3) Using relevant examples discuss the roles of the operation functions

in achieving strategic success.

A company’s plan for achieving a competitive edge is its strategy. The success of a
strategic plan is determined by how well a company coordinates all of its internal
operations and processes and brings them to bear on its goals. Although most of the firms
express their goals in terms of customer satisfaction or level of quality their underlying
objective is to beat the competition. On way in which companies can gain competitive
edge is deploying the basic functions of operations management in a more effective
manner than their rivals.

There are different roles operation function can play in for achieving strategic success. ne
of them is acting as a support Strategy. Most companies will have some kind of strategy
but its is the operation which puts it into practice. For example, if a manufacturer of
Personal Computers has decided to compete by being the first in the market with every
available new product innovation, then its operation functions needs to be capable of
coping with the changes which constant innovation will bring. It must develop or
purchase processes which are flexible enough to manufacter novel parts and products. It
must organize and train its staff to understand the way product are changing and put in
place the necessary changes to the operations it must develop relationships with its
suppliers which help them responding quickly when supplying new parts.

The second role of operations part of the business is to implement strategy. You canot
afterall touch a strategy; you cannot even see it all you can see is how the operations
behaves in practice. For example if an airline has strategy of attracting a higher
proportion of business class travelers it is the operations part of each function which has
task of operationlizing the strategy. Its marketing operation much organizes appropriate
promotions and pricing activities. The personnel needs to be train its cabin and ground
staff to achieve higher level of customer service

The third role of the operations part of the business is to drive strategy by giving it a long
term competitive edge. Different parts of the business have different effects on a
company’s ability to prosper. If the finance function doesn’t control cash flow accurately
the business could run out of cash and go out of business almost immediately.

Operation management by Mike Pycraft, Hemmanth singh, Khomotso Phihlela, South

African Edition.

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id=v6tVJ43nuD0C&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepag
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If we take example of Zara there operations are completely aligned to their strategies.
Zara’s clothes the way the company goes about making them. On its way to becoming
ones of the worlds most successful retail fashion houses. Rather than farm out
manufacturing to whoever can make clothing least expensively, Zara designed its
manufacturing system and operation activities around quality, speed and consumer
behavior.

Make or Break Strategy + business… by KAJ GRICHNIK and CONRAD WINKLER

with JEFFREY ROTHFEDER

Many operations function has three main roles to play within an organization:
- As an implementer of the organization’s strategies
- As a supporter of the organization’s overall strategy
- As a leader of strategy
- The extent to which an operations function fulfils these roles, together with its
aspirations, can be used to judge the operations function’s contribution to the
organization. Hayes and Wheelwright provide a four-stage model for doing this.

H1 Operations management

What is operations management?

- Operations management is the term used for the activities, decisions and
responsibilities of operations managers who manage the production and delivery of
products and services.
- It is one of the core functions of any business, although it may not be called
operations management in some industries.
- The span of responsibility varies between companies, but will usually overlap to
some extent with the other functions.
- Operations management can also be viewed as that part of any function’s or
manager’s responsibility which involves producing the internal products and services
within the organization, as opposed to the strictly technical decisions which they take
within their functions.

What are the similarities between all operations?

- All operations can be modeled as a process which transforms inputs into outputs.
- All have inputs of transforming resources which are usually divided into ‘facilities’
and ‘staff’. All also have transformed resources which are some mixture of materials,
information and customers.
- All operations transform inputs into outputs by acting on some aspect of their
physical properties, informational properties, possession, location, storage or
accommodation, physiological state or psychological state.
- All operations have some mixture of tangible goods or products and less tangible
services. Few operations produce only products of only services.
- All operations can be divided into micro operations which form a network of internal
customer – supplier relationships within the operation.
- All operations can be viewed as a set of business processes which often cut across
functionally based micro operations.

How are operations different from each other?

- Operations differ in terms of the volume of their outputs. High volume is usually
associated with low cost.
- All operations differ in terms of the variety of outputs they produce. Low variety is
usually associated with low cost.
- All operations vary in terms of the variation in demand with which they have to cope.
Low variation is usually associated with low cost.
- All operations vary in terms off the degree of ‘visibility’ or customer contact they
have. Low customer ‘visibility’ is usually associated with low cost.

What responsibilities do operations managers have?

- They translate the strategic direction of an organization into operational action.

- They design the operation, not only the products and services themselves, but the
systems or processes which produce them.
- They plan and control the activities of the operation by deciding when and where
activities will take place, and detecting and responding to any deviations from plans.
- They improve the performance of the operation with reference to its strategic
objectives, through some combination of major and minor improvement activities.
- Indirect responsibilities include working closely with other functional areas of the
business.
- Broad responsibilities include understanding the impact on the operation of
globalization, environmental responsibility, social responsibility, new technologies
and knowledge management.

