3. Role of Operations in Strategic Management.pptx

Operation management

1. 3. Role of Operations in Strategic Management

2. FRAME WORK FOR MANAGING OPERATIONS STRATEGIC ROLE OF OPERATIONS OPERATIONS OBJECTIVES TRENDS IN OPERATIONS MANAGEMENT

3. Frame Work and Importance of Strategic Management Companies today face increasingly turbulent, complex and threatening environments . In the past they could succeed by just focusing all management efforts virtually on routine day to day activities and maintaining efficiency for the same. Although such focusing is still essential and important; one has to adopt the changing business environment through proper strategic management.

4. Strategic Management The Strategic Management perspective highlights the significance of devoting more attention for analyzing of environmental changes and formulating strategies that relate directly to such environmental changes . We now understand that Strategic Management is the need of the hour. The ultimate purpose of the Strategic Management is to help the organization increase its performance through improved effectiveness, efficiency and flexibility.

5. OPERATIONS OBJECTIVES Job of operations manager is to ensure that the process of conversion is managed professionally, using managerial skills and approaches of classical, behavioral, and mathematical modeling so as to get the desired output from the inputs and ensuring maximization of Value Addition . The conversion process and resultant output can be achieved through the Operation Functions.

6. OPERATION FUNCTIONS Operations function is important for operations’ managers because it influences how they understand customers and their needs and translate it into Performance Objectives . In turn, the Performance Objectives influence the overall operations strategy of the business and give Purpose Objectives to the business and thus help to formalize Strategic Role of Operations.

7. STRTEGIC ROLE OF OPERATIONS The Strategic Role of Operation Manager’s can be summarized as under: Primary Goals - Identify Market opportunities. Secondary Goals – Ensure Economy and Efficiency of conversion operations. Identify Potential within the Industry. Develop Overall Organizational Strategy .

8. KEY QUESTIONS DETERMING THE OPERATION STRATEGY Strategic Role of Operations Manager thus lies in the answers to the following two questions: What Role should the Operation Functions play in achieving Strategic Success? What are the Performance Objectives of Operations and what are the internal and external benefits that can be derived through excellence in the performance objectives?

9. INTERNAL BENEFITS OF STRATEGIC MANAGEMENT It allows for identification, prioritization and exploitation of opportunities. It provides an objective view of management problems It provides for a frame work for improved co-ordination and control of activities. It minimizes the effect of adverse conditions and changes. It allows major decision to better support and establish objectives,

10. INTERNAL BENEFITS OF STRATEGIC MANAGEMENT It allows more effective allocation of time and resources to identified opportunities. It allows fewer resources and less time to be devoted to correcting erroneous or adhoc decisions. It creates a frame work for internal communication among personnel. It helps to integrate the behaviors of individuals into total efforts. It provides the basis for the clarification of individual responsibilities.

11. INTERNAL BENEFITS OF STRATEGIC MANAGEMENT It gives encouragement to forward thinking. It provides a co-operative integrated and enthusiastic approach to tackling problems and opportunities. It encourages a favorable attitude towards change. It gives a degree of discipline and formality to the management of a business.

12. EXTERNAL BENEFITS INVOKE CONCERNS OF THE OPERATIONS MANAGERS While the 14 internal benefits discussed earlier are results of the strategic management process, it is concern for some of the targeted external benefits which invoke the need for strategic management. Looking from this point of view it is the competitive business environment and prevailing market conditions provide the real basis for developing and designing organization’s strategy.

13. KEY TO STRATEGIC MANAGEMENT The key to strategic management thus lies in the integration of companies policies to some of the key business environment market related questions and how successful we are in formulating our strategy to meet the answers raised by these questions.

14. EXTERNAL BENEFITS OF STRATEGIC MANAGEMENT KEY QUESTIONS Where is the industry now? Where it will be in future? What are the existing and potential markets? What market gaps exists? What Competencies do we have for filling them?

15. TARGETED EXTERNAL BENEFITS Careful analysis of the market segments and ability of our competitors and ourselves to meet the needs of these segments will determine the best direction for focusing on organization’s efforts. The concerns raised by above questions and on assessing the potential within an industry an overall strategy must be developed to meet potential customer related characteristics as a primary base for facing the market competitions.

16. CUSTOMER RELATED CHARACTERISTICS IN ORDER OF PRIORITY QUALITY – Product specifications and attributes. COST EFFICIENCY – Lower costs, higher productivity. DEPENDIBILITY – Reliability, Efficient and timely delivery to customers. FLEXIBILITY – Responding rapidly with new products or change in volume. CUSTOMER SATISFACTION – Delighting the customers.

17. LIMITATIONS TO MEET WITH THE CUSTOMER RELATED PRIORITIES In recent years, operation managers have learned that most organizations can not be best on all these dimensions , and by trying to do so, they end up doing nothing well . Further more when a competency exists in one of these areas opting for or exploring available or different options leads to a downfall in effectiveness , which is primary objective of OM.

18. LIMITATIONS TO MEET WITH THE CUSTOMER RELATED PRIORITIES Time is emerging as a critical dimension of competition in both utility product and service industry. In any industry the firm with the fastest response to customer demands has the potential to achieve an overwhelming market advantage. Its importance for any industry can not be under estimated. In an era of time-based competition, a firm’s competitive advantage is defined not by cost but the total time required to produce a product or service. Firms able to respond quickly have reported growth rates three times over the industry average and double the profitability. Please note that a conversion process designed for one type of focus is often ill suited for success in another system.

19. BASIC STRATEGIC CHOICES The basic strategic choices therefore are Set the tone for the shape of the operation functions and Set the tone for the content of the operation functions and what it accomplishes (in reference to customer related priorities) .

20. STRATEGIC MANAGEMENT Following four steps will help to develop and achieve the strategic management: 1. Analyse the Opportunities and threats or constraints that exists in the external environment. 2. Formulate Strategies that will match the organization’s strengths and weaknesses with environments threats and opportunities. 3. Implement the strategies. 4. Evaluating and controlling of activities to ensure that the operations’ objectives are served.

21. WHAT IS A STRATEGY? OPERATIONS STRATEGY Strategy is a common vision that unites an organization , provides consistency in decisions, and keeps the organization moving in the right direction . Operation Strategy is concerned with setting broad policies and plans for using the firm’s resources to best support the firm’s long term competitive strategy .

22. OPERATION STRATEGY An operation strategy involves decisions that relate to : The design of a process. The infrastructure needed to support the process.

23. OPERATION STRATEGY PROCESS DESIGN INCLUDES:- The selection of appropriate technology Sizing the process over a period of time The role of inventory in the process Locating the process

24. OPERATION STRATEGY INFRASTRUCTURE DECISIONS INVOLVE FOLLOWING:- The logic associated with the planning and control systems. Quality assurance and approaches Work payment structures and The organization of operation functions.

25. OPERATION STRATEGY An operation strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organization. Since the goals of the larger organization change over time, the operations strategy must be designed to anticipate future needs.

26. OPERATION PRIORITIES Following is the list of operation priorities: Cost Product quality and reliability Delivery Schedule Ability to cope with the changes in demands Flexibility and new product introduction speed Other criteria; Technical liaison and support, meeting a launch date, after sales service.

27. FORMULATION OF OPERATION STRATEGY Formulation of strategy involves careful considerations of following five steps: Define Primary Task Assess Core Competence Determine Order Winners and Order Qualifiers Positioning of the firm and Developing Corporate Strategic Plan.

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