An Assessment of Contributions of Operations Management to Academia and Practice in Turkey

1
An Assessment of Contributions of Operations
Management to Academia and Practice in Turkey
EUROMA 2007, Bilkent University, Ankara, Turkey
Prof. Dr. Gündüz Ulusoy Faculty of Engineering
and Natural Sciences Sabanci University,
Istanbul Director, TÜSIAD-Sabanci University
Competitiveness Forum
2
CONTENTS

• TURKEYA BRIEF INTRODUCTION
• COMPETITIVENESS PROFILE OF TURKEY
• SOME OBSERVATIONS CONCERNING MANUFACTURING
  INDUSTRIES IN TURKEY
• AN ASSESSMENT OF OPERATIONS MANAGEMENT IN TURKEY
• CONCLUSIONS

3
TURKEY A BRIEF INTRODUCTION
4
SOME ECONOMIC INDICATORS
5
DISTRIBUTION OF GDP AMONG SECTORS
6
DEMOGRAPHICS
7
EDUCATION

Total number of students enrolled in
universities 1.247.404 (2004) In Open
University 695.591 (2004)
Ultav, Panel Presentation at the National
Innovation Initiative Meeting, Ankara, October,
2006
8
EDUCATION
Percentage of Degrees Awarded in Mathematics,
Natural Sciences and Engineering in Total


Ultav, Panel Presentation at the National
Innovation Initiative Meeting, Ankara, October,
2006
9

• RD AND INNOVATION INPUT OUTPUT

10
FTE RD PERSONNEL AND RESEARCHERS
11
FTE RD PERSONNEL/RESEARCHERS
12
RD INTENSITY
13
NUMBER OF JOURNAL PUBLICATIONS (SCI, SSCI, AH)
14
RANK OF TURKEY IN THE NUMBER OF PUBLICATIONS
(SCI, SSCI, AH)
15
APPLICATIONS AND REGISTRATION FOR UTILITY MODELS
16
PATENT APPLICATIONS
17
FOREIGN TRADE
18
EXPORTS AND IMPORTS
Ave Annual Increase in Exports er20,6
Ave Annual Increase in Imports ir16,8
19
TOP 10 EXPORT DESTINATIONS (2005)
20
TOP 10 IMPORT SOURCE COUNTRIES (2005)
21
DYNAMIC TRADE PERFORMANCE OF TURKEY (2-digit
SITC)
Underachievers
Champions
Losers in declining markets
Achievers in adversity
Öz, Foreign Trade As An Economic Driver, The
Global Competitiveness Report Turkey 2006, REF,
Istanbul, November 2006
22
CHAMPIONS IN 2000-2005 PERIOD
Öz, Foreign Trade As An Economic Driver, The
Global Competitiveness Report Turkey 2006, REF,
Istanbul, November 2006
23
ACHIEVERS IN ADVERSITY IN 2000-2005 PERIOD
Öz, Foreign Trade As An Economic Driver, The
Global Competitiveness Report Turkey 2006, REF,
Istanbul, November 2006
24
CHANGES IN THE EXPORT MIX
Ultav, Panel Presentation at the National
Innovation Initiative Meeting, Ankara, October,
2006
25
EU MARKET SHARE OF TURKISH COMPANIES IN
CONSUMER ELECTRONICS
Ultav, Panel Presentation at the National
Innovation Initiative Meeting, Ankara, October,
2006
26
COMPETITIVENESS PROFILE OF TURKEY
27
PILLARS OF COMPETITIVENESS
Key forfactor-driven economies

• InstitutionsInfrastructureMacroeconomyHealth
  and Primary Education

BASIC REQUIREMENTS

Key forefficiency-driven economies

• Higher Education and TrainingMarket Efficiency
  (goods, labour, financial)Technological
  Readiness

EFFICIENCY ENHANCERS
Key forinnovation-driven economies

• Business SophisticationInnovation

INNOVATION SOPHISTICATIONS FACTORS
The Global Competitiveness Report 2006-2007,
World Competitiveness Forum, Geneva, 2006.
28
GLOBAL COMPETITIVENESS INDEX RANKING
29
LIST OF COUNTRIES IN EACH STAGE OF DEVELOPMENT
The Global Competitiveness Report 2006-2007,
World Competitiveness Forum, Geneva, 2006.
30
RELATIONSHIP BETWEEN GDP PER CAPITA () (PPP) AND
GCI SCORE
31
TURKEY IN RELATION TO EU 25
Öz, The Investment Environment, The Global
Competitiveness Report Turkey 2006, REF,
Istanbul, November 2006
32
TURKEY IN RELATION TO NEW MEMBERS
Öz, The Investment Environment, The Global
Competitiveness Report Turkey 2006, REF,
Istanbul, November 2006
33
EU-10 IN 1996 AND 2006
Öz, The Investment Environment, The Global
Competitiveness Report Turkey 2006, REF,
Istanbul, November 2006
34

