BBA 1010

PRODUCTION AND OPERATIONS

MANAGEMENT

TAN WAH TIONG

940928-14-5531
201565
017-685 3251
DOUGLAS CHENG
FEBRUARY 2013
NO
1.0

DETAIL
Content

PAGE
1

2.0

Introduction production and operations management

2
Page 0 of 29

3.0

Task 1

3-6
Various automated systems for transfer of materials in the
production plant

4.0

Example in automobile industry

Task 2

7-11

Important for locating an automobile plant

Layout planning of an automobile plant from various sources to

furnish

5.0

Task 3

12-16

6.0

The helping of material flow information in work center decision

Task 4

17-18

7.0

Concept of Industry Best Practice and Pragmatic Bench Marketing

Reference
19

8.0

Coursework

20-22

1.0 Content

2.0 Introduction to production and operations

management

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Operations management is an area of management concerned with overseeing,

designing, and controlling the process of production and redesigning business
operations in the production of goods or services. It involves the responsibility of
ensuring that business operations are efficient in terms of using as few resources as
needed, and effective in terms of meeting customer requirements. It is concerned with
managing the process that converts inputs into outputs. Besides,the relationship of
operations management to senior management in commercial contexts can be compared
to the relationship of line officers to highest-level senior officers in military science.
The highest-level officers shape the strategy and revise it over time, while the line
officers make tactical decisions in support of carrying out the strategy. In business as in
military affairs, the boundaries between levels are not always distinct; tactical
information dynamically informs strategy, and individual people often move between
roles over time. According to the U.S. Department of Education, operations
management is the field concerned with managing and directing the physical and/or
technical functions of a firm or organization, particularly those relating to development,
production, and manufacturing. Operations management programs typically include
instruction in principles of general management, manufacturing and production systems,
plant management, equipment maintenance management, production control, industrial
labor relations and skilled trades supervision, strategic manufacturing policy, systems
analysis, productivity analysis and cost control, and materials planning. Management,

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including operations management, is like engineering in that it blends art with applied
science. People skills, creativity, rational analysis, and knowledge of technology are all
required for success.

3.0 Task 1
Various automated systems for transfer of materials in the production plant and
example in automobile industry
Automation is the use of machines, control systems and information technologies to
optimize productivity in the production of goods and delivery of services. The correct
incentive for applying automation is to increase productivity, and/or quality beyond that
possible with current human labor levels so as to realize economies of scale, and/or
realize predictable quality levels.
In the scope of industrialization, automation is a step beyond mechanization. Whereas
mechanization provides human operators with machinery to assist them with the
muscular requirements of work, automation greatly decreases the need for human
sensory and mental requirements while increasing load capacity, speed, and
repeatability.
In addition, automation plays an increasingly important role in the world economy and
in daily experience. Automation has had a notable impact in a wide range of industries

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beyond manufacturing (where it began). Once-ubiquitous telephone operators have been

replaced largely by automated telephone switchboards and answering machines.
Medical processes such as primary screening in electrocardiography or radiography and
laboratory analysis of human genes, sera, cells, and tissues are carried out at much
greater speed and accuracy by automated systems.
Besides, automated teller machines have reduced the need for bank visits to obtain cash
and carry out transactions. In general, automation has been responsible for the shift in
the world economy from industrial jobs to service jobs in the 20th and 21st centuries.
Furthermore, the term automation, inspired by the earlier word automatic (coming from
automaton), was not widely used before 1947, when General Motors established the
automation department. At that time automation technologies were electrical,
mechanical, hydraulic and pneumatic. Between 1957 and 1964 factory output nearly
doubled while the number of blue collar workers started to decline.
Automation, much like mechanization, depends on machines to execute functions many
of which were first performed manually. Mechanization can be seen as the stepping
stone between manual labor and automationit eliminates the need for physical labor,
but operators are still needed to oversee machine operations and provide maintenance
and feedback. However, eliminate the need for an operator by including feedback and
sensory programs. The result is highly independent machine systems that can carry out a
task from start to finish, without human assistance.

