Competitiveness, Strategy and Productivity in Operation Management

 Competitiveness- is the ability and performance of a firm to sell and supply goods and services in
a given market, in relation to the ability and performance of other firms.
 It is how one firm win over customers in order to become the product or service of choice.
 Competitive advantage is the leverage a business has over its competitors. This can be gained by
offering clients better and greater value
 Each organization needs to have a deep understanding of their customers and what drives their
customers to make purchases

Core competencies- are the sources and capabilities that compare the strategic advantages of a
business. A modern management theory argues that a business must define, cultivate, and exploit its
core competencies in order to succeed against the competition.

 Core competencies are the defining characteristics that make a business or and individual stand
out from the competition.
 Identifying and exploiting core competencies are as important for a new business making its
mark as for an established company trying to stay competitive.
 A company’s people, physical assets, patents, brand equity, all capital all can make a
contribution to a company’s core competencies

Examples:

 McDonald’s has standardization. It serves nine million pounds of French-fries every day, and
everyone them has precisely the same taste and texture.
 Apple has style. The beauty of its devices and their interfaces gives them an edge over its many
competitors.
 Walmart has buying power. The sheer of its buying operation gives it the ability to buy cheap
and undersell retail competitors

Strategy

 Strategy is an action that managers take to attain one or more of the organization’s goals.
Strategy can also be defined as “general direction set for the company and its various
components to achieve a desired state in the future.
 A strategy is all about integrating organizational activities and utilizing and allocating the scare
resources within the organizational environment so as to meet the present objectives. While
planning a strategy it is essential to consider that decisions are not taken in a vacuum and that
any act taken by a firm is likely to be met by a reaction from those affected, competitors,
customers, employees or suppliers.
 Strategy is a well-defined roadmap of an organization. It defines the overall mission, vision and
direction of an organization.
 The objectives of a strategy is to maximize an organization’s strengths and to minimize the
strengths of the competitors.
 Strategy, in short, bridges the gap between “where we are” and “where we want to be”.
SUCCES

1. Mission Statement – What is the company represents & values.

2. Vision Statement – what the company wishes to become.
3. Strategy and goals – how the company strives to achieve its mission & measures its success.

STRATEGY

Corporate Strategy

 Refers to the overarching strategy of the diversified firm. Such a corporate strategy answers the
questions of “in which business should we compete?” and “how does being in these businesses
create synergy and/or add to the competitive advantage of the corporation as a whole?”
 What business are we in?

Business strategy

 Refers to the aggregated strategies of a single business firm or a strategic business (SBU) in a
diverted corporation.
 How do we compete in each of our major businesses?

Functional Strategy

 Include strategies, new product development strategies, human resources strategies, financial
strategies, legal strategies, supply-chain strategies, and information technology management
strategies. The emphasis is on short- and medium-term plans and is limited to the domain of
each department’s functional responsibility.
 How do we best support each our business strategies?

COMMON OPERATIONS STRATEGIES

Quality-based strategies – are commonly used when companies wish to elevate their reputation in the
marketplace. Improving in their product design and the reduction of errors are backbone of these
initiatives.

Time-based strategies – are used to reduce lead time, which is the amount of time elapsed from the
receipt of the customer’s order until the products are shipped. Firms that can produce faster will often
have lower costs.

EXAMPLE OF DIFFERENT STRATEGIES

1. Low cost
2. Scale based strategies. Use capital intensive method to achieve high output volume and low unit
costs
3. Specialization. Focus on narrow product lines or limited service.
4. Newness.
5. Flexible operations
6. High quality
7. Service
KEY PURCHASING AREA

 Price – How much does the product cost compared to competitors?

 Quality – Will product be long lasting and defect free?
 Variety – Are different options or styles for the product?
 Timeliness – Can the product be delivered in a timely manner?

ORDER QUALIFIERS VERSUS OEDER WINNER

 Order qualifiers are those characteristics that are “the nonnegotiable requirement” of the
customer. Unless these characteristics are part of the product as service package, the customer
will look elsewhere. Order qualifiers for a car may include and minimum safety features, and air
conditioning.
 An order winner is the characteristics that wins the order. Often it may be a new technical
feature that is desirable. It could be a great warranty package or service agreement, or a better
place.

GLOBAL STRATEGIES

Boeing – sales and production are worldwide

Benetton – moves inventory to stores around the world faster that its competition by building flexibility
into design, production, and distribution.

