Overview of Competitiveness, Strategy &Productivity

Dr. T. T. Kachwala

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Overview of Competitiveness, Strategy & Productivity

Competitiveness

Mission/Strategy/Tactics
Operations Strategy Productivity Definition, Measures of Productivity, Methods of

improving Productivity.
Video (Productivity Improvements at Whirlpool) Productivity in Service Sector Productivity and Goal (Eli Goldratt).

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Competitiveness
Competitiveness: How effectively an organization

meets the wants and needs of customers relative to others that offer similar goods or services Competing using Marketing: Identifying consumer wants and needs, Pricing, Advertising and promotion Competing using Operations: Product and Service design, Cost, Location, Quality, Quick response, Flexibility, Inventory management, Supply chain management, Service and Service Quality

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Mission/Strategy/Tactics

Mission

Strategy

Tactics

Mission:

The reason for existence for an organization, the mission statement states the purpose of an organization & the Goals provide detail and scope of mission Plans for achieving organizational goals
and actions taken to The methods accomplish strategies

Strategies:

Tactics:

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Mission/Strategy/Tactics
Mission Goals

Organizational Strategies
Functional Goals Finance Strategies Tactics Operating procedures Marketing Strategies Operations Strategies

Tactics Operating procedures

Tactics Operating procedures

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Mission/Strategy/Tactics
Example: Student would like to have a career in business, have a good job, and earn enough income to live comfortably
Mission:

Live a good life

Goal:
Strategy: Tactics:

Successful career, Good income

Obtain an MBA education from reputed college Select a reputed college and a specialization

Operations:

Register, buy books, take courses, study,

graduate, get job using college placements

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Operations Strategy
Operations strategy: The approach, consistent with

organization strategy, that is used to guide the operations function. Examples of strategies: Low cost, Scale-based, Specialization, Flexible operations, High quality, & Service Quality-based strategies: Focuses on maintaining or improving the quality of an organizations products or services, Quality at the source Time-based strategies: Focuses on reduction of time needed to accomplish tasks

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Definition of Productivity

1.

The term Production is absolute. While the term Productivity is relative (output relative to input)

2.

It is ratio of output & input

i.e. Productivity = (Measure of output) / (Measure of input)

3.

Productivity can be defined as incremental change in output for a unit change in input.

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Measures of Productivity
1.

Partial Measures

1.

Labor productivity = Output (units) / Labor (hours)

2.

Material Productivity = Output (units) / Material (kgs)

3.

Machine Productivity = Output (units) / Machine (hours)

2.

Multifactor Productivity Index = Output (units) / (Labor + Material + Machine)

3.

Total Productivity Index = Output (units) / (All inputs used)

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Methods of improving Productivity

1.

Increase the output for the same input (Quality

Management) Decrease the input for the same level of output (Reducing Wastage) Small increase in input resulting in a

2.

3.

substantial

increase

in

output

(Capital

Investments in new facilities)

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Productivity Gains at Whirlpool

1.

The

plant

is

competing

against

the

foreign

manufacturers with much lower labour cost

2.

The issue really is the labor content and the product i.e. Labour Productivity

3.

Productivity at Whirlpool 139% of the average of the industry, and rising by about 5% per year

4.

Whirlpool

uses

gain

sharing

program

called

performance share & promises employees no job loss because of productivity gains

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Productivity in Service Sector

1.

More difficult to measure & manage because it involves intellectual activities & high degree of variability: for example medical diagnosis, consultancy & legal services Some of the factors that affect Productivity are Methods, Quality,

2.

Technology & Management

3.

Standardizing Processes & Procedures where ever possible to reduce variability can improve Productivity & Quality: for example Burger Kings combined menu items in meal packages such as a burger, fries & soft drink which reduced time to take and process the order & this resulted in increased productivity

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Productivity and Goal (Eli Goldratt)

Productivity is the act of bringing a company closer to its goal.

Productivity is meaningless unless you know what your goal is?

List of all the items people think of as being goals: cost-effective purchasing, employing good people, high technology, producing & selling quality products, capturing market share and customer satisfaction.

All of these are essential to running the business successfully. They enable the company to make money. But they are not the goals themselves, theyre just the means of achieving the goal.

The Real Goal of the organization is To Make Money and all other things are just ways to achieve that goal.

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Productivity and Goal (Eli Goldratt)

If the goal is to make money, then, an

action that moves us toward making money is productive. And an action that takes us away from making money is nonproductive In order to know if we are making money, the minimum number of financial measurements we would need to simultaneously increase are net profit, return on investment and cash flow

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Productivity and Goal (Eli Goldratt)

How to build a direct connection between the three financial measurements and what goes on in the plant? The measurements which express the goal of making money perfectly

well, and which also permit us to develop operational rules for running
our plant are:
1.

Throughput It is the rate at which the system generates money through sales Inventory It is all the money that the system has invested in purchasing things, which it intends to sell. Operational expense It is all the money the system spends in order to turn inventory into throughput.

2.

3.

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Productivity and Goal (Eli Goldratt)

The Goal is to increase throughput while simultaneously reducing both inventory and operating expense. Each one of those definitions contains the word money.
1. 2. 3.

Throughput is the money coming in. Inventory is the money currently inside the system. Operational expense is the money we have to pay out to make throughput happen.

One measurement for the incoming money, one for the

money still stuck inside, and one for the money going out.

Thanks and Good Luck Have a nice Day

Dr. T. T. Kachwala