Productivity Improvement and Competitiveness Why is Productivity Improvement

Productivity Improvement and Competitiveness

Why is Productivity Improvement Important to An Organization?

Why is Productivity Improvement Important to An Organization? l Cost reduction and increased profits l Global competition l Pricing and financial pressures l Rising customer expectations l More effective use of resources l Market share increase /market expansion

Does Productivity Improvement Guarantee Financial Success?

Competitive Strategies l Specific performance criteria associated with the competitive priorities are used to evaluate an organization’s performance: • Cost (initial, life cycle) and availability • Quality (performance, features, reliability, etc. ) • Flexibility (product, process, & volume) • Delivery (speed, dependability) • Service (types)

Competitive Strategies (Continued) l Competitive priorities are usually ranked according to their importance to the overall organizational strategy. l Different organizational strategies place different demands on the operations of the organization.

Competitive Strategies (Porter’s Model) Competitive Scope Competitive Advantage Broad Target Narrow Target Lower Cost Differentiation Cost Leadership Differentiation Cost Focused Differentiation

Competitive Strategies Examples Competitive Advantage Competitive Scope Lower Cost Broad Target Narrow Target Differentiation

Strategic Directions (Value Disciplines) – Treacy & Wiersema l Operational Excellence – Wal-Mart, Southwest Airlines, Toyota, Dell, USAA l Customer Intimacy – Home Depot, Nordstrom, Ritz-Carlton, Kraft l Product Leadership – Johnson & Johnson, Merk, Nike, Apple Computer, Toyota

Customer Requirements for the Strategic Directions Operational Excellence Customer Intimacy Product Leadership Price Convenience Accessibility Consistency Timeliness Accuracy Flexibility Responsiveness Empathy Innovation Performance Features

Which of the Strategic Directions is Most Effective?

What Are the Major Strategies to Improve Productivity?

Productivity Improvement Strategies l l l l Downsizing/ Outsourcing Technology (hardware & software) Re-organization Product and process innovation Merger & acquisition Motivational & incentive programs Training & development

How Effective Are Each of Those Strategies?

How To Achieve Long-Term Success in Productivity Improvement?

Productivity Improvement Portfolios l Investments in leadership development l Investments in facilities and equipment l Investments in programs and systems l Investments in people (Note: These alternatives are not mutually exclusive. All are important. )

Productivity Improvement Strategic Approaches l Are not limited solely to operations l Do not focus solely on direct labor l Do not only seek out quick cost reductions l Do not throw together unconnected projects l Are linked explicitly to business needs through the strategic planning process l People are the real key to success

What Could be the Barriers to Effective PI?

Barriers to Effective Productivity Improvement l Poor Leadership l Flawed measurements l Flawed HR management systems l Bureaucracy l Lack of a long-term business strategy l Short-term focus l Ineffective execution