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Then, automated machines have been seamlessly integrated into countless industries,
from carrying out manufacturing tasks to handling telephone switchboards. In quotidian
life, we encounter automated systems each time we use an ATM. The level of human
dependence is high, as is the functions we entrust them withmanaging our finances,
our phone calls, our computers. With such an array of functions, its not surprising that
not all automated systems are the same. Depending on the exact function, one of several
different tools may be responsible for an automated system: an artificial neural network,
distributed control system, human machine interface, supervisory control and data
acquisition, or a programmable logic controller.
The First is Artificial Neural Network. An artificial neural network is a mathematical or
computational model whose rhythms mimic those of biological neurons. The structure
of the network is adaptive, meaning it can change based on the external or internal
exchange of information throughout the network. Besides, artificial neural networks are
used to identify patterns in pools of data and to classify relationships (such as sequence
recognition). Applications include e-mail spam filtering, system control (such as in a
car), pattern recognition in systems (such as radars), pattern recognition in speech,
movement, and text, and financial automated trading systems.
The Second is Distributed Control System. A distributed control system is one in which
there are separate controls throughout the system. The controls are not centrally located,
but tend to be spread out depending on which region of the system needs monitoring

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each control is connected to the others in a communication network. Moreover, these

kinds of systems are typically used in manufacturing processes, especially when the
action or production is continuous. The controllers can be specified for a given process,
and manipulated to enhance or monitor machine performance. Traffic lights are usually
controlled by distributed control systems, and they can also be applied in oil refining
and central station power generation.
The third is Human Machine Interface. Commonly referred to as a user interface, a
human machine interface system depends on human interaction with the system in order
to function. A user will provide input, and the system in turn will produce output that
coincides with the users intent. In order for this to work, users must have access to the
system and a means by which to manipulate it. ATMs, for example, are designed so
users can easily dictate what the system is supposed to do while enabling it to easily
respond and provide the appropriate results. In addition, Buttons that read withdrawal or
make a deposit provide the user with any easy way to trigger a chain of commands
within the internal system. The desired result, either the intake of a deposit or the
ejection of cash, can then be achieved.

The Next are Supervisory Control and Data Acquisition. A supervisory control and data
acquisition system (SCADA) is a larger, industrial control network that is often

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comprised of smaller sub-systems, including human machine interface systems

connected to remote terminal units, which work to translate sensor signals into
comprehensible data. These systems can work together to control an entire
manufacturing site, or even an entire region by connecting several different
manufacturing plants. SCADA systems bear a high resemblance to distributed control
systems, and at times it may be difficult to differentiate between the two. The key
difference lies in what they ultimately doSCADA systems do not control each process
in real time, rather they coordinate processes. Generally speaking, however, the two
systems are highly similar and are often used in identical applications.
The last is Programmable Logic Controllers. Programmable logic controllers are real
time systems, meaning there is a set deadline and timeframe in which the desired result
must be achieved. In addition, the PLC system is essentially a computer that controls
manufacturing machines in an industrial production line, so it has multiple capabilities,
such as varied temperature ranges and input and output settings, as well as the ability to
weather dust and other unfavorable conditions. Programmable logic controllers can be
used to program a variety of day-to-day applications, such as amusement park rides.

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4.0 Task 2
Important for locating an automobile plant and layouting planning of an
automobile plant from various sources to furnish
It is often said that the key to success in real estate is location, location, location.
Although this phrase means different things to different people, it is generally agreed
that the MSHDA should not finance developments that do not meet reasonable and
prudent site selection criteria. The following factors are used to determine if a site is an
acceptable location for a MSHDA financed housing development. They are not listed in
order of priority.
Firstly, Sites must be appropriate for residential use, in proximity to viable downtown or
commercial centers. Parcels must be near existing residential uses, preferably single
family, which reinforce the feeling of "neighborhood. The residential uses should be in
good condition or the subject of a realistic plan to improve them to a good condition.
Areas impacted by high concentrations of very low income housing, which is
deteriorating, or in jeopardy of deterioration will not satisfy this criterion. However,

