Introduction It is very important for an organisation to have well defined objective. A well-defined objective facilitates development of strategies and policy thereby creating value for customers. Operation Strategy Operational strategy is essential to achieve operational goals set by organisation in alignment with overall objective of the company. Operational strategy is designed to achieve business effectiveness or competitive advantage. Operational strategy is planning process which aligns the following ORGANISATIONAL GOAL- BUSINESS GOAL- PRODUCT/SERVICE GOAL- SWOT ANALYSIS- OPERATIONS STRATEGY In this global competitive age organisation goals tend to change from time to time therefore operations strategy as a consequence has also be dynamic in nature. A regular SWOT analysis ensures that the organisation is able to maintain competitive advantage and business leadership. Strategic Management Process for Production and Operation For success of organisational strategic objectives, strategic planning has to trickle down to various function areas of the business. In order to build the strategic management process a sequential process as below is followed Competition Analysis: In this step company evaluates and studies current competition in the market and practices that are followed in the industry for operations and production vis-à-vis company policies Goal Setting: The next step involves narrowing down the objectives towards which the organisation wants to move towards. Strategy Formulation: The next step is breaking down of organisational goals into operations and production strategies. Implementation: The final step is to convert operations and production strategies into day-to-day activities like production schedules, product design, quality management etc. As organisations are always customer-centric, production and operation strategy for organisation are built around them Productivity Measurement of formulated operations and production strategy is important to maintain alignment with the organisation objectives. In simple terms productivity is defined as sum of total output per employee or per day. The productivity of the company is dependent on industry and environmental conditions in which it is operating. Two essential parts of productivity are labour and capital. In scenario of limited resources, optimum and efficient utilisation of labour and capital will generate favourable productivity. Productivity measurement also enables company to identify areas which require improvement or special focus. Also, productivity provides a ready report card to measure status against company’s production objective. Productivity measurements can be classified in three categories based on the inputs used for calculation. Partial productivity ration of output is compared to one of resource used for example, labour productivity where output is compared to the labour wages. Total productivity measure takes into consideration sum of all input factors which are used for the output. In the modern age technology plays an important part in productivity. Wastivity Another important factor is the case of production is wastivity. Not 100% of input would be converted to output, there is going to waste during production. Wastivity is the reciprocal of productivity. Classic examples of wastivity are defective products and services which either have to be re-cycle or disposed of completely. Other examples are idle capacity of material, man-power equipment etc.
Questions: 1.2 Determine the importance of measuring productivity in operations management. (10)