• GCI AND INNOVATION

35
RELATIONSHIP BETWEEN INNOVATION SCORE AND GCI
SCORE
36
RELATIONSHIP BETWEEN RD EXPENDITURE AS A
PERCENTAGE OF GDP AND GCI SCORE
37
RELATIONSHIP BETWEEN RESEARCHERS IN RD AND GCI
SCORE
38
BUSINESS COMPETITIVENESS INDEX (BCI)
39
BUSINESS COMPETITIVENESS INDEX
40
GCI RANK 2006 vs. BCI RANK 2006
41
SOME OBSERVATIONS CONCERNING MANUFACTURING
INDUSTRIES IN TURKEY
42
EMPIRICAL STUDIES OVER A DECADE

• The observations and remarks following will be
  based on several empirical studies distributed
  over a decade starting in 1997.
• Automotive
• Cement
• Electronics
• White goods suppliers
• Automotive suppliers (technology management)
• Electronics (NPD capability)
• Machine building
• Innovation in manufacturing industries
  (2004,2006)
• Innovation models in manufacturing and innovation
  networks

43
RANKING OF PRACTICES IN RELATION TO THEIR IMPACT
ON THE SUCCESS OF THE COMPANY
Ulusoy, Moving Forward, TÜSIAD Report, Istanbul,
2003. Ulusoy, Ikiz, "Benchmarking best
manufacturing practices a study into four
sectors of the Turkish industry", International
Journal of Operations and Production Management,
21, 1020-1043, 2001.
44
RANKING OF OUTCOMES IN RELATION TO THEIR IMPACT
ON THE SUCCESS OF THE COMPANY
Ulusoy, Moving Forward, TÜSIAD Report, Istanbul,
2003. Ulusoy, Ikiz, "Benchmarking best
manufacturing practices a study into four
sectors of the Turkish industry", International
Journal of Operations and Production Management,
21, 1020-1043, 2001.
45
COMPETITIVENESS STRATEGIES FOR MANUFACTURING
FIRMS IN TURKEY

• In general, the manufacturing industry in Turkey
  had based its competitiveness strategy on low
  price rather than product differentiation.
• But, rapid design change and rapid new product
  introduction were within the first five
  competitive priorities of all sectors involved.
• Furthermore, decreasing the new product
  development time was within the first five
  manufacturing objectives.
• The manufacturing firms were fully aware that in
  order to survive in the market process and
  product quality are necessary requirements.
• There were areas open to improvement in quality
  issues of which companies seem to be aware.
  Consistent quality level was designated as the
  highest competitive priority.

Ulusoy, Moving Forward, TÜSIAD Report, Istanbul,
2003. Ulusoy, Ikiz, "Benchmarking best
manufacturing practices a study into four
sectors of the Turkish industry", International
Journal of Operations and Production Management,
21, 1020-1043, 2001.
46
COMPETITIVENESS STRATEGIES FOR MANUFACTURING
FIRMS IN TURKEY

• In line with these observations Total Quality
  Management came out to be the most popular action
  plan.
• Based on these observations we can conclude that
  the Turkish manufacturing industry will increase
  the weight of product differentiation strategy
  against the low cost strategy within its mixed
  strategy.

Ulusoy, Moving Forward, TÜSIAD Report, Istanbul,
2003. Ulusoy, Ikiz, "Benchmarking best
manufacturing practices a study into four
sectors of the Turkish industry", International
Journal of Operations and Production Management,
21, 1020-1043, 2001.
47
COMPETITIVENESS STRATEGIES FOR MANUFACTURING
FIRMS IN TURKEY

• The agenda of the Turkish manufacturing industry
  is to be able to manufacture quality goods at low
  cost and to increase their market share.
• Firms also aim at introducing products with high
  added value in order to increase their
  profitability.
• These strategies are consistent with the
  increasing emphasis on product differentiation
  and the increasing importance of new product
  development.

48
COMPETITIVENESS

• At the macro level, competitiveness in Turkey
  suffers from three weaknesses
• Informal economy
• Macroeconomic and political instability
• Governmental ownership
• Nonoperational profits were high.

