Transcript OPERATIONS STRATEGY

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Operations Strategy
OPERATIONS STRATEGY
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Definition of a strategy


Little agreement amongst either practitioners
academics
Misleading to attempt a single definition
“Operations strategy is the total pattern of decisions which
shape the long term capabilities of any type of operation and
their contribution to overall strategy”
Slack Operations Strategy, Prentice Hall, 2002
or
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OPERATIONS STRATEGY
3 LEVELS OF STRATEGY
Corporate
Strategy
Business
Level Strategy
Functional
Strategies
Corporate
Head Office
Company A
Company Β
Sales
Marketing
Marketing
R&D
Finance
Production
HR
Sales
R&D
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OPERATIONS STRATEGY
EXAMPLE: 3 LEVELS OF STRATEGY
Corporate
Strategy
BAYER S.A.
Business
Level Strategy
Pharma
Functional
Strategies
Sales
Pesticides
Marketing
Chemicals
Finance
Plastics
R&D
Various
HR
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OPERATIONS STRATEGY
Levels of strategic decision making
Level
Corporate
Strategy
[3-5 years
ahead]
Key Strategic Decisions

What business to be in (now & in
the future)?
 What business to acquire or divest?
 How to allocate financial resources?
 Setting corporate values
 How to manage the relationships
between businesses?
Influences on
decision making

Environment:
Market, political &
social

Company
ownership:
Values, ethics
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OPERATIONS STRATEGY
Corporate Strategy
Often is not obvious to participants that an
organization has a corporate strategy
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OPERATIONS STRATEGY
The Terminology of Strategy
Term
Mission
Definition
Overriding purpose in line
with the values or
expectations of stakeholders
A personal
example
Be healthy and fit
Vision or
Describes aspirations for the
strategic intent future, without specifying the
means that will be used to
achieve those desired ends
of the organization
To run the marathon
Goal
General statement of aim or
purpose in line with the
mission. Maybe qualitative
Lose weight and
strengthen muscles
Objective
Quantification (if possible) or
more precise statement of
the goal
Lose 10 Kg by 1
September and run
marathon in 2006
OPERATIONS STRATEGY
The Terminology of Strategy
Term
Definition
A personal example
Core
competences
Resources, processes
or skills which provide
“competitive advantage”
Proximity to a fitness
centre, supportive family
and friends and past
experience of successful
diet
Strategies
Long term direction
Associate with a
collaborative network (e.g.
join running club), exercise
regularly, compete in
marathons locally, stick to
appropriate diet
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OPERATIONS STRATEGY
Term
Definition
A personal example
Strategic
architecture
Combination of
Specific exercise and diet
resources, processes and regime, appropriate training
competences to put
facilities, etc.
strategy into effect
Control
The monitoring of action
steps to:
Assess effectiveness of
strategies and actions
Modify strategies and/or
actions as necessary
Monitor weight, miles run and
measure times:
if satisfactory progress, do
nothing;
if not, consider other
strategies and actions
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OPERATIONS STRATEGY
List of some Customer Needs necessary to develop business strategy
Low Price
Ability to satisfy customer’s requirements more
cost-effectively than competition
Product feature
/performance
The extend to which a product out-performs the
offerings of competition or offers more product
features
Quality & Reliability
The extend to which customers’ expectations are
satisfied or exceeded by the product or service,
and continue to be satisfied
After sales service
The effectiveness with which customers queries or
complaints are handled
Customization
The ability of the operations system to tailor its
output to meet special customers’ requirements
Rapid Innovation
The ability of OS to generate and launch new
products into market fast
Volume Flexibility
Ability to cope with abrupt market request
Fast & Reliable
Delivery
Fast & reliable service
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OPERATIONS STRATEGY
QUESTION
Match the following order winners with the products or
services from the list
order winners
Products/services
1. Low Price
a. IKEA
2. Product feature
/performance
b. Rolex
3. Quality & Reliability
4. After sales service
5. Customization
6. Rapid Innovation
c. UPS
d. Domino Pizza
e. PC’s
f. Easy Jet
7. Volume Flexibility
g. Tailor
8. Fast & Reliable Delivery
h. Toyota
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OPERATIONS STRATEGY
Considering Customer Needs
ANSWER
1. Low Price
f. Easy Jet
2. Product feature /performance
b. Rolex
3. Quality & Reliability
h. Toyota
4. After sales service
h. TOYOTA
5. Customization
g. Tailor
6. Rapid Innovation
e. PC’s
7. Volume Flexibility
a. IKEA
8. Fast & Reliable Delivery
d. Domino Pizza,
c. UPS
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OPERATIONS STRATEGY
Contents of an operations strategy
Success
factors
Low price
Wide variety
Quality
Delivery
Fast response
Reliability
Super
market
Fast Telephone
food services
Petrol
On-line
Financial
stations shopping services
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OPERATIONS STRATEGY
Approaches to determining operations strategy
Fast food restaurants have a rather sort list on the menu.
Could they extend it and still supply all items in as short a delivery
period?
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OPERATIONS STRATEGY
Approaches to determining operations strategy
Trade – off (see-saw)
Examples:

Low Price vs. Available Variety
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Delivery time vs. Flexibility
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Quality vs. Absolute Cost
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Personalized attention vs. Low cost of service
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High quality service vs. Staff salaries
Performance
Objective 1
Performance
Objective 2
Performance
Objective 1
Performance
Objective 2
One aspect of performance
can be improved at the
expense of others
OPERATIONS STRATEGY
Approaches to determining operations strategy
Trade – off
Can you always compromise? For example in the case of airplanes
we can trade off in cruising speed , passenger comfort but not in
safety.
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OPERATIONS STRATEGY
Approaches to determining operations strategy
Trade – off
Can you always compromise? For example in the case of airplanes
we can trade off in cruising speed , passenger comfort but not in
safety.
Performance
Objective 2
Performance
Performance
Objective
2
Performance
Objective 1
Objective 1
Move the pivot
(=> continuous improvement)
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OPERATIONS STRATEGY
Order Qualifiers and Winners
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Order qualifiers?
They are the basic criteria that permit the firms products to be
considered as candidates for purchase by customers.
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Order winners?
They are the criteria that differentiates the products and
services of one firm from another.
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OPERATIONS STRATEGY
Service Breakthroughs
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A brand name car can be
an “order qualifier”
Repair services can be “order winners”
Examples: Warranty, Roadside Assistance, etc.
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OPERATIONS STRATEGY
Order Qualifiers and Order Winners
EXAMPLES of
•Order Qualifiers and
•Order Winners?
A company will enter in its supplier list only these
suppliers that are accredited to one of the ISO
9000 quality standards.
Order Qualifiers?
Order Winners?
2-7
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OPERATIONS STRATEGY
Order Qualifiers and Order Winners
ANSWER
OQ
Fast food
Easy Jet
Availability
2-7
Speed
Right
type of food
Low cost
of service
Perceived value for money
Cleanliness
Availability
Value
speed
for money
Dependability
Reliability
Range
Reputation
Convenience
University
OW
of courses
Reputation
Accessibility
Accessibility
Cost
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OPERATIONS STRATEGY
Stage
Volume
Order qualifiers
Competitive priority
Order winners
Customers
Competitors:
Typical products
slow
rapid
slow
reputation
Price, range
quality
dependability
availability
quality speed
cost
dependability
cost
early adopters
bulk of market
laggards
increasing
many
declining
Product
characteristics
capability
novelty
innovators
few
decline
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