1)Operations and Competitiveness

7/30/2019 1)Operations and Competitiveness

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Operations and Competitiveness



What Do OperationsManagers Do?

What is Operations? a function or system that transforms inputs into outputs of

greater value

What is a Transformation Process? a series of activities along a value chain extending from

supplier to customer

activities that do not add value are superfluous and

should be eliminated What is Operations Management?

design, operation, and improvement of productivesystems



Physical: as in manufacturing operations

Locational: as in transportation operations

Exchange: as in retail operations

Physiological: as in health care

Psychological: as in entertainment

Informational: as in communication

Transformation Process



INPUT•Material

•Machines

•Labor

•Management

•Capital

TRANSFORMATION

PROCESS

OUTPUT

•Goods

•Services

Feedback

Operations as aTransformation Process



Evolution of OperationsManagement

Craft production

process of handcrafting products orservices for individual customers

Division of labor

dividing a job into a series of small taskseach performed by a different worker

Interchangeable parts standardization of parts initially as

replacement parts; enabled massproduction



Scientific management

systematic analysis of work methods

Mass production high-volume production of a

standardized product for a massmarket

Lean production

adaptation of mass production thatprizes quality and flexibility

Evolution of OperationsManagement (cont.)



Continuum from

Goods to Services

Source: Adapted from Earl W. Sasser, R. P. Olsen, and D. Daryl Wyckoff,Management of Service Operations (Boston: Allyn Bacon, 1978), p.11.



Operations Managementand E-Business

Categories of E-Commerce

B u s i n e s s

C o n s u m e r

Business Consumer

B2B

Commerceone.com

B2C

Amazon.com

C2B

Priceline.com

C2C

eBay.com



An Integrated Value Chain

Value chain: set of activities that create anddeliver products to customer

Manufacturer Supplier Customer

Flow of information (customer order)

Manufacturer Supplier Customer

Flow of information (customer order)

Flow of product (order fulfillment)



Globalization andCompetitiveness (cont.)

Hourly Wage Rates for Selected Countries

Source: “International Comparisons of Hourly Compensation Costs for Production Workers in

Manufacturing,” Bureau of Labor Statistics, U.S. Department of Labor, Updated September 30, 2003.

Germany: $26.18

USA: $21.33

Taiwan: $5.41

Mexico: $2.38

China: $0.50



Globalization andCompetitiveness (cont.)

Trade with China: Percent of each country‘s trade

Source: “Share of China in Exports and Imports of Major Traders, 2000 and 2002,”International Trade Statistics 2003, World Trade Organization, www.wto.org



Risks of Globalization

Cultural differences

Supply chain logistics

Safety, security, andstability

Quality problems

Corporate image

Loss of capabilities



Competitiveness andProductivity

Competitiveness degree to which a nation can produce

goods and services that meet the test ofinternational markets

Productivity ratio of output to input

Output sales made, products produced,

customers served, meals delivered, orcalls answered

Input labor hours, investment in equipment,

material usage, or square footage



Measures of Productivity

Competitiveness andProductivity (cont.)



Changes inProductivity for Select

CountriesInternet-enabledproductivity

- Dot com bust- 9/11 terrorist attacks

Source: “International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2002,” Bureau of Labor

Statistics, U.S. Department of Labor, September 2003. U.S. f igures for 2002 –2003 from “Major Sector Productivity and

Costs Index,” Bureau of Labor Statistics, U.S. Department of Labor, March 2004



Become efficient output increases with little or no increase in input

Expand both output and input grow with output growing

more rapidly

Achieve breakthroughs output increases while input decreases

Downsize output remains the same and input is reduced

Retrench both output and input decrease, with input

decreasing at a faster rate

Productivity Increase



Competitiveness

and Productivity

Productivity as a Function of Inputs and Outputs, 2001 –2002

Source: “International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2002,” Bureau of Labor

Statistics, U.S. Department of Labor, September 2003

BreakthroughPerformance

More Efficient

Retrench



Global CompetitivenessRanking

1. Finland2. United States3. Sweden

4. Denmark5. Taiwan6. Singapore7. Switzerland8. Iceland9. Norway10.Australia

Source: Global Competitiveness Report

2003 –2004, World Economic Forum,January 2004, www.weforum.org



Economies of Scale

Capital Investment

Access to Supply and DistributionChannels

Learning Curve

Operations –OrientedBarriers to Entry



Primary Topics in OperationsManagement (cont.)



Learning Objectives of

this Course Gain an appreciation of strategic importance

of operations in a global business

environment Understand how operations relates to other

business functions

Develop a working knowledge of concepts

and methods related to designing andmanaging operations

Develop a skill set for quality and processimprovement

Documents

1)Operations and Competitiveness