Page 23 - DMGT501_OPERATIONS_MANAGEMENT

Unit 1: Introduction to Operations Management

Notes
Figure 1.3: The Productivity Tree
Improved Services
Better delivery, better Reduced Costs
Increased Volume quality, better output, Lower unit cost.
Able to reach wider Better benefits to More profit or more
market sales.
customers

OUTPUTS
CONVERSION PROCESS

INPUTS

Materials People Systems
quality, quantity of Correct skill levels, Procedures to ensure organisation
input materials age, mix. can undertake conversion process
Tools Knowledge efficiently
To undertake the People with Management
work efficiently experience and Skill, ability and leadership style,
Equipment expertise in the Right calibre and competence.
Up to date and fit appropriate areas Processes
for purpose of the business Processes adopted, the
Skill technology employed, the
Trained and systems used.
developed for the Attitudes
purpose Ability to adopt, cooperate,
change Resourcefulness and
motivation.
Source: http://www.accel-team.com/productivity_01_what.html#
In both these cases, the cost of the service declines and the quality improves.
However, it must be remembered that developments in technology often drive productivity
improvements. As organizations invest in technology, they can optimize time, expand options,
and reduce costs.
Technology is in many cases revolutionizing business and Operations Management by changing
everything from the way products are designed to how inventory is managed and controlled. It
is helping in decision making by gathering, organizing, analyzing, and presenting data to
managers faster and cheaper each day. This has an impact not only on how effectively and
efficiently the equipment is used but also on designing activities that help enhance productivity.

Task Give examples of few companies that have specifically followed cost
leadership and focus strategies.

The productivity tree is shown in three parts, the roots (inputs), the trunk (the conversion
process) and the fruit (the outputs). As will be recognized in the figure, long-term productivity
improvements can be achieved by the human factor through skills, systems, management and
positive and innovative attitudes. In this sense, productivity is an attitude of mind which is
intolerant of waste of every kind and in any form. It not only refers to work systems but also to
the development of right attitudes and a strong concern for efficiency. Waste can be eliminated
through:
1. Technology, Innovation and Automation: Technology, Innovation and automation brings
new ideas, methods, and/or equipment to the process of making a product. Technology
determines both the maximal physical quantity of output that can be reached as well as the
number and the quality of inputs required. This presents an opportunity to cut costs and to

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