Sony – purchases components from suppliers in Thailand, Malaysia, and around the world.
REASON TO GLOBALIZE

Tangible Reason and Intangible Reason

 Reduce costs (labor, taxes, tariffs, etc.)

 Improve supply chain
 Provide better goods and services
 Understand markets
 Learn to improve operations
 Attract and retain global talent

Productivity – is referred to as a relative measure. It has little meaning in isolation but does tell a
story when it is compared to the previous period, or to a similar department or organization. The
key thing we pay attention to is whether the productivity has improved or declined or stayed the
same.
EXAMPLES OF PRODUCTIVITY MEASURES Total Productivity
Partial Productivity
Output
Output All inputs

Labor Outputs is always a reflection of how much the

firm was able to produce.
Output
Energy Inputs, peso spent are typically used as the
measure. Several exceptions might be labor
Output hours, gallons of water, or kilowatts of
Materials electricity. Firms will typically measure the
productivity for the things which represent
Multi-factor Productivity significant expenditures.

Output PERCENT CHANGE

Labor + materials
New Value−Old Value
Percent Change ¿ x 100 %
Output Old Value
Energy + Labor + Materials
If the results is positive, it is an increase.
If the result is negative, it is decrease.

Material Productivity Labour Productivity

 Units of output per dollar spent on
materials
 Dollars of per dollar spent on materials
 Dollars of output per unit of material
input
Machine Productivity
 Output per machine
 Units of output per machine hour
 Output per machine centre
 Dollars productivity per labour hour
 Units of output per labour dollar
 Units of output per shift
Energy Productivity
 Units of output per gallon of water
 Dollars of output per dollar of hydro
 Dollars of output per kilowatt hour

FORECASTING

Organizations use forecasting methods to predict business outcomes. Forecasts creates estimates that
can help managers develop and implement production strategies. Operations managers are responsible
for the process that deliver the final product. This where forecasts can help: They aid decision making
and planning around possible events.

Forecasting is valuable to businesses because it gives the ability to make informed business decisions
and develop data driven strategies. Financial and operational decisions are made based on current
market conditions and predictions on how the future looks.
WHAT ARE USES OF FORECAST?

1. Finance – Equipment replacements needs, timing and amount of funding borrowing needs,
cost estimates, profit projections, cash management.
2. Human resources – Hiring activities, including recruitment, interviewing, training, layoff
planning, including outplacement, counseling.
3. Marketing – Pricing and promotion, e-business strategies, global competition strategies
4. Operations – Schedules, work assignments and workloads, inventory planning, make-or-buy
decisions, outsourcing, product or service design.

Features Common to All Forecasts

1. Forecasting techniques generally assume that the same underlying causal system that existed in
the past will continues to exist in the future.
2. Forecasts are rarely perfect; predicted values usually differ from actual results

3. Forecasts for group of items tend to be more accurate than forecasts for individual items
4. Forecasts accuracy decreases as the time period covered by the forecasts increases.

Elements of a Good Forecast

 The forecast horizon must cover the time necessary to implement possible changes
 The degree of accuracy should be stated.
 The forecast should be reliable; it should work consistently.
 The forecast should expressed in meaningful units.
 The forecast should be in writing.
 The forecast should be simply to understand and use, or consistent with historical data
intuitively.

STEPS IN FORECASTING PROCESS

Step 1: Determine purpose of forecast
Step 2: Establish a time horizon
Step 3: Select a forecasting technique
Step 4: Gather and analyze data
Step 5: Prepare the forecast
Step 6: Monitor the forecasting

TYPES OF FORECAST

Judgmental—(qualitative) Forecasts that use subjective inputs such as opinions from consumer surveys,
sales staff, managers, executives, and experts.

Time series—(quantitative) uses historical data assuming the future will be like the past.

Associative Models—uses explanatory variables to predict the future.

JUDGMENTAL FORECASTS (QUALITATIVE)

Consumer surveys. The opinions of market. Delphi method. Managers and staff complete a
series of questionnaires, each developed from
the previous one, to achieve a consensus Sales force. With personal contact with
forecast. customers.
Executive opinions. Opinions of managers and
staff.

TIME SERIES FORECASTS (QUANTITATIVE)

A time-ordered sequence of observations taken at regular intervals over time.

