BAGUIO CENTRAL UNIVERSITY

#18 Bonifacio St., Baguio City

COLLEGE OF GRADUATE SCHOOL
PHAS/EDMGT 510
PRODUCTIONS & OPERATIONS MANAGEMENT

Reporter: Nilda C. Bete

Professor: Estrella V. Bisquera, Ph. D.

Competitive Priorities

A superiority gained by an organization when it can provide the

same value as its competitors but at a lower price, or can charge higher
prices by providing greater value through differentiation. Competitive
advantage results from matching core competencies to the opportunities.

It is also defined as the dimensions that a firm’s production system

must possess to support the demands of the markets in which the firm
wishes to compete.

 Criteria of Competitive Priorities

1) Quality: “fitness for use”. It is defined as excellence, value,

conformance to specifications and meeting or exceeding customers’
expectations.
Low defect rate, product performance reliability, certification and
environmental concern.

 Dimensions of quality:

 Performance - the primary operating characteristics.

 Features - optional extras (the "bells" and "whistles").

 Reliability - likelihood of breakdown.

 Conformance - conformance to specification.

 Technical durability - length of time before the product becomes

obsolete.

 Serviceability - ease of service

  Aesthetics - look, smell, feel, taste.

 Perceived quality - reputation.

 Value for money.

2) Cost: The ability to manage effectively production cost, including its

related aspects such as overhead and inventory, and value-added.

 Dimensions of price and cost:

 Manufacturing cost.

 Value added.

 Selling price.

 Running cost - cost of keeping the product running.

 Service cost - cost of servicing the product.

 Profit.

3) Delivery: Which is considered a time-based issue. Delivery addresses

how quickly a product or a service is delivered to customers. It also
incorporates the time to market for a new product.
“Delivery of the required function means ensuring that the right
product (meeting the requirements of quality, reliability and
maintainability) is delivered in the right quantity, at the right time, in the
right place, from the right source (a vendor who is reliable and will meet
commitments in a timely fashion), with the right service (both before and
after sale), and, finally, at the right price”.

4) Flexibility: This term represents the ability to deploy and/or re-deploy

resources in response to changes in contractual agreements which are
initiated primarily by customers. It includes several features, such as
adjustment to design/planning, volume changes and product variety. It is
the ability to respond effectively to changing circumstances.

 Dimensions of flexibility
  Material quality - ability to cope with incoming materials of varying
quality.

 Output quality - ability to satisfy demand for products of varying

quality.

 New product - ability to cope with the introduction of new products.

 Modification - ability to modify existing products.

 Deliverability - ability to change delivery schedules.

 Volume - ability to accept varying demand volumes.

 Product mix - ability to cope with changes in the product mix.

 Resource mix - ability to cope with changes in the resource mix.

5) Customer Focus: This concentrates on how to fulfil customers’ needs.

It includes after-sale services, product customisation, product support,
customer information and dependable promise.
6) Know-how: This deals with the trend of decreasing product lifecycles.
Therefore, knowledge management, creativity and skills development are
included.

Manufacturing Strategies

Companies must develop a manufacturing strategy that plays up their

strengths and puts them competitively in their market. Developing a
manufacturing strategy that suits a company's strengths is essential not
only to maintain the supply chain to customers, but to ensure the
company remains competitive within its market.

1. Strong links with the market. Raw manufacturing prowess alone

does not create business success. It has to start with the customer.
Whatever you manufacture has to be something that customers really
want to buy. You have to design it right. We’re really focused on being
connected to the customer.
2. Rigorous financial discipline. Nobody gets paid for just making
money. Everything is a ratio of what we earn over what we invest.
3. Balanced investment approach. Although the balanced investment
strategy aims to balance risk and return it does carry more risk than
those strategies aiming at capital preservation or current income. In other
words, the balanced investment strategy is a somewhat aggressive
strategy, and is suitable for those investors with a longer time horizon
(generally over five years), and who have some risk tolerance. Such a
strategy would be appropriate for a younger investor, who has decades
until she or he retires and no longer has a steady stream of income or
salary. Perhaps the individual also has some experience with investments
and understands the possibilities of losses and is willing to make
calculated, well informed risks.
4. Multiple “home markets” plus export strategy.
5. Labor flexibility. Labor market flexibility refers to firms' ability under
a jurisdiction's laws and regulations to make decisions regarding
employees's hiring, firing, hours and working conditions. It is the degree
to which a company is able to modify its labor force to
maximize productivity.
Ability of a company to adjust to fluctuations in the economy and to
the increase or decrease in consumers' demand for their services and
products. A company's flexibility depends on several factors: work hours,
cross-training, wages, location, and the adaptability of its labor force. The
fewer regulations a company has governing its labor force, the greater its
flexibility.
6. Lean production. Lean production began as a manufacturing
technique to enhance efficiency and profitability. Its primary focus is
speed of output by waste elimination. Waste is anything that does not add
value to the end product.
The focus of lean manufacturing is value. Any step or process that
adds value to the end product is kept. Anything that does not add value is
waste and is eliminated. Assessing value-added functions is the first step
in lean production. Once those you know those, you can begin eliminating
waste.
Lean manufacturing identifies five different types of waste:
1. Motion and Transportation

The first type of waste in lean production is unnecessary motion. Wasted

motion might be that of humans or machines. If a worker takes 10 steps
when five will suffice, the additional five are deemed waste and eliminated
in a lean company. Similarly, transportation also has the potential to be
wasteful. Moving the product along the line is necessary and adds value.
Moving components to wait for the next step in the process is waste.

2. Inventory and Overproduction

Inventory of either component parts or end products is also considered

waste by lean organizations. The ideal state is to have parts arriving at
the very moment they are needed. This is often referred to as JIT, or just
in time. Overproduction is linked to both inventory and transportation
waste. If you create too many parts before they are needed, those parts
will have to be moved into storage and held as inventory.

3. Waiting

Lean companies are adept at reducing waiting time or time in a queue.

This type of waste goes hand in hand with overproduction, as well. Parts
that are waiting to have something done with them are not adding value
to the end product. Sometimes workers have wasted time waiting for
parts to arrive, as well.

4. Processing Waste

Processing waste is similar to motion waste. Over-processing is doing

more work to add value than needed resulting from poor design. Using a
six-inch bolt when a five-inch one will do is a good example.

5. Defects

The last type of waste defined in lean manufacturing is defects. A

successful lean company will have processes in place throughout the
workflow to eliminate defects. A final quality-control check doesn’t exist in
a lean company, as the quality has been controlled through the entire
process. The last look is wasted effort.

References
 Foo, G., Friedman, D.J. (1992). Variability and Capability: The
Foundation of Competitive Operations Performance, AT&T;
Technical Journal, July/August, pp 2-9.

Hayes, Robert H., and Wheelwright, Steven C. (1984).

Restoring Our Competitive Edge: Competing Through
Manufacturing. New York: John Wiley.

Hill, T. (1994). Manufacturing Strategy: Text and Cases. John

Wiley and Sons, New York.

Krajewski, L. and Ritzman L. (1993). Operations Management:

Strategy and Analysis. 3rd Edition, Addison-Wesley, Boston.

Upton, D. (1994). The Management of Manufacturing Flexibility.

California Management Review, Vol. 36, No. 2, pp. 72-89.