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proposals to reintroduce housing into renewal areas of Michigan's urban centers may be
accepted absent other residential uses in the immediate area. Acceptance is contingent
upon funded community initiatives to revitalize areas adjacent to the site. Besides, a site
will more likely be accepted where the proposed development will build on or
complement existing anchor institutions. It must also support the economic vitality of
traditional center of commerce similar to those found in a neighborhood of primarily
unassisted housing of a similar nature..
The second is Sites should exhibit no obvious negative environmental influences, which
cannot be corrected or acceptably mitigated. Environmental impacts include, but are not
limited to: excessive noise or physical hazard from railroad, vehicular, or air traffic;
high tension power lines or high pressure natural gas transmission lines; sanitary
landfills or salvage yards; sewage treatment plants; stored hazardous materials on or
near the sites; buried or spilled hazardous wastes; operating oil wells; mine shafts;
gravel pits; wetland designation; and prime agricultural soils classification. The
Authority will not finance projects to be located in a 100-year flood plain unless all
necessary governmental approvals are obtained and all buildings, parking areas, and
pedestrian and vehicular ingress and egress will be elevated at least one foot above the
flood plain elevation when the project is finished.
The third is Other environmental factors to consider include wetlands, Great Lakes,
wild and scenic rivers, prime agricultural soils, historic districts, and lead based paint.

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Environmental clearance procedures vary depending upon whether the proposal

involves new construction or rehabilitation, the use of federal funds, and occupancy by
children. Before selecting a site, please contact MSHDA development staff at 517 3736880 or refer to MSHDAs Phase Potential delays in processing, additional design
requirement, and significant development costs may occur if the following
environmental issues are encountered: Sites in 100-year flood plains or sites involving
wetlands in the area proposed for construction. Sites within one mile of jet capable
airports (two miles or further if located within the main landing or take-off paths for
aircraft. Site with significant historic value. Sites with any significant amount of soil
contamination or with a history of previous use such as a gas station, paint manufacturer
or sales, dry cleaning, auto repair or salvage, heavy manufacturing, etc, which present a
high risk of residual soil contamination. Besides, Buildings constructed before 1978 are
subject to lead-based paint regulations. Sites within 600 feet of railroads or within 400
feet of major underground gas transmission lines or underground storage. Sites in heavy
traffic or high crime areas, sites within 500 feet of the Great Lakes or a wild and scenic
river.

The Next is Proposals involving federal funds for occupied sites should involve no
permanent relocation. Funding for relocation costs is generally not available from

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MSHDA, although proposals involving temporary relocation at minimal cost may be

considered on a case-by-case basis.
The fifth is Parcels must have all necessary utilities. The sites must be served by a
municipally-owned water supply, as well as a storm and sanitary sewer system,
available and adequate for the number of units proposed. Private water systems will not
be approved except for lawn irrigation. Storm water detention/ retention basins to
control the discharge to sewer systems are desirable. Sites requiring off-site utility
extensions or sewage lift stations may be considered. However, all sites are appraised as
"ready to build," and the cost of unusual on-site and off-site improvements may be
included in the mortgage only to the extent that the land acquisition cost is less than the
appraised value. (The Authority recognizes buried rubble and debris in the appraisal of
urban renewal sites as a normal site condition.)
The sixth is sites must be of a reasonable size and configuration to permit acceptable
and professional site planning with adequate open space, circulation, and parking,
exclusive of parking in primary drives. Long and narrow, so-called "bowling alley" sites
requiring a single point of access and an extensive cul-de-sac are not acceptable.
Sufficient space must be available to accommodate fire safety equipment, solid waste
removal trucks and school busses, where applicable. The proposed project should not be
out of scale relative to current and proposed adjacent land uses.