A. Trend—long term movement in data D. Random variations—caused by chance

B. Seasonality—short-term regular E. CYCLE—wave like variations lasting
variations in data more than one year.
C. Irregular variations—caused by unusual
circumstances

FORECASTING METHOD

NAÏVE FORECAST

 Simple to use
 Virtually no cost
 Easily understandable
 Cannot provide high accuracy

Estimating technique in which the last period’s actuals are used as this period’s forecast, without
adjusting them or attempting to establish causal factors. It used only for comparison with the forecasts
generated by the better (sophisticated) techniques.

Simple Moving Average Formula

Ft = At-1 + At-2 + At-3 +… At-n

N

Ft= Forecast for the coming period

N= number of periods to be average

At-1= Actual occurrence in the past period for up to “n” periods.

WEIGHTED MOVING AVERAGING

A Weighted Moving Average puts more weight on recent data and less on the past data. The weighted
moving average (WMA) is a technical indicator that assigns a greater weighting to the most recent data
points, and less weighting to data points in the distant past. The WMA is obtained by multiplying each
number in the data set by predetermined weight and assuming up the resulting values.

Alpha is a measure of the performance.

Weight is an amount/percentage given to increase or decrease the importance of an item.

EXPONENTIAL SMOOTHING

 It is a sophisticated weighted averaging method that is relatively easy to use and understand.
 It is a weighted averaging method based on previous forecast plus a percentage of the forecast
error.
 The smoothing constant represents the percentage of forecast error.

ADJUSTED EXPONENTIAL SMOOTHING

A method that uses measurable, historical data observations, to make forecast by calculating the
weighted average of the current period’s actual value and forecast, with a trend adjustment added in.

CHOOSING FORECASTING TECHNIQUE

 No technique works best in every situation

 Factors to be considered are cost and accuracy
 Availability of data/ computer software, time needed, analyse and prepare data.
 Forecast techniques may use more than one.

CONCLUSION

 In using forecast techniques, be productive rather than reactive

 Forecast give future opportunities, reduce risks, created strategy.

PRODUCT AND SERVICE DESIGN

PRODUCT DESIGN

 Describes the process of imagining, creating, and iterating that solve user’s problems or address
specific needs in a given market.
 The key successful to product design is understanding the end-user customers, the person for whom
the product is being created. Product designers attempt to solve real problems for real people by
using empathy and knowledge of their prospective customer’ habits, behaviors, frustrations, needs,
and wants.
 Is essential in creating the initial user experience and product offering, from pre-ideation user
research to concept development to prototyping and usability testing.
 It doesn’t end there, as product design plays an ongoing role in refining the customer experience
and ensuring supplemental functionality and capabilities get added in a seamless, discoverable, and
non-disruptive manner. Brand consistency and evolution remain an essential product design
responsibility until the end of a product’s lifespan.

SERVICE DESIGN

 Is with the design of services and making them better suit the needs of the service’s users and
customers. It examines all activities, infrastructure, communication, people, and material
components involved in the service to improve both quality of service and interactions between
the provider of the service and its customers.
What does product and service design do?

Translate customers want and needs into product and service requirements

1. Refine existing products and services

2. Develop new products and services
3. Formulate quality goals
4. Formulate cost targets
5. Construct and test prototypes

Key questions from company standpoint

 Is there demand for the product?

 Can we do it?
 What level of quality is appropriate?
 Does it make sense from an economic standpoint?

COCA-COLA

 From its symbolic Coca-Cola text, what we call Spencerian script, to the unmistakable contour
bottle, Coca-Cola has worked for more than 130 years to create its iconic brand designs.
 But all in all innovation and creativity there’s been one symbol that keeps quietly making itself
known: the red disc.
 Now considered one of the most popular and well known shapes in the world, the Coca-Cola
curvy glass bottle was invented in 1915 in an effort to design a “bottle so distinct that you would
recognize if by feel in the dark or lying broken on the ground”

Most Famous Examples of Influential Product Design

1. ANGLEPOISE LAMP
2. POLAROID CAMERA
3. VW BEETLES
4. APPLE IPOD CLICK WHEEL

Reasons for Product or Service Design

 Economic (to reduce cost)

 Social and demographic (population shifts)
 Political or legal (new regulations)
 Competitive (newness of product)
 Cost or availability (labor or materials)
 Technological (process improvements)

Importance of Product Design

 Better product designs give a competitive advantage to the company over other brands as its
preferred more by the customers.
 Product design significantly pulls crowd, especially for technology abled offerings such as
Automobiles, Laptops and Smartphones.