49
A TWO-TRACK ECONOMY
Labor Productivity USA100
Baser, Farrel, Meen, Turkeys quest for stable
growth, McKinsey Quarterly, 74-95, Special
Edition, 2003
50
PRODUCTIVITY

• In the 11 sectors covered the labor productivity
  has been found to be at the 40 level of the
  labor productivity in USA.
• In manufacturing sector labor productivity is 64
  of that in USA.
• In steel production labor productivity is 76 of
  that in USA.
• In service sector labor productivity is 33 of
  that in USA.
• In infrastructure services sector labor
  productivity is 48 of that in USA.
• In cell phone services sector labor productivity
  is 109 of that in USA.
• In electricity distribution sector labor
  productivity is 21 of that in USA.

Baser, Farrel, Meen, Turkeys quest for stable
growth, McKinsey Quarterly, 74-95, Special
Edition, 2003
Kaynak MGI
51
EVOLUTION OF MANUFACTURING INDUSTRIES IN THE LAST
DECADE

• Quality has preserved its position as the number
  one competitive priority through the last 10
  years.
• The same holds true for TQM as the most widely
  employed action plan.
• Good performance in CIP, JIT delivery, JIT
  purchasing.
• Innovation and particularly new product
  development emphasis is steadily increasing.
• Weight of the product differentiation strategy
  against low cost strategy within firms mixed
  strategy is increasing.

52
CHANGES IN COMPETITIVENESS STRATEGY

• Evolution of product strategy from focus on cost
  to focus on differentiation through product
  variety.

Ulusoy, Yegenoglu, Innovation performance and
competitive strategies in the Turkish
manufacturing sector, QIK 2007, pp. 907-915, New
Delhi, India, February 2007
53
CHANGES IN COMPETITIVENESS STRATEGY

• Evolution of new product strategy from follower
  in the market to first in the market.

Ulusoy, Yegenoglu, Innovation performance and
competitive strategies in the Turkish
manufacturing sector, QIK 2007, pp. 907-915, New
Delhi, India, February 2007
54

• PUBLIC SUPPORT FOR RD AND INNOVATION

55
PUBLIC SUBSIDIES FOR THE SCIENCE, TECHNOLOGY AND
INNOVATION ACTIVITIES OF THE PRIVATE SECTOR
Million YTL
Year
Current Prices
2005 Prices
56
PUBLIC SUBSIDY TO RESEARCHERS
Number of Researchers
Year
57
DIRECT PUBLIC SUBSIDIES TO SCIENCE, TECHNOLOGY
AND INNOVATION
Million YTL
Year
Current Prices
2005 Prices
58
APPLICATIONS AND REGISTRATION FOR UTILITY MODELS
59
PATENT APPLICATIONS
60
A PERSISTENT FAULT LINE

• A persistent fault line among the firms is the
  lack of collaboration.
• There is a distinct need for Turkish firms to
  establish networks and clusters.
• The Turkish firms need to become part of the
  global supply chains.

Ulusoy, Moving Forward, TÜSIAD Report, Istanbul,
2003.
61
WHAT NEXT?

• Continuation of developing indigenous technology
  and products at increasing intensity.
• A strong wave of innovative activities is
  expected.
• Work on overcoming the barriers to collaboration
  of the Turkish firms.

62
AN ASSESSMENT OF OPERATIONS MANAGEMENT IN TURKEY
63
A BRIEF HISTORY OF OPERATIONS RESEARCH IN TURKEY

• The first OR unit in Turkey was established in
  the General Staff of Armed Forces under the title
  Scientific Consultation Directorate on August 19,
  1954. Mainly reserve officers with suitable
  background served in this unit. Later in 1958 the
  RD Laboratories in the Air Force were attached
  to this unit. It continued to serve in the
  General Staff of Armed Forces until 1970 when it
  was transferred to the Ministry of Defence.
• In 1973, another unit, which was first called
  Defense Research Directorate and then Armament
  and Defense Directorate, was established in the
  General Staff of Armed Forces.

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A BRIEF HISTORY OF OPERATIONS RESEARCH IN TURKEY

• In the civilian sector, the first attempt took
  place on September 1, 1965. The Operations
  Research Unit was founded within the Scientific
  and Technical Research Council of Turkey and
  continued to operate on the campus of Middle East
  Technical University until 1973. In 1973, it was
  transferred as a Unit to the Marmara Scientific
  and Industrial Research Institute in Gebze,
  Kocaeli. Later in 1992 it was dissolved.