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The next is Sites are required to have sufficient frontage on a paved thorough fare to be
able to have a self-advertising quality, allow for adequate ingress and egress where
ingress or egress is necessary from that paved road, allow for adequate visual separation
from other adjacent uses, and allow for adequate signage, lighting, and landscaping so
as to establish a pleasing and noticeable residential presence. Moreover, regard to the
foregoing criteria, it should be noted that the traffic speeds permitted on the streets and
the density and nature of surrounding uses may have a bearing on the amount of
frontage that is required in a given situation. Also, these requirements are not applicable
with respect to second or later phases of successful multifamily residential projects,
which have (broadly defined) commonality of ownership and management with
previously existing phases.
The eighth is the surrounding uses when viewed from the site itself should usually be
well maintained and aesthetically pleasing. Sites will be rejected for proximity to
dumps, auto salvage yards, and heavy industrial uses. Sites may also be rejected for
deteriorating or blighted residential uses, massive parking lots or storage yards,
unsightly loading zones at retail facilities, and similar uses unless screening can be put
in place which adequately protects the proposed development site from the negative
aspects of the adjacent use.
In addition, sites should have easy and safe ingress and egress Areas of concern include
difficult left-hand turns against prevailing traffic, excessive curb cuts surrounding the

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entrance to the development, and unreasonable lines of sight at the entrance. Excessive
traffic congestion should be avoided. Examples include major employment parking lots,
regional shopping malls, and multi-screen theaters.
Besides, Good vehicular access and walk able connections are to be available for
residents to public transportation and community resources such as grocery shopping,
pharmacy, banking, employment opportunities, religious and educational institutions,
medical and social services, recreational facilities and community parks. There should
be appropriate separation of vehicles from pedestrian traffic. Sites should allow for
visually proud orientation of the housing to the street and surrounding neighborhood.
Surrounding uses, when viewed from the housing should be well maintained and
aesthetically pleasing. Other desirable site characteristics include some degree of
physical attractiveness such as mature vegetation, rolling topography, and water
frontage.
Lastly, in cases where more than one site is submitted in a single market area or where a
site does not meet all of the foregoing criteria, other relevant considerations may be
taken into account. Other relevant considerations include but are not limited to a)
availability of and/or close proximity to neighborhood and community services,
schools, parks, libraries, other special amenities geared to the population to be served by
the proposal, b) other "desirable" site characteristics described in 10 above, and c)
location within a portion of the community exhibiting strong economic growth but

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lacking affordable housing. Small communities (generally with a population of less than
10,000) with a demonstrated housing need and strong market but lacking affordable
housing may not have sites available that meet all of the criteria. In such situations, the
best available site may be selected. The developer must describe and compare all
available sites and demonstrate that the proposed site is the best available.
The systematic layout planning (SLP) is a tool used to arrange a workplace in a plant by
locating two areas with high frequency and logical relationships close to each other.[1]
The process permits the quickest material flow in processing the product at the lowest
cost and least amount of handling. There are four levels of detail in plant layout design
which is site layout that shows how the building should be located in a proper way. In
addition, block layout: shows the sizes of departments in the buildings. In addition,
detailed layout which showing the arrangements of equipment and workstations in the
departments. Last is workstation layout which showing the locations of every part of the
workstation.

5.0 Task 3
The helping of material flow information in work center decision

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A work center is a production facility comprising of one or more machines and one or
more workmen considered as a single unit for purposes of estimation of capacity. This
unit may have a single operation or a number of them conducted on the input items. In
the pipeline of production, each work centers contribution is vital as materials are
scheduled, routed and loaded to be sent to it. In many organizations, they are even
considered as cost centers. Location just means relative positions of different centers so
as to minimize the movement of materials, meet technological sequences, to reduce
congestion, maximize throughput, improve part tracking ability and avoid repetitive
movements. In addition, another consideration is to provide for expansion of
production. Each work center receives information along with material that entering it.
The material also leaves the work center with information. The route sheet contains
information about the material, process, quantities, inspection procedures, etc. The
drawing or instructions tell the condition of the material at entry and the required
condition at exit. In this sense every operation consists of material transformation
occurring on the basis of information. Activities conducted are on the basic of
information that flows with material. Different locations have to accommodate the
constraints of operations. Their positions on evaluated on the basis of deriving
maximum benefit of the information. Their position on evaluated on the basis of
deriving maximum benefit of the information that is available. Basically each location is
determined on the basis of from and to. Where does it receive material from and to

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which center the material goes? Some centers have to close as a matter of necessity,
some need not be and some need to be as far away as possible.
This aspect has been given a rating scale in terms of alphabets as under:
a- Absolutely necessary to be close
e- Essential to be close
i-

Important that they are close

o- Ordinary closeness
u- Unimportant that they are close or not
x-

Not desirable that the centers are close.