H2 The strategic role and objectives of operations

What role should the operations function play in achieving strategic success?

- Any operations function has three main roles to play within an organization:
- As an implementer of the organization’s strategies
- As a supporter of the organization’s overall strategy
- As a leader of strategy
- The extent to which an operations function fulfils these roles, together with its
aspirations, can be used to judge the operations function’s contribution to the
organization. Hayes and Wheelwright provide a four-stage model for doing this.
What are the performance objectives of operations and what are the internal and
external benefits which derive from excelling in each of them?

- At a strategic level, performance objectives relate to the interests of the operation’s

stakeholders. These relate to the company’s responsibility to customers, suppliers,
shareholders, employees and society in general.
- By ‘doing things right’, operations seek to influence the quality of the company’s
goods and services. Externally, quality is an important aspect of customer satisfaction
of dissatisfaction. Internally, quality operations both reduce costs and increase
dependability.
- By ‘doing things fast’, operations seek to influence the speed with which goods and
services are delivered. Externally, speed is an important aspect of customer service.
Internally, speed both reduces inventories by decreasing internal throughput time and
reduces risks by delaying the commitment of resources.
- By ‘doing things on time’, operations seek to influence the dependability of the
delivery of goods and services. Externally, dependability is an important aspect of
customer service. Internally, dependability within operations increases operational
reliability, thus saving the time and money that would otherwise be taken up in
solving reliability problems and also giving stability to the operation.
- By ‘changing what they do’, operations seek to influence the flexibility with which
the company produces goods and services. Externally, flexibility can:
- Produce new products and services (product/ service flexibility)
- Produce a wide range or mix op products and services (mix flexibility)
- Produce different quantities or volumes of products and services (volume flexibility)
- Produce products and services at different times (delivery flexibility)
Internally, flexibility can help speed up response times, save time wasted in
changeovers, and maintain dependability.
- By ‘doing things cheaply’, operations seek to influence the cost of the company’s
goods and services. Externally, low costs allow organizations to reduce their price in
order to gain higher volumes, or, alternatively, increase their profitability on existing
volume levels. Internally, cost performance is helped by good performance in the
other performance objectives.

H3 Operations strategy

What is strategy?

- Strategy is the total pattern of decisions and actions that position the organization in
its environment and that are intended to achieve its long-term goals.
- A strategy has content and process. The content of a strategy concerns the specific
decisions which are taken to achieve specific objectives. The process of a strategy is
the procedure which is used within a business to formulate its strategy.
What is the difference between a ‘top-down’ and a ‘bottom-up’ view of operations
strategy?

- The ‘top-down’ perspective views strategic decisions at a number of levels.

Corporate strategy sets the objectives for the different businesses which make up a
group of businesses. Business strategy sets the objectives for each individual business
and how it positions itself in its marketplace. Functional strategies set the objectives
for each function’s contribution to its business strategy. In this sense, we use the term
operations strategy as a functional strategy which deals with the parts of the
organization that create goods and services.
- The ‘bottom-up’ view of operations strategy sees overall strategy as emerging from
day-to-day operational experience.

What is the difference between a ‘market requirements’ and an ‘operations resource’

view of operations strategy?

- A ‘market requirements’ perspective of operations strategy sees the main role of

operations as satisfying markets. Operations performance objectives and operations
decisions should be primarily influenced by a combination of customers’ needs and
competitors’ actions. Both of these may be summarized in terms of the product/
service life cycle.
- The ‘operations resource’ perspective of operations strategy is based on the resource-
based view(RBV) of the firm and sees the operation’s core competences(or
capabilities) as being the main influence on operations strategy. Operations
capabilities are developed partly through the strategic decisions taken by the
operations. Strategic decision areas in operations are usually divided into structural
and infrastructural decisions. Structural decisions are those which define an
operation’s shape and form. Infrastructural decisions are those which influence the
systems and procedures that determine how the operation will work in practice.

How can an operations strategy be put together?

- There are many different procedures which are used by companies, consultancies and
academics to formulate operations strategy. The two we describe in this chapter are
the Hill methodology and the Platts-Gregory procedure. The Hill methodology is
based on the idea of making connections between different levels of strategy-making,
from corporate objectives through marketing strategy, operations objectives and
structural and infrastructural decisions. The Platts-Gregory procedure is based on
identifying the gaps between, on the one hand, what the market requires form an
operation and, on the other, how the operation is performing against market
requirements.

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