Difference between quality and productivity in operation management
Answers
Factors that affect profitability can be both external and internal to the organization. A severe drought is an external factor that may cause wheat crops to die. As a result, the cost of breadcrumbs may rise. The breadcrumbs are a raw material used to make the nuggets. The rise in cost for one raw material will lower the profitability of the final product.
The Managers
Internal factors that affect profitability can often be attributed to management decisions. There are three management levels that make decisions in an organization. Each level of management plays a different role in the decisions about productivity and quality.
Top level managers
Top-level managers are responsible for the overall strategic vision for the organization and rank highest in the organizational hierarchy. These managers are responsible for the entire organization. Decisions made by top-level managers affect all areas of the organization.
Decisions top-level management make at Chicken Valley Poultry may include:
Policies and procedures
Resource allocation (like suppliers)
Quality standards
Budgeting
These decisions significantly affect profitability. When Chicken Valley's top management made a change in suppliers, it meant a change in the quality of chicken used to make the nuggets. Customers did not like the change. Mid-level managers must now make important decisions because production changed based on the lower demand for the nuggets.
Mid level managers
Mid-level managers carry out the plans made by top-level managers in areas like planning and coordinating the work activities of lower-level managers. These managers make decisions that involve production and quality.
Chicken Valley Poultry allows mid-level managers to make decisions about:
Tactical plans (or action plans)
Short-term goal attainment
Marketing
These decisions also affect profitability. Tactical plans are the action steps needed to achieve the strategic goals set by top-level management. When Chicken Valley Poultry management decided to change the quality of the chicken for the nuggets, low demand decreased production. Mid-level management may decide to market the product differently to increase demand and in turn, production. A change in the way a product is marketed means spending money on marketing campaigns. This rise in input costs lowers profitability until demand for the nuggets increases