Operation and Competativeness

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4. Ensuring Quality: Quality underlines all operational decisions. Ensuring quality entails establishing a quality management system using statistical quality control, improving customer service and managing human resources wisely. Topics are ‘Statistical Process Control, ‘Quality Management’, and ‘Human Resources in Operations Management’.

5. Product and Services:

The traditional starting point in the production process in designing the product or service. Decisions related to design include converting customer requirements to product or service characteristics determining the desired level of quality, selecting materials and evaluating the resulting production cost.

Suppliers R & D Customers [pic 3]

Marketing Competitors

Product

Or

Service Concept

Performance

Specification

[pic 4]

Preliminary

design

Design Manufacturing

Specification and delivery

Specifications

Final design &

Process Plans

Fig: Design Process (Reference : Page 153)

6. Process & Technology:

A process is a group of related tasks with specific inputs and outputs. Processes exist to create value for the customer, the shareholders or society. Process design defines what tasks need to be done and how they are to be coordinated among functions, people and organizations. Plans are developed for acquiring materials, determining the types of job skills, equipment and technology required and managing the process.

7. Facilities:

The production process that has been designed must be physically housed in a facility and laid out in an effective manner so that the product can be produced or service delivered as efficiently as possible.

8. Project Management:

Project management is a technique that breaks down complex processes, schedules activities and ensures that the project is completed on time and on budget.

9. Managing Supply Chain:

A supply chain encompasses all the facilities, functions and activities involved in producing and delivering a product or service from the suppliers to the customer.

# Operations Management in an E-Business Environment

Trade that occurs over the internet (or any computer network) is called electronic commerce, e-commerce or e-business.

Category of E-Commerce: Electronic commerce can take the form of trade between businesses, between consumers or between businesses and consumers

Business – to- business: (B2B) Trade typically involves companies and their suppliers.

Business – to – consumer: (B2C) Trade can the form of online retailing, like Amazon.com or online

stockbrokerage.

Consumer – to – business : (C2B) Transactions reverse the normal flow of trade by having customers post

what they want and having businesses accept or reject their offers. Such as giving passengers the opportunity to bid on airline seats.

Consumer- to – consumer: (C2C) Transactions involve consumer auction sites like eBay, or consumer exchange sites like Napster.

Business

Consumer

Business

B2B

B2C

Consumer

C2B

C2C

# Competitiveness:

Definition: The degree to which a nation can produce goods and services that meet the test of international markets while simultaneously maintaining or expanding the real incomes of its citizens.- The U.S Department of Commerce.

Most common measure of competitiveness is productivity, which is calculated by dividing units of output by units of

input. Productivity= Output/ Input

Industry competitiveness can be measured by the number of major players in an industry and the market share of the industry leader. By these measures, the most competitive industries worldwide are banking, food and drug stores and electronics. Industries with low barriers of entry are more competitive. Internet –based start-ups rise quickly since very little capital or physical facilities are needed to enter the industry, but they can also fall quickly when the number of competitors is more than the market can handle. Many of the barriers to entry- make it difficult for new firms to enter an industry.

1. Economies of scale: As the number of units produced increases the cost of producing each individual unit decreases, which is known as economic of scale. New companies entering such an industry may not have the demand to support large volume of production; thus their unit cost would be higher.

2. Capital Investment: Large initial investments in facilities, equipment and training may be required to open a new hospital. In contrast a day care center may operate out of an existing home with only minimal equipment, training and licensing requirements.

- Access to supply and distribution channel: Existing firms within an industry have established supply and distribution channels that may be difficult for new firms to replicate.

4. Learning curves: Lack of experience can be a barrier to entry in an industry with significant learning curves.

# Productivity Improvement:

Productivity is the value of outputs