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A BRIEF HISTORY OF OPERATIONS RESEARCH IN TURKEY

• The first course on OR was offered in the Faculty
  of Mechanical Engineering at Istanbul Technical
  University in 1962-1963 academic year. Later two
  courses were initiated at the Middle East
  Technical University in 1964-1965 in the
  Mathematics Department. A graduate degree program
  was established in the same Department starting
  in 1965-1966 academic year.
• Later OR courses became part of the fundamental
  course work in the Industrial Engineering
  Departments and Management Departments. Besides
  industrial engineering and management fields, OR
  courses are also included in the mathematics,
  statistics, econometrics, and regional and city
  planning curricula among others.

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A BRIEF HISTORY OF OPERATIONS RESEARCH IN TURKEY

• Operations Research Association was established
  in 1975 and organized the first Operations
  Research National Conference the same year.
  Starting with the 15th National Congress in July
  1993 the title of the Conference was changed to
  Operations Research and Industrial Engineering.
  National Conference. The 27th OR/IE National
  Conference will convene in Izmir during July 2-4,
  2007.

67
INDUSTRIAL ENGINEERING AND MANAGEMENT DEPARTMENTS
IN TURKEY
Number of IE undergraduates app. 9.200. Number
of Management undergraduates app. 41.600.
68
UNIVERSITY PLACEMENT TEST BASE ACCEPTANCE SCORE
(Normalized over 100)
69
UNIVERSITY PLACEMENT TEST BASE ACCEPTANCE SCORE
(Normalized over 100)
70
JOURNAL PUBLICATIONS BY TURKISH RESEARCHERS
(1990-2006)
71
JOURNAL PUBLICATIONS BY TURKISH RESEARCHERS
(1990-2006)
72
SOME OBSERVATIONS AND COMMENTS

• The papers published are concentrated in a small
  number of journals all of them IEOR oriented.
• We observe very few empirical work among the
  publications. OM displays some similarities to
  medical practice. Observations lead to models and
  theories. We lack in Turkey empirical research.
  Not much operational data is collected in Turkey.
  
• Only very few case studies are generated by the
  Turkish researchers. Although few in number still
  the quality of work is established in the number
  of prizes given to these case studies by INFORMS.
  
• There is a lack of university-industry
  cooperation and collaboration. This has some
  serious repercussions.

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SOME OBSERVATIONS AND COMMENTS

• It is important in this phase of development that
  Turkish researchers concentrate on solving
  problems from practice. This implies doing more
  joint work with the industry. There seems to be a
  positive trend in this direction. This might be
  more rewarding than incremental improvements in
  methodologies well developed already.
• In the selection of sectors a good guideline can
  be the productivity figures cited earlier.
• One can easily observe that the number of
  publications in collaborationwith researchers
  based outside Turkey is small mostly ones PhD
  advisor. International joint work is needed not
  only to increase productivity but also for
  bringing Turkish researchers into the kitchen of
  events.

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SOME OBSERVATIONS AND COMMENTS

• Collaboration among universities in Turkey is
  weak as well.
• The fact that FDI in Turkey is steadily
  increasing can be seen as an opportunity to
  further improve OM practice here.
• OM has a strong social science component. In
  Turkey I have not made any mentionable
  observation of cooperation between OR/OM
  researchers and social scientists.
• Establishing strong relationships with social
  scientists is not only needed for
  interdisciplinary research but there is a lot to
  be learnt from them in terms of conducting
  empirical research.

75
LOCAL GOVERNMENTS - CONSTRUCTION

• Looking to the urban population ratio in Turkey
  and recalling that in advanced economies it is
  above 90, it is obvious that Turkey has a long
  way to go. Urbanization is an important problem
  needing the attention of experts with OM
  background. At this point in time there seems to
  be only very limited interest in this issue in
  Turkey and that mainly around urban
  transporation.
• Local governments need all sorts of guidance,
  which the OM people are capable of providing.
• Construction is one of the internationally more
  competitive sectors in Turkey but with OM weakly
  represented in the planning and operation of this
  sector.

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TECHNOLOGY AND INNOVATION MANAGEMENT

• Interest and need for technology and innovation
  management is growing in practice in Turkey. This
  is closely related to the increasing activities
  in Turkey for the development of indigenous
  technology.
• The managers are not in a position to pinpoint
  their needs exactly. They need to be guided by OM
  practitioners.

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Thank you...