For example, Jusco is showing you how material flow information helps in work
center decision. Today, the companys vision of providing best value infrastructure and
utility services lies in an area that has traditionally been in the purview of the third tier
of the government, i.e., urban local bodies (ULBs). The business in the municipal sector
has been executed by ULBs, where the same body regulates, executes and judges its
own performance, with minimum levels of accountability. The challenge to enabling
better quality standards lies in separating these roles and making them accountable. But
with the launch of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM)

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in 2005, this age-old system is now undergoing changes. The mission advocates
separation of the role of service provider from that of policy maker, both of which have
been performed by the ULBs so far. As Mr. Paul points out, This ensures proper
utilization of funds and accountability to execute projects for the benefit of citizens.
This has given a fillip to the infrastructure sector and enabled growth a sustainable
manner. Under the JNNURM, opportunities have increased. According to Jusco, the
municipal water and sanitation market is estimated at Rs100, 000 million and is
growing at the rate of 6-8 per cent every year. Similarly, the industrial sector market is
estimated to be worth about Rs100, 000-120,000 million, growing at 5-7 per cent per
annum. "There are immense opportunities here," says Mr. Paul, "As a result, many
international players are also eyeing this sector." And there in lie the foundation of the
Jusco model. Says Mr. Paul, "Our business model is very simple provide the best of
services to your customers and let them pay for it. Civic services were always
considered to be free services provided by the government. But in todays scenario
people demand better services and they are ready to pay."

Of Juscos basket of services, there is one area where it has chosen to stand out and
excel as service provider water. Drinking or potable water is today one of the worlds
emerging crisis sectors. India along with the rest of the world is poised on the brink of
an environmental holocaust caused by global warming, which will have huge

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repercussions on the quality and availability of fresh water. Under the UNGC project,
Jusco has taken on the mandate of providing water to areas that lie outside its command
areas at Jamshedpur, where there is no ULB providing services to underprivileged
households. When the project began in 2005, only 5 per cent of this population had
access to piped water; today half the households have access to taps and the rest,
according to Juscos plan, should follow suit by 2012.Juscos competencies in water and
waste water management have been built over nine decades of experience. To this Jusco
has added technology, expertise and high quality standards. As Mr. Paul puts it, "We are
the only comprehensive water service provider in the country. Our expertise lies in the
robust systems and processes that is the core of all our projects. The systems and
processes developed over the years have given us an edge over others."

Besides, what makes Juscos services a benchmark in the water management sector is
the fact that the company has implemented quality management systems, environmental
management systems and established water laboratory accredited by the National
Accreditation Board for Testing and Calibration Laboratories. With competencies
spanning both water and waste water, Jusco is the first utility to have integrated river-toriver water management skills. It has also set up a non-revenue water reduction
programmer that has enabled it to record the lowest water losses among water utilities
in India. Jusco extensively uses both technology and good management practices to