 Design also huge role in heavy machinery or service as it marks the difference between efficiency
and chaos.
 There can be various kinds of designs, and it could better the acceptability of the product design
more over time, and better the brand built for the organization.

Designs considerations

 Product/service life cycles

 How much standardization
 Mass customization
 Delayed differentiation
 Product/service reliability
 Degree of newness

Product life cycle

A systematic approach to managing the series of changes of product goes through, from its conception
to its end life.

Standardization

Extent to which there is an absence of the variety in a product, service or process.

ADVANTAGES:

 Cost of product design per unit is low

 Economies of production
 Flow of materials can be continuous
 Automation and mechanization

DISADVANTAGES:

 Varying customer demands

Mass customization

A strategy of producing standardized goods or services, but incorporating some degree of customization.

Delayed Differentiation

Producing but not quite completing a product or service until customer preferences or specifications are
known

Modular Design
Is a design is a form of standardization in which component parts are subdivided into modules that are
easily replaced or interchanged.

It allow:

- Easier diagnosis and remedy of failures

- Easier repair and replacement

- Simplification of manufacturing and assembly

DEGREE OF NEWNESS

 Modification of an existing product

 Expansion of an existing product line or service
 Clone of competitor’s product or service

PHASES IN PRODUCT DESIGN AND DEVELOPMENT

 Idea Generation
 Idea screening
 Concept Testing
 Business Analysis
 Product Development
 Test Marketing
 Commercialization
 Review of Market Performance

RECYCLING

 Recovering materials for future use.

Recycling reasons: Cost Savings, Environment concerns, Environment regulations

REMANUFACTURING

Is the rebuilding of a product to specifications of the original manufactured product using combination
of reused, repaired and new parts.” It requires the repair or replacement of worn out or obsolete
components and modules.

SERVICE DESIGN…

Is the activity of planning and organizing people, infrastructure, communication and material
components of a service in order to improve its quality and the interaction between service provider
and customer.

Design according to the needs of customers, so the service is user-friendly, competitive and relevant to
the customers. Focus on the behavior of the customers, their needs and motivations.

SERVICE DESIGN APPROACH

WHAT—SERVICE OFFERINGS
HOW—SERVICE DELIVERY
WHO—SERVICE PROVIDERS
WHERE—SERVICE POINTS
WHEN—SERVICE OPERATIONS
WHY—SERVICE PHILOSOPHY

SERVICE DESIGN

 Service—something that is done to or for a customer

 Service delivery system—the facilities, processes, and skills needed to provide a service
 Product bundle—the combination of goods and services provided to customer
 Service package—the physical resources needed to perform the service

Service mapping/blueprinting—a tool for simultaneously depicting the service process, the points of
customer contact, and the evidence of service from the customer' point of view.

STEP 1
Identify the process to be blue-printed.

STEP 2
Identify the customer or customer segment.

STEP 3
Map the process from the customer’s point of view.

STEP 4
Map contact employee actions, onstage, and back-stage.

STEP 5
Link customer and contact person activities to needed support functions.

STEP 6
Add evidence of service at each customer action step.

PROCESS SELECTION, DESIGN, AND ANLYSIS

Process selection – it refers to the way, in which the production of goods and services are organized. It
make the vital decisions such as:

 Capacity Planning
 Facilities layout
 Equipment and design of work systems

The primary questions to be addressed here are:

 How much variety of Products/ Services is required?

 What degree of equipment flexibility is required?
 What is the quality & quantity level expected in the output etc.
 Whether it is new product or already established Product etc.
Product & services design are interrelated to its process design

Designing the Processes that

Designing the Product or Produce the Product or
Service Service

Products and services should Processes should be designed

be designed in such a way so they can create all
that they can be created products and services which
effectively. the operation is likely to
introduce.

Decisions taken during the design of the product or service will have an
impact on the process that produces them and vice versa

Process Selection and System Design.

Facilities and
Forecasting Capacity Equipment
Planning

Product and Layout

Service Design

Technological Process
Work Design
Change Selection
PROCESS AND TECHNOLOGY

A process is a group of related tasks with specific inputs and outputs. Process exist to create value for
the customer, the shareholder, or society.

