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Tata McGraw

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Operations and Supply Strategy
Chapter 2
Operations and Supply Strategy
Competitive Dimensions
Order Qualifiers and Winners
Strategy Design Process
A Framework for Manufacturing Strategy
Service Strategy Capacity Capabilities
Productivity Measures
OBJECTIVES
2-3
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.
2-4
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
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Dealing with Trade-offs
Cost
Quality
Delivery Flexibility
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.
For example, if we reduce costs by reducing product
quality inspections, we might reduce product quality.
2-6
Order Qualifiers and Winners

Defined
Order qualifiers are the basic
criteria that permit the firms
products to be considered as
candidates for purchase by
customers

Order winners are the criteria that
differentiates the products and
services of one firm from another
2-7
Operations and Supply Strategy Framework
2-8
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
2-9
Total Measure Productivity
Total Measure Productivity = Outputs
Inputs

or
= Goods and services produced
All resources used
2-10
Partial Measure Productivity
Partial measures of productivity =

Output or Output or Output or Output
Labor Capital Materials Energy


2-11
Multifactor Measure Productivity
Multifactor measures of productivity =

Output
Labor + Capital + Energy

or

Output
Labor + Capital + Materials

2-12
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 weeks productivity = 480/2000 =
0.24, and this weeks productivity is =
560/2400 = 0.23. So, productivity is
decreasing slightly.
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Question Bowl
An operations and supply strategy is
concerned with which of the
following?
a. Setting specific policies and plans
b. Short-term competitive strategies
c. Coordination of operational goals
d. All of the above
e. None of the above
Answer: c. Coordination of operational
goals
2-14
Question Bowl
Typically a strategy breaks down
into what major components?
a. Operations effectiveness
b. Customer management
c. Production innovation
d. All of the above
e. None of the above
Answer: d. All of the above
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Question Bowl
A criterion that differentiates the
products and services of one
firm from another can be which
of the following?
a. An order qualifier
b. An order winner
c. PWP
d. KPI
e. None of the above
Answer: b. An order winner
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Question Bowl
A travel agency processed 240 customers on
Day 1 with a staff of 12, and 360 customers
the on Day 2 with a staff of 15. What can be
said about the productivity shift from Day 1
to Day 2?
a. An increase in productivity from Day 1 to Day
2
b. A decrease in productivity from Day 1 to Day
2
c. The same productivity from Day 1 to Day 2
d. Can not be computed from data above
e. None of the above
Answer: a. An increase in productivity from Day 1 to Day
2(Day 1 productivity = 240/12=20
Day 2 productivity = 360/15=24)
2-17
End of Chapter 2
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