Tata McGraw

1. CHAPTER 2 Operations and Supply Strategy Tata McGraw

2. Operations and Supply Strategy Chapter 2

3. 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

4. 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.

5. Operations and Supply Chain Strategy • Corporate strategy provides overall direction and coordinates operational goals with those of the larger organization • Operations effectiveness – performing activities in a manner that best implements strategic priorities at a minimum cost

6. Formulating an Operations and Supply Chain Strategy

7. 2-7 Competitive Dimensions • 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

8. 2-8 Cost Flexibility Delivery Quality 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.

9. 2-9 Order Qualifiers and WinnersDefined • Order qualifiersare the basic criteria that permit the firms products to be considered as candidates for purchase by customers • Order winnersare the criteria that differentiates the products and services of one firm from another

10. 2-10 Operations and Supply Strategy Framework

11. 2-11 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

12. 2-12 Total Measure Productivity Total Measure Productivity = Outputs Inputs or = Goods and services produced All resources used

13. 2-13 Partial Measure Productivity • Partial measures of productivity = • Output or Output or Output or Output Labor Capital Materials Energy

14. 2-14 Multifactor Measure Productivity Multifactor measures of productivity = Output Labor + Capital + Energy or Output Labor + Capital + Materials

15. Productivity Calculation

16. 2-16 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. So, productivity is decreasing slightly.

17. 2-17 End of Chapter 2