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The operations function is fashionable!. The consultancy services market. % of world revenues of 40 largest firms . Financial 6. Marketing/sales 2. Organizational design 11. Operations and process management 31. Benefits/Actuarial 16. IT strategy 17. Corporate strategy 17.

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slide1

The operations function is fashionable!

The consultancy services market

% of world revenues of 40 largest firms

Financial

6

Marketing/sales

2

Organizational design

11

Operations and process management

31

Benefits/Actuarial

16

IT strategy

17

Corporate strategy

17

slide2

Strategic Reconciliation

Market Requirements

OPERATIONS STRATEGY

Operations Resources

Operations strategy reconciles the requirements of the market with the capabilities of operations resources

slide3

Operations strategy is …..

“… the decisions which shape the long-term capabilities of the company’s operations and their contribution to overall strategy through the on-going reconciliation of market requirements and operations resources …”

slide4

Micro

level of the process

Operations management

Operations strategy

Short-term

Long-term

for example, capacity decisions

for example, capacity decisions

Time scale

Demand

Demand

1-12 months

1-10 years

Macro

level of the total operation

Level of analysis

Detailed

Aggregated

For example

Level of aggregation

For example

“Can we give tax services to the small business market in Antwerp?”

“What is our overall business advice capability compared with other capabilities?”

Philosophical

Concrete

Level of abstraction

For example

For example

“How do we improve our purchasing procedures?”

“Should we develop strategic alliances with suppliers?”

Operations strategy is different to operations management

slide5

Corporate strategy

Business strategy

Operations strategy

Emergent sense of what the strategy should be

Operational experience

Top-down and bottom-up perspectives of strategy

slide6

CUSTOMERS

Segmentation on:

  • Age - youth
  • Purpose - general

PERFORMANCE OBJECTIVES

MARKET POSITION

Differentiation on:

  • Dependability
  • Speed of delivery
  • Product mix flexibility
  • Speed to market
  • Innovative products
  • Time to market
  • Product range
  • Coordinated launches

COMPETITORS

Traditionally weak in:

  • promotion
  • design innovation

The market perspective analysis of the garment company

slide7

Customer Needs

Market Positioning

Performance Objectives

Competitors’ Actions

Required performance

Understanding markets

The market perspective on operations strategy

slide8

Resources

Tangible

  • Equipment
  • Staff

Intangible

  • Reputation
  • Relationships
  • (internal and external)
  • Experience

Operations Strategy Decisions

Capabilities

  • Application of leading- edge lighting and sound technology
  • Articulation of client requirements
  • Location
  • Virtual reality technology
  • Supplier development
  • Equipment tracking system
  • Organizational structure
  • Staff meetings

Processes

  • Integration of equipment supply and client requirements
  • Design process
  • Supplier liaison process

The operations resource perspective analysis of the lighting company

slide9

Operations Capabilities

Tangible and Intangible Resources

Operations Strategy Decision Areas

Operations Processes

Understanding resources and processes

Strategic decisions

The operations resource perspective on operations strategy

slide10

Operations Capabilities

Tangible and Intangible Resources

Customer Needs

Operations Strategy Decision Areas

Market Positioning

Performance Objectives

Operations Processes

Competitors’ Actions

Required performance

Understanding markets

Understanding resources and processes

Strategic decisions

Operations strategy is the strategic reconciliation of market requirements with operations resources

slide11

Operations has to cope with the clash between the nature of external markets and the nature of internal resources

Market Requirements are….

Operations Resources are….

Dynamic

Difficult to change

Heterogeneous

Technically constrained

Ambiguous

Complex

slide12

Strategic Reconciliation

Market Requirements

Operations Resources

Operations Resources

Market Segmentation

Operations Strategy Decisions

Performance Objectives

Market Positioning

Operations Competences

Operations Processes

Competitor Activity

Understanding Resources and Processes

Strategic Decisions

Required Performance

Understanding Markets

Quality

Speed

Dependability

Flexibility

Cost

Capacity

Supply networks

Process technology

Development and organization

Operations strategy is the strategic reconciliation of market requirements with operations resources

slide13

What you HAVE

What you DO

What you WANT

What you NEED

to maintain your capabilities and satisfy markets

from your operations to help you “compete”

in terms of operations capabilities

to “compete”

In the market

Strategic

Reconciliation

Market Requirements

Operations Resources

slide14

Internal

and

External

Understanding of the processes

Strong marketing

Competitiveness

Competencies embedded in the operation

High margin

Capabilities enhance innovation and improvement

Investment

Developing the resources which let the operation’s performance stay ahead of the competition

Developing customers’ competitors’ and stockholders; perceptions and expectations

Operations can kick-start two virtuous cycles

World Class Operations

slide15

Existing ‘effective’ capability

Lafage Cosmetics’ requirements

wide

Existing ‘effective’ capability

Variety of items per order

Store delivery

Catalogue customers

narrow

small

large

Number of items per order

Hagen Style – Comparison of new demands placed on the order fulfilment processes by potential new business opportunities

slide16

Operations Resources

Market Requirements

  • