RE-THINKING OPERATIONS IN THE NEXT NORMAL Operations functionsincluding procurement, supply chain, and manufacturingare at the forefront of managing the challenges and finding new ways of working in light of global trends and disruptions. The COVID-19 pandemic has accelerated the pace of change, creating an inflection point. Companies have relied on their operations functions not only to maintain day-today operations, which has itself been challenging, but also to position the business to survive and grow in the post-pandemic world. For example, regionalization has been accelerated by the pandemic, as countries closed their borders and protected their supply chains. Globalization was already under strain before the pandemic: the intraregional share of global goods trade increased by 2.7 percentage points between 2013 and 2018, according to an analysis by the McKinsey Global Institute (MGI). Regionalization is most apparent in global innovation value chains, given their need to closely integrate many suppliers for just-in-time sequencing. This trend could become apparent in other value chains as well, as automation reduces the importance of labor costs and increases the importance of speed to market in company decisions about where to produce goods. The pandemic is the latest, and most severe, disruption to affect value chains in recent times. The financial impact of these disruptions is significant. An MGI analysis found that over the course of a decade, the average company can expect disruption to cause losses equal to almost 45 percent of one years profits. This is equal to seven percentage points of decline, on average. As many companies have learned over the past year, many operations functions are not sufficiently prepared to handle the shocks. These functions were built for an earlier era, when change was more gradual, disruptions were less frequent, and customer expectations were lower. Today, companies need greater transparency into demand, supply chains, and production capabilities, so that they can respond proactively or in real time to rapidly changing conditions. Considering that operations disruptionswhether arising from geopolitics, technology, climate change, or diseaseare becoming increasingly frequent, incremental improvements will not be sufficient to prevent significant revenue losses. Operations leaders must fully rethink their organizations and capabilities to deliver not only short-term financial improvement, but also longer-term value creation through efficiency, resilience, agility, and digitization.

The Minister responsible for Trade and Industry has assigned you the task of evaluating the improvement in productivity of manufacturing businesses in South Africa. Data for one of the businesses you are to evaluate is provided. The data are the monthly average of last year and the monthly average for this year. Labour: R8 per hour Capital: 0.83% per month of investment Energy: R0.60 per BTU

Production (dozen) Labour (hours) Capital Investment (R) Energy (BTU)

	Last year	This year
Production (dozen)	1,500	1,500
Labours (hours)	350	325
Capital investment (R)	15,000	18,000
Energy (BTU)	3,000	2,700

4.1 Determine the multi-factor productivity for last year and this year. (6 marks)

4.2 Determine the percent change in productivity for the monthly average last year versus the monthly average this year on multifactor basis. (4 marks)

4.3 Sizwe conditioners a manufacturing firm based in Gauteng makes three different types of air conditioners: the ceiling type, the cassette type and the wall mounted type. Weekly sales of each type are two, four and six units at a price of R350, R450 and R500 each, respectively. The ceiling type can be assembled in 1.5 hours, the cassette type in one hour, and the wall mounted type in 45 minutes. Labor cost is R40 per hour and the factorys multifactor productivity is 2.2. Determine the average cost per air conditioner based on the current multifactor productivity. Also calculate the labor productivity in rands for each type of air conditioner. Lastly comment on where the company should focus its efforts-based on labor productivity and average cost. (10 marks)