OS is concerned with setting broad policies and plans for using the resources of a firm to best support its

long term competitive strategy.

Strategy specifies how the firm will employ its production capabilities to support its corporate strategy.
Operations Strategy is the tool that helps to define the methods of producing goods or a service offered to the customer

Slack and Lewis, Operations strategy is the total

pattern of decisions which shape the long-term capabilities of any type of operations and their contribution to the overall strategy, through the reconciliation of market requirements with operations resources.

A plan to transform an organization's overall strategic objectives into operational deliverables. It involves the design of the product or service and the processes by which the product or service is produced; the way in which production is managed and controlled; and the design of processes for the constant improvement of the operations

Strategy Process
Customer Needs

Example
More Product

Corporate Strategy

Increase Org. Size

Operations Strategy Decisions on Processes and Infrastructure

Increase Production Capacity

Build New Factory

Given the choices customers face today, how do they decide which product or service to buy? Different customers are attracted by different attributes. Some customers are interested primarily in the cost of a product or service and, correspondingly, some companies attempt to position themselves to offer the lowest prices.

COST OR PRICE: Make the product or deliver the

service cheap: within every industry, there is usually a
segment of the market that buys solely on the basis of low cost. To successfully compete in this niche, a firm must be the low cost producer, but even this does not guarantee profitability and success.

Price , however is not only basis on which a firm can compete. For example, we do buy premium shirts from Louis Philippe for their performance or features and they definitely not the cheapest available.

QUALITY: Make a great product or deliver a great service :

there are two characteristics of a product or service that define quality: Design quality & Process quality.

Design quality: Relates to the set of features the product or service

contains. the higher- quality product commands a higher price in the market place due to its special features over designed products and services with too many or inappropriate features will be viewed as prohibitively expensive.

under-designed products and services will lose customers to product that cast a little more.

Process quality: it relates to the reliability of the product & service.

the goal of process quality is to produce defect free products & services

 Delivery

the service quickly:

speed: Make the product or deliver

A firms ability to deliver more quickly than its competitors may be critical . A company that can offer an on site repair service in only 1 or 2 has a significant advantage over a competing firm that guarantees service only within 24 hours

Coping

its Volume

with changes in demand: Change

A company ability to respond to increases and decreases in demand is important to its ability to compete. When demand is increasing and strong= costs are continuously reduced

But when demand decreases it led to laying off employees and related reduction in assets.

 Flexibility

speed: CHANGE IT

and new- product introduction

Refers to the ability of a company to offer a wide variety of products to its customers. An important element of this ability to offer different products is the time required for a company to develop a new product and to convert its processes to offer the new product.

Delivery

reliability: Deliver it when

promised
This dimension relates to the firms ability to supply product or service on or before a promised delivery due date. For a service firm such as Federal Express, delivery reliability is the cornerstone of its strategy.

In the Kaplan and Nortons Generic Strategy Map, under the Financial Perspective, the Productivity Strategy is generally made up from two components:
1.

2.

Improve cost structure: Lower direct and indirect costs Increase asset utilization: Reduce working and fixed capital

In the Kaplan and Nortons Generic Strategy Map, under the Financial Perspective, the Revenue Growth Strategy is generally made up from two components:
1.
2.

Build the franchise: Develop new sources of

revenue Increase customer value: Work with existing
customers to expand relationships with company

In the Kaplan and Nortons Generic Strategy Map, under the Customer Perspective, there are three ways suggested as means of differentiating a company from others in a marketplace: 1. Product leadership
2.
3.

Customer intimacy
Operational excellence

In the Kaplan and Nortons Generic Strategy Map, under the Learning and Growth Perspective, there are three principle categories of intangible assets needed for learning:
1.

Strategic competencies

2.
3.

Strategic technologies
Climate for action

Customer Needs

New product : Old product

Competitive dimensions & requirements

Quality, Dependability, Speed, Flexibility, and Price

Enterprise capabilities
Operations & Supplier capabilities R&D Technology Systems People Distribution

Support Platforms

Financial management

Human resource management

Information management

Strategy Map
Financial Perspective

What it is about!
Improve Shareholder Value

Customer Perspective

Customer Value Proposition

Internal Perspective

Build-Increase-Achieve

Learning & Growth Perspective

A Motivated and Prepared Workforce


1)

Objectives of manufacturing strategy development are

To translate required competitive dimensions(typically obtained from marketing) into specific performance requirements for operations and To make plans necessary to ensure that operations(and enterprise) capabilities are sufficient to accomplish them.

2)

a) b)

Steps for prioritizing these dimensions are as follows:

Segment the market according to the product group Identify the product requirements, demand patterns, and profit margins of each group Determine the order winners and order qualifiers for each group Convert order winners into specific performance requirements

c) d)

Process-based

Capacities that transforms material or information and provide advantages on dimensions of cost and quality

Systems-based

Capacities that are broad-based involving the entire operating system and provide advantages of short lead times and customize on demand

Organization-based

Capacities that are difficult to replicate and provide abilities to master new technologies