Operations Strategy

What is Operations Strategy? Link with Corporate and Business Strategy?

Mfg. Strategy is to cope with:

Corporate strategy is derived from vision/mission Business Strategy (C S) translates corporate strategy to determine product marketing strategy Mfg.Strategy is expected to cope with the outcome and is often set with little reference to existing manufacturing structure

But Mfg. is confronted with:

Trade offs It cannot perform well on every yardstick It can perform well on a limited task It has to therefore develop capabilities to support desired CA of business unit. Mfg. needs a proactive strategy to interact with Corporate Strategy/Business strategy to develop CA.

Strategic role of Mfg.Strategy

Competitive Strategy can be effective if it offers sustainable CA over existing and potential competitors. Porter talks of three strategies for CA: - Low cost leadership - Product differentiation - -Segmentation or Focused approach All functional strategies have to work to support Business strategy

Proactive strategy
Competitive Strategy Competitive Advantages

Manufacturing Strategy

Manufacturing Advantages

Mfg. Strategy is predominantly strategic

Alignment with market, understanding winners, Alignment with Competitive strategy Plan to build up resources accordingly. It is outside-in approach as also inside-out Mfg.Strategy is more a driver of business and less of a functional strategy.

Slack refers:
Operations is the activity of managing resources and processes to produce and deliver goods and services It is concerned with activity of managing total transformation process, that is the whole business

Formal definition(Slack)
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, through the reconciliation of market requirements with operations resources

Operations as transformational activity

1. Flow between operations: Supply network is
an arrangement of operations ( supply network: capability of each operation in the net work) 2. Flow between processes: an operation is an arrangement of processes ( capability of each process in the operation) 3. Flow between resources: a process is an arrangement of resources( capabilities of each resource people and facilities)

Lowsons Generic factors of the Operations Strategy

Medium and Long term decisions, for Large, Medium and Small industries Core competencies, capabilities, and processes Resources(sourcing, outsourcing, human ) Technologies Certain key tactical activities vital to support strategy or positioning

Operations Management encompasses

Production of tangible goods Management of non-core production related processes Production of services Servitization of tangible products Blurring boundary between tangible products and services {Recent trend: Business Process Management}

Operations Strategy: The Role

How to supply particular products and services and the needs or requirements of: capabilities or competencies resources, work flows, human resource levels, facilities, processes, technologies, capacities, levels of flexibility,quality levels Types of suppliers, supplier relationships, sourcing and outsourcing Decisions on operating systems,resources

Operations Strategy Decisions

Locations, Technology Procurement and supplier relationship Selection of plant and machinery Capacity Supply network Development and organization Performance Objectives

Operations and Operational

Operational is day to day activities, that is short term Operations has long term impact; it is strategic as it has to develop CA. It carries elements of decisions on sustainability