A company’s process strategy defines its:

 Vertical integration: The extent which the firm will produce the inputs and control the outputs
of each stage of the production process.
 Capital Intensity: The mix of capital (i.e., equipment, automation) and labor resource used in
the production process.
 Process flexibility: The ease with which resources can be adjusted in response to changes in
demand, technology, products or services, and resource availability.
 Customer involvement: The role of the customer in the production process.

Process Planning

Selection

HIGH JOB SHOP PRODUCTION

BATCH PRODUCTION
VARIETY
REPETITIVE PRODUCTION

CONTINUOUS PRODUCTION
LOW

LOW VOLUME HIGH

Process Selection – Projects

A one-time event, such as construction of an apartment building, implementation of a new ERP system,
or writing a book, would all be considered a projects have a high degree of customization, substantial
use of resources, and a complex set of related activities. There is only single output at the end of the
project.

Process Selection—Batch

Some businesses are in the situation where they make groups of identical products on a regular basis.
These groups are referred to as a batch. The batch will progress through a set of steps to be completed
from the start to the end. An organization may have multiple batches at different stages coming through
the process. This type of processing is also intermittent (start, stop, start) There is less variety in this
type of business (compared to a job shop) and the equipment used will be relatively general purpose
and suited to the industry that they are in. Employees need to be skilled and experienced at operating
that equipment and producing these products. Examples of products made using batch production are
baked goods, aircraft parts, clothing, and vaccines. An important decision by these firms is how big the
batch should be.

Process Selection – Job Shop

This is most commonly used when the product being produced is unique for each customer. It is a make-
to-order type of business where production is intermittent (i.e. rather than one entire product being
completed at a time, work will continue on multiple products as time permits). Often the product has
unique characteristics for each customer. The workers in this type of business are very highly skilled in
their craft or trade. Often they are referred to as craftsmen or makers. The volume of output is low in a
job shop. The equipment used is quite general purpose. Examples include a small bakery that produces
beautiful custom wedding cakes, or a business that makes custom guitars or bicycles based on the
customers measurements and preferences of materials and components.

Process Selection – Repetitive

This type of business produces products that are more standardized in nature. Usually the output is
high. Since the goods are quite standardized, the equipment used tends to be quite specialized and
often highly customized for that process. The skill level of the employees is usually low because the
steps are highly standardized. Although these types of jobs may not require a trade or extensive
experience, they often do require skills such as multi-tasking, concentration, problem solving, and
teamwork. Often, these processes use flexible automation that allows for customization such as the
addition of upgraded features. Examples of a repetitive process include assembly lines such as
assembling automobiles or electronics, a carwash, or a cafeteria line.

Process Selection – Continuous

A continuous process is when a very high volume of standardized product is produced.  The type of
product being made is described as non-discrete. This means that these businesses do not produce
individual products, rather a product that is often a liquid or a product such as sugar, gasoline, or steel.
An example of this type of process is an oil refinery. There are not separate individual workstations,
rather the product flows from one step to the next within the system. The equipment in this type of
process is highly complex and designed solely for that product at that facility.  There are very few
workers except for those that are responsible for process monitoring, maintenance, and cleaning.

Process analysis is the systematic examination of all aspects of a process to improve its operation—to
make it faster, more efficient, less costly, or more responsive to the customer.
Process Innovation

When continual improvement efforts have been exhausted and performance expectations still cannot
be reached with an existing process, it is time to completely redesign or innovate the process.

Process innovation projects are typically chartered in response to a breakthrough goal for rapid,
dramatic improvement in process performance.

Technology Decisions

Technology decisions involve large sums of money and can have a tremendous impact on the cost,
speed, quality, and flexibility of operations. More importantly, they define the future capabilities of a
firm and set the stage for competitive interactions. Thus, it is dangerous to delegate technology
decisions to technical experts or financial analysts.

Financial Justification of Technology

 Purchase Cost

 Operating Costs

 Annual Savings

 Revenue Enhancement

 Replacement Analysis

 Risk and Uncertainty

Facility Layout

Layout refers to the way in which organizations position their equipment, departments, or work
centres.  Having an effective layout can streamline production activities, eliminate wasted or redundant
movement and improve safety. The general types of layouts are: a fixed position layout, a process layout
(functional), a product (line) layout, and a cellular layout, which is considered a hybrid. Other common
layouts include office layouts, retail layouts, and warehouse layout.

Objectives of Facility Layout

The basic objective of the layout decision is to ensure a smooth flow of work, material, people, and
information through the system. Effective layouts also:

 Minimize movement and material handling costs

 Utilize space efficiently

 Facilitate communication and interaction between workers, between workers and their
supervisors and between workers and customers

 Reduce manufacturing cycle time and customer service time

 Eliminate wasted or redundant movement

 Facilitate the entry, exit, and placement of material, products, and people
  Incorporate safety and security measures

 Provide a visual control of activities

 Provide flexibility to adapt to changing conditions

OFFICE LAYOUT

In 2020 office spaces are a great deal different than in generations past. Floor space per employee has
dropped significantly. There is far less worry about the flow of paperwork than in the past. Often
employees are grouped according to the tasks they perform and the work teams they participate in. 
Workspaces now tend to be more flexible with less paper and less furniture to hold files and documents.
Many organizations put more emphasis on having comfortable spaces for collaboration.  Layouts are
much more open concept with lower partitions to improve visibility of the workspace

RETAIL LAYOUT

The overall goal when laying out a retail location is to try and maximize the amount of sales per square
foot in the facility. This is done by careful study of traffic patterns in the store in order to try and
maximize the amount of product to which each customer is exposed. That is why you will often find the
milk at the far end of the store causing customers the need to walk past all other departments to reach
it.
WAREHOUSE LAYOUT

Effective warehouse layout aims to make effective use of the total volume of space contained in the
building. The relationship between the receipt of incoming goods, the storage space and the picking,
packing and shipping of outbound goods is carefully analysed. An important consideration is the
placement of inventory items in order to minimize distance goods and employees are need to travel.
Many warehouses have special holding requirements such as freezers, cold storage and high security
areas.

IMPORTANCE OF PROCESS DESIGN

Every firm that produces a good or a service will do so by the use of a process.  This process will use the
firm’s resources in order to transform the primary inputs into some type of output.

IMPORTANCE OF FACILITY LAYOUT

CAPACITY PLANNING

 Capacity is defined as the ability to achieve, store or produce. For an organization, capacity
would be the ability of a given system to produce output within the specific time period. In
operations, management capacity is referred as an amount of the input resources available to
produce relative output over period of time.

 Capacity is referred as maximum production capacity, which can be attained within a normal
working schedule.
  Capacity planning is essential to be determining optimum utilization of resource and plays an
important role decision-making process, for example, extension of existing operations,
modification to product

Forecasting v/s Capacity Planning

There would be a scenario where capacity planning done on a basis of forecasting may not exactly
match. For example, there could be a scenario where demand is more than production capacity; in this
situation, a company needs to fulfill its requirement by buying from outside. If demand is equal to
production capacity; company is in a position to use its production capacity to the fullest. If the demand
is less than the production capacity, company can choose to reduce the production or share it output
with other manufacturers.

Factors Affecting Capacity Planning

Effective capacity planning is dependent upon factors like production facility (layout, design, and
location), product line or matrix, production technology, human capital (job design, compensation),
operational structure (scheduling, quality assurance) and external structure ( policy, safety regulations)
MULA DITO YUNG FINALS
LOCATION PLANNING
The objective of location strategy is to maximize the benefits of location of the firm.
INDUSTRIAL LOCATION DECISIONS
COST focused.
 Revenue varies little between locations.
 Production separate from consumption.
 Location is major cost factor.
o Costs vary greatly between locations.

 Shipping costs.
 Production costs (e.g., labor).

SERVICE LOCATION DECISIONS

REVENUE focus.
o Costs vary little between market areas.
 Production/service together with consumption.
 Location is a major revenue factor.
o Affects amount of customer contact.
o Affects volume of business.
ORGANIZATIONS THAT LOCATE CLOSE TO MARKETS/CUSTOMERS
Government agencies.
Police & fire departments, post offices
Retail sales and Services.
     Fast food restaurants, supermarkets, gas stations.        Doctors, lawyers, barbers, banks, auto repair.

