Operations strategy - mindran.com

1 Operations strategy Source: courtesy of Justin Waskovich What is strategy ? Strategic decisions means those decisions which . Are widespread in their effect on the organization to which the strategy refers Define the position of the organization relative to its environment Move the organization closer to its long-term goals. 1. Operations ' is not the same as operational'. Operations ' are the resources that create products and services Operational' is the opposite of strategic, meaning day-to- day and detailed So, one can examine both the operational and the strategic aspects of Operations Operations strategy is different from Operations management Example: capacity decisions Operations management Operations strategy Short-term Long-term Time scale capacity decisions capacity decisions Demand Demand 1 12 months 1 -10 years 2.

2 Operations strategy is different from Operations management Operations management Operations strategy Level of Micro Macro analysis level of the process level of the total operation Operations strategy is different from Operations management Operations management Operations strategy Level of Detailed Aggregated aggregation For example For example Can we give tax services to What is our overall the small business market in business advice capability Antwerp? compared with other capabilities? . 3. Operations strategy is different from Operations management Operations management Operations strategy Level of Concrete Philosophical abstraction For example For example How do we improve our Should we develop purchasing procedures?

3 Strategic alliances with suppliers? . The four perspectives on Operations strategy Top-down perspective What the business wants Operations to do Operations Market resources requirement perspective perspective Operations What Operations strategy What the market resources can do position requires Operations to do What day-to-day experience suggests Operations should do Bottom-up perspective 4. Top-down and bottom-up perspectives of strategy Corporate strategy Business strategy Operations strategy Emergent sense of what the strategy should be Operational experience The strategy hierarchy Key strategic Influences on decisions decision making What business to be in?

4 Economic environment Corporate What to acquire? Social environment strategy What to divest? Political environment How to allocate cash? Company values and ethics What is the mission? Customer/market dynamics Business What are the strategic Competitor activity strategy objectives of the firm? Core technology dynamics How to compete? Financial constraints How to contribute to the Skills of function's staff Functional strategic objectives? Current technology strategy How to manage the Recent performance of the function's resources? function 5. The effects of the product/service life cycle on the organization volume Sales Introduction Growth Maturity Decline Volume Slow growth in Rapid growth in Sales slow down Market needs sales sales volume and level off largely met Customers Innovators Early adopters Bulk of market Laggards Competitors Few or none Increasing Stable number Declining numbers numbers Variety of Possible high Increasingly Emerging Possible move to product / customization or standardized dominant types commodity service frequent design standardization design changes The effects of the product/service life cycle on the organization volume Sales Introduction Growth Maturity

5 Decline Likely order Product/service Availability of Low price Low price winners characteristics, quality Dependable performance or products/services supply novelty Likely Quality Price Quality Dependable qualifiers Range Range Range supply Dominant Flexibility Speed Cost Cost Operations Quality Dependability Dependability performance Quality objectives 6. Different competitive factors imply different performance objectives Competitive factors Performance objectives If the customers value these .. Then, the Operations will need to excel at these .. Low price Cost High quality Quality Fast delivery Speed Reliable delivery Dependability Innovative products and services Flexibility (products and services).

6 Wide range of products and services Flexibility (mix). Ability to change the timing or quantity Flexibility (volume and/or delivery). of products and services Order-winning, qualifying and less important competitive factors Competitive Order-winning factors benefit +ve Neutral ve Performance 7. Order-winning, qualifying and less important competitive factors Competitive Qualifying factors benefit +ve Neutral ve Qualifying level Performance Order-winning, qualifying and less important competitive factors Competitive Less important factors benefit +ve Neutral ve Performance 8. Mintzberg's concept of emergent strategy Intended Deliberative Realized strategy strategy strategy Unrealized Emergent strategy strategy Market requirements and Operations resources perspectives of Operations strategy Strategic reconciliation Operations Operations Market resources strategy requirements Operations strategy reconciles the requirements of the market with the capabilities of Operations resources 9.

7 Operations strategy is . the decisions which shape the long- term capabilities of the company's Operations and their contribution to overall strategy through the on-going reconciliation of market requirements and Operations resources '. Operations Market resources requirements What you What you What you What you HAVE DO WANT NEED. to maintain from your in terms of your Operations to Operations capabilities to compete' in help you the market capabilities and satisfy compete'. markets Strategic reconciliation 10. The challenge of Operations strategy formulation An Operations strategy should be: Appropriate .. Comprehensive .. Coherent .. Consistent over time.

8 An implementation agenda is needed When to start? Where to start? How fast to proceed? How to coordinate the implementation programme? 11. The five P's of Operations strategy implementation Purpose a shared understanding of the motivation, boundaries and context for developing the Operations strategy Point of entry the point in the organization where the process of implementation starts Process how the Operations strategy formulation process is made explicit Project management the management of the implementation Participation who is involved in the implementation Trade-offs Do you want it good, or do you want it Tuesday? . No such thing as a free lunch.

9 You can't have an aircraft which flies at the speed of sound, carries 400 passengers and lands on an aircraft carrier. Operations are just the same. (Skinner). Trade-offs in Operations are the way we are willing to sacrifice one performance objective to achieve excellence in another.. 12. The efficient frontier' view The new efficient Variety frontier'. Variety The efficient A frontier' B1. B A. B. X C X C. D D. Cost efficiency Cost efficiency Key Terms Test Strategic decisions Decisions that are widespread in their effect, define the position of the organization relative to its environment, and move the organization closer to its long-term goals. Top-down The influence of the corporate or business strategy on Operations decisions.

10 Bottom-up The influence of operational experience on Operations decisions. 13. Key Terms Test Market requirements The performance objectives that reflect the market position of an operation's products or services; also a perspective on Operations strategy . Operations resource capabilities The inherent ability of Operations processes and resources;. also a perspective on Operations strategy . Business strategy The strategic positioning of a business in relation to its customers, markets and competitors; a subset of corporate strategy . Key Terms Test Functional strategy The overall direction and role of a function within the business; a subset of business strategy .