Operations strategy

operations strategy
,
positioning the firm
,
strategic decisions in operations
,
effective ways to deploy strategy

1. Operations
Strategy

2. Operations Strategy
A vision that unites an organization, provides
consistency in decision, and keep the organization
moving in the right direction.
There are five basic steps that consists
the strategy
Defining a primary Task
Assessing core competencies
Determining order winner and order qualifier
Positioning the firm
Deploying the strategy

3. Operations Strategy
Defining a
primary Task
Represent the purpose of a firm-
what the firm is in business of
doing
Determine the competitive arena

4. Operations Strategy
Assessing
core
competencies
What a firm does better than
anyone else. It includes the
issues;
Exceptional services, higher
quality, faster delivery, lower
cost

5. Operations Strategy
Determining
order winner
and order
qualifier
Order qualifier: The
characteristics of a product
or service that qualify it to
be considered for purchase
by a customer
Order winner-The
characteristics of a product
or service that wins orders
in the marketplace-the
final factor in the
purchasing decision.

6. Operations Strategy
Positioning
the firm
How it will compete in the
marketplace –what unique value it
will deliver to the customer
It considers the strengths and
weaknesses of the organization, the
needs of the marketplace, and the
position of competitors.
A company that has positioned itself
to compete on cost, quality, flexibility
and speed

7. Positioning the firm
Competing
on cost
Companies that compete
successfully on cost realize
that low cost cannot be
sustained as a competitive
advantage if increases in
productivity are obtained
solely by short-term cost
reductions

8. Positioning the firm
Competing
on quality
Quality is confined to minimizing
defect rates or conforming to
design specifications
To compete on quality, company
must view it as an opportunity to
please the customer, not just a
way to avoid problems or reduce
rework cost.

9. Positioning the firm
Competing
on
flexibility
Flexibility is the ability to adjust to
changes in product mix, production
volume, or design
It includes the ability to produce a
wide variety of products, to introduce
new products and modify existing
ones quickly and to respond to
customer needs.

10. Positioning the firm
Competing
on speed
an organization characterized
by fast moves, fast
adaptations and tight linkages

11. Operations Strategy
Deploying
the
strategy
Implementing strategy can
be more difficult than
formulating strategy.
Different departments or
functional areas in a firm
may interpret the same
strategy in different ways.
If their efforts are not co-
ordinate, the results can be
disastrous

12. Effective ways to deploy strategy
The
strategic
planning
Hierarchy
A corporate strategic plan in concurrence
with the firm’s mission and vision, customer
requirements and business conditions.
The strategic plan focuses on the gap
between the firm’s vision and its current
position
It identifies what needs to be done to close
the gap and provides direction for
formulating strategies in the functional areas
of the firm such as marketing, operations
and finance

13. Effective ways to deploy strategy
Policy
Deploymen
t
Focus everyone in an organization
on common goals and priorities by
translating corporate strategy into
measurable objectives throughout
the various functions and levels of
the organization
Everyone in the organization should
understand the strategic plan, be
able to drive several goals from the
plan and determine how each goals
tie into their own daily activities

14. Effective ways to deploy strategy
Balanced
Scorecar
d
Balanced scorecard measuring more
than financial performance, which
examined a firm’s performance in four
critical areas
Finance:How should we look to our
shareholders?
Customer:How should we look to our
customers?
Processes:At which business
processes must be excelling?
Learning and Growing: How will
we sustain our ability to change and
improve?

15. Strategic Decisions in Operations
Strategic decisions in operations involve
Products and service
processes and technology
capacity and facilities
human resources
Quality
Sourcing
Operating systems

16. Strategic Decisions in Operations
Product
and
Services
The kinds of products and services offered
by a company drive operations strategy.
Products and services can be classified as
make-to-order, make-to-stock or assemble-
to-order.
Make-to-order
Make –to-stock
Assemble-to-order

17. Strategic Decisions in Operations
Process
and
Technology
Production process can be
classified into
Projects
Batch production
Mass production
Continuous production

18. Strategic Decisions in Operations
Capacity
and
Facilities
Capacity decisions affect product lead
times, customer responsiveness, operating
costs and a firm’s ability to compete
Inadequate capacity can lose customers
and limit growth
Excess capacity can drain a company’s
resources and prevent investments in more
lucrative ventures
When, how much and in what form to alter
capacity are critical decisions

19. Strategic Decisions in Operations
Human
Decisions
Strategic issues in human resources involve
determining the skill levels and degree of
autonomy required to operate the production
system
outlining training requirements and selection
criteria
setting up policies on performance
evaluations
compensation and incentives

20. Strategic Decisions in Operations
QualityQuality permeates virtually every
strategic decision
What is the target level of quality for our
products and services?
How will it be measured?
How will employee be involved with
quality?
What types of training are necessary?
How will customer perceptions of quality
be determined?

21. Strategic Decisions in Operations
Sourcing
On what basis should particular items be made-in-
house? When should items be out sourced?
A firm that sells the product, assembles the product,
makes all parts and extracts the raw material is
completely vertically integrated
But most companies cannot or will not make all of the
parts that go into a product
A major strategic decision, then, is how much of the
work should be done outside the firm

22. Strategic Decisions in Operations
Operating
Systems
Operating systems execute strategic decisions
on a day to day basis, so it is important that
they be designed to support how the firm
competes in the market place
The IT system must be able to support both
customer and worker demands for rapid
access, storage and retrieval of information
Planning and control systems must be set up
with timely feedback loops and consistent
decision making criteria
Inventory levels, scheduling priorities and
reward systems should align with strategic
goals.