Organizations That
Locate  Close to
Suppliers or  Materials
Organizations That
Locate  Close to
Suppliers or  Materials
Organizations That
Locate  Close to
Suppliers or  Materials
ORGANIZE THAT LOCATE CLOSE TO SUPPLIERS OR MATERIALS
 By necessity.
Mining, fishing, farming, etc.
 When transporting materials is more expensive than transporting finished goods.
Perishable raw materials. (Seafood processing.)
Heavy or bulky raw materials. (Steel producers.)              
Processing reduces bulk. (Lumber mills, paper production.)
LOCATION DECISION FACTORS
 Regional
 Community Considerations
 Multiple Plant Strategies
 Site-related Factors
GLOBAL LOCATIONS
Globalization
Facilitating Factors
 Trade agreements
 Technology
Benefits
 Markets
 Cost savings
 Legal and regulatory
 Financial
Disadvantages

 Transportation costs  Security

 Unskilled labor 
 Import restrictions 
 Criticisms

Risk
  Political 
 Terrorism 
 Legal 
 Cultural

Foreign Government
a. Policies on foreign ownership of production facilities
Local Content
Currency restrictions
Environmental regulations
Local Product standards
Liablity Laws
b. Stability issues
Cultural Differences
Living circumstances for foreign workers/dependents
Religious holidays/traditions
Customer preferences
Possible buy locally sentiment
Labor
Level of training and education of workers
Work ethic
Possible regulations limiting number of foreign employees
Language differences
Resources
Availability and quality of raw materials, energy, transportation infrastructure.
Location decisions are often important – to both large and small businesses. The location decision has a
direct effect on an operation’s costs as well as its ability to serve customers (and therefore its revenues). 
Also, location decisions, once made, are difficult and costly to undo.  The costs of moving an operation
are often significant and run the risk of inconveniencing customers and staff. It is always best to get the
location decision right first time.

Good location is one which delivers the following

benefits:
Competitive unit costs – through a combination of a productive and efficiency labour supply, acceptable
location overheads and cost-effective access to inputs (raw materials, components etc)
Optimal revenue opportunities – customer service is not inconvenienced through the choice of location
An acceptable rate of return on investment – all business projects compete for scare cash resources; a
business location decision is no different
Sufficient production capacity to meet demand and future flexibility in capacity management decisions
Access to a labour force which enables the business to achieve the objectives of its workforce planning

MANAGING QUALITY
ISO or the International Standards Organization is an independent
body which provides standards of the organization. In terms of
standard, we can define it as quality, safety and efficiency of the
products or services provide by the businesses. ISO 9001 certification
outlines the importance of high-quality goods and services. Also,
when you find an increased market rate or high struggle in being
differentiated, then ISO is a key which helps you sustain and nurture
in the market. Register your company and get ISO certified now. The
ISO certificate helps to improve your business credibility and
authority as well as the overall efficiency of the business. When your
organization is ISO certified, it has so many benefits to include with.
SUPPLY CHAIN MANAGEMENT
LOGISTICS.
The movement of goods, services, cash and information in
supply chain.

KEY ASPECTS OF SUPPLY CHAIN MANAGEMENT

 Determining appropriate level of outsourcing
 Managing procurement
 Managing suppliers
 Managing customer relationships
 Being able to quickly identify problems and respond to them
Distribution channels are the path products take from their initial manufacturing
stage to selling them to consumers. The main goal of these channels is to make
goods available to final consumers in sales outlets as soon as
possible.https://www.tutor2u.net/business/reference/distribution-channels

HOW TO CHOOSE RIGHT SUPPLIER

  TYPICAL QUESTIONS
FACTOR

Quality and Quality What procedures does suppliers have for the
Assurance quality control and quality assurance?

Flexibility How flexible is the supplier in handling changes

in delivery schedules, quantity or product and
service changes 

Location Is the supplier nearby?

Price Are the price reasonable? Are they willing to

negotiate?

Reputation and What is the reputation and financial status of the

financial stability supplier?
Lead Times/Delivery What procedures does the suppliers have for
assuring on-time deliveries?

Others Is supplier heavily dependent on other

customers, causing a risk of giving priority to
those needs over ours?
**Effective supply chain management enables companies to
improve product flow through accurate demand and sales
forecasting and also improve inventory management to arrest
the bullwhip effect and avoid underproduction.
**Any company's performance is inextricably tied to how well it
manages the supply chain. SCM practices prosper not only by
lowering costs, but also by growing investment sustainability,
commercial expansion, and lowering the overall cost of doing
business.
**supply chain management oversees all the processes that
integrate suppliers to work efficiently together to move a
product from creation to the customer’s hands, taking into
account supply and demand along the way.
**SCM means managing costs at every step and delivering
goods to consumers as quickly as possible. It assumes that
every product that is for sale exists because of the various
participants in the supply chain.