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enhance its efficiencies for instance, the company uses TPM, supervisory control and
data acquisition systems for the water treatment plant, energy audit and conservation
measures, metering and flow monitoring, trenchless technologies, ground penetrating
radar, electronic pipe locator, leak detection instruments, geographical information
system, hydraulic modeling, and so on. Says Mr. Paul, "These are best practices that
have been developed over the years and can be replicated anywhere. Most developed
countries use similar systems and processes." On top of that, the company has invested
in a 24/7 helpline service as a part of its customer management system called Jusco
SANYO Kendra that allows customers to log and track complaints. This system has
proved so effective in tracking and improving response time that it won the company
the National Urban Water Award 2009. Says Mr. Paul, "The system is so robust that it
has been implemented successfully at Jamshedpur, Halide and Seraikela- Kharsawan
operations." As a result, the company is in a position to offer end-to-end solutions in the
water sector to customers not just in the civic sector, but also in commercial and
industrial areas. Its services comprise operation and maintenance, lease or concession
contracts, engineering and construction of new facilities, management contracts,
reduction in non-revenue water and creation of 24x7 water supply zones. Today, the
company is busy replicating the Jamshedpur practices in other cities of India and is
working on water and waste water projects with municipal authorities in Mysore,
Kolkata, Haldia, Chennai, Muzaffarpur, Gwalior and Bhopal. It has also secured

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corporate projects from Tata BP Solar in Bangalore and the Uranium Corporation of
India in Tummalapalle (Andhra Pradesh). Remarks Mr Paul, "Any new project brings
new challenges and helps in learning. The UCIL project involves design, construction
and commissioning of its entire water and effluent treatment and distribution facility."

In addition, Juscos span of operations goes far beyond water; it provides

comprehensive and sustainable solutions for other urban infrastructure needs as well,
namely power distribution, municipal solid waste management, and engineering and
construction. In fact, it is one of the few utilities in India that has been given a licence to
set up power distribution infrastructure in parallel with the state electricity board in the
Seraikela-Kharsawan district of Jharkhand. Jusco boasts the highest level of power
availability at the lowest tariff rate. For municipal solid waste management it has
operations at Jamshedpur, Kollam and Kolkata. Under engineering and construction it
provides services in industrial, civil and structural areas. The company caters as a
single-stop shop for urban and industrial infrastructure like roads, bridges, residential
and commercial complexes, recreational facilities, and civil and structural construction.
Juscos green focus has led to intelligent illumination and energy-saving devices for
street lights. It has planted over 100,000 trees making Jamshedpur one of the greenest
cities in India. Its clear that Jusco is taking every word of its promise of 'Quality
services for life very seriously.

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6.0 Task 4
Concept of Industry Best Practice and Pragmatic Bench Marketing
A best practice is a method or technique that has consistently shown results superior
to those achieved with other means, and that is used as a benchmark. In addition, a
"best" practice can evolve to become better as improvements are discovered. Best
practice is considered by some as a business buzzword, used to describe the process of
developing and following a standard way of doing things that multiple organizations can
use. In addition, Best practices are used to maintain quality as an alternative to
mandatory legislated standards and can be based on self-assessment or benchmarking.
Best practice is a feature of accredited management standards such as ISO 9000 and
ISO 14001. Some consulting firms specialize in the area of Best Practice and offer premade 'templates' to standardize business process documentation. Sometimes a "best
practice" is not applicable or is inappropriate for a particular organization's needs.
Besides, a key strategic talent required when applying best practice to organizations is

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the ability to balance the unique qualities of an organization with the practices that it has
in common with others.
The concept of benchmarking as a managerial tool emerged in the management
literature as a consequence of a series of successful organization development projects
conducted by the management of the US copier manufacturer Rank Xerox. A review of
the literature in this field highlights a large number of definitions of the concept,
although most only differ in terms of the terminology they use, or the amount of
information they include. Camp (1989, 1995, 1998) one of the founding researchers in
the field of benchmarking, defined benchmarking as the search for industry best
practices that leads to superior performance (Camp 1995, p.8). Bogan and English
(1994, p.4) suggested a more extensive definition when they stated that Benchmarking
is the continuous process of measuring products services and practices against the
toughest competitors or those companies recognized as industry leaders. Consequently,
benchmarking can be considered as a structured process that leads to understanding of
superior performance in the delivery of services and products (Camp, 1998; Lankfrod,
2002; Marwa and Zairi, 2008). Nourayi (2006) has offered a number of reasons for the
use of benchmarking in organizations. He suggests that organization can use
benchmarking to improve productivity, service design and to identify new opportunities.
In addition, Fernandez, McCarthy and Rako to be-Joel (2001) have highlighted the
advantages of benchmarking in terms of its ability to contribute to strategic planning,

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process analysis and improvement and organizational change. Moreover, its ability to
allow the analysis of processes is particularly important for the managers of elite sport
systems who may be able to use process benchmarking to learn how to improve the way
they deliver their direct support services.

