality-based strategy - focuses on

quality in all phases of an
organization

Time-based strategy - focuses on

reduction of time needed to
accomplish tasks.
Organizations have achieved
time reduction in some of the
following:

1. Planning time
2. Product/service design time
3. Processing time
4. Changeover time
5. Delivery time
6. Response time for
complaints
 Productivity in the Service Sector
Service productivity is more problematic than manufacturing
productivity. In many situations, it is more difficult to measure, and
thus to manage, because it involves intellectual activities and a high
degree of variability.

Factors That Affect Productivity

Numerous factors affect productivity. Generally, they are methods,
capital, quality, technology,and management.
 Other factors that affect productivity include
the following:
q Standardizing
q Quality differences
q Use of the Internet
q Computer viruses
q Searching for lost or misplaced items
q Scrap rates
q New workers
q Safety
q A shortage of technology-savvy workers
q Layoffs
q Labor turnover
q Design of the workspace
q Incentive plans that reward productivity increases
 Improving Productivity

1. Develop productivity measures for all operations.

2. Look at the system as a whole in deciding which
operations are most critical.
3. Develop methods for achieving productivity
improvements
4. Establish reasonable goals for improvement.
5. Make it clear that management supports and
encourages productivity improvement.
6. Measure improvements and publicize them.
 References:
The Usage of Operations Management. (2019). The Usage of Operations Management.
UniversalClass.com. https://www.universalclass.com/articles/business/the-usage-of-operations-
management.htm
 THANK YOU!

“Every action is an opportunity to improve.”

~Mark Graban