7.0 Reference

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http://en.wikipedia.org/wiki/Automation

http://www.thomasnet.com/articles/automation-electronics/general-automationsystems

http://www.michigan.gov/documents/mshda/mshda_li_ca_38_tab_cc_site_select
ion_criteria_183895_7.pdf

http://en.wikipedia.org/wiki/Systematic_layout_planning

www.google.com

http://zh.scribd.com/doc/22693685/Mb0028-Complete

http://www.tata.com/company/articles/inside.aspx?artid=r4XuV0EAk5Q

https://dspace.stir.ac.uk/bitstream/1893/2863/1/Is%20benchmarking
%20appropriate%20for%20the%20management%20of%20elite%20sport
%20systems_.pdf

http://en.wikipedia.org/wiki/Best_practice

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8.0 Coursework
Operations has major influence on competitiveness through product and service design,
coot location, quality, response time, flexibility, inventory and supply chain
management ,and service. Many of these are interrelated.
1. Product and service design should reflect joint efforts of many areas of the firm
to achieve a match between financial resources, operations capabilities, supply
chain capabilities, and customer wants and needs. Special characteristics or
feature of a product or service can be a key factor in consumer buying decisions.
Other key factors include innovation and the time-to-market for new products
and services.
2. Cost of an organizations output is a key variable that affects pricing decisions
and profits. Cost-reduction efforts are generally ongoing in business
organizations. Productivity is an important determinant of cost. Organization

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with higher productivity rates than their competitors have a competitive cost
advantage. A company may outsource a portion of its operation to achieve lower
costs, higher productivity, or better quality.
3. Location can be important in terms of cost and convenience for customers.
Location near inputs can result in lower input costs. Location near markets can
result in lower transportation costs and quicker delivery times. Convenient
location is particularly important in the retail sector.
4. Quality refers to materials, workmanship, design and service/ Consumers judge
quality in terms of how well they think, a product or service. Consumer judge
quality in terms of how well they think, a product or service will satisfy its
intended purpose. Customers are generally willing to pay more for a product or
service if they perceive the product or service has higher quality than that of a
competitor.
5. Quick respond can be a competitive advantage. One way is quickly bringing
new or improved products or services to the market. Another is being able to
quickly deliver existing products and services to a customer after they are
ordered, and still another is quickly handling customer complaints.
6. Flexibility is the ability to respond to changes. Changes might relate to
alterations in design features of a product or service, or to the volume demanded

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by customers, or the mix of products or services offered by an organization.

High flexibility can be a competitive advantage in a changeable environment.
7. Inventory management can be a competitive advantage by effectively matching
supplies of goods with demand.
8. Supply chain management involves coordinating internal and external
operations (buyers and suppliers) to achieve timely and cost-effective delivery of
goods throughout the system.
9. Service might involve after-sale activities Customers perceive as value-added
such as delivery. Setup. Warranty work, and technical support. Or it might
involve extra attention while work is in progress, such as courtesy, keeping the
customers informed, and attention to details. Service quality can be a key
differentiator; and it is one that is often sustainable. Moreover, businesses rated
highly by their customers for services quality tend to be more profitable, and
grow faster, than businesses that are not rated highly.
10. Managers and workers are the people at the heart and tool of an organization,
and if they are competent and motivated, they can provide a distinct competitive
edge by their skills and the ideas they create. One often overlooked skill is
answering the telephone. How complaint calls or requests for information are
handled can be a positive or a negative. If a person answering is rude or not

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helpful, that can produce a negative image. Conversely, if calls are handled
promptly and cheerfully, that can produce a positive image and, potentially, a
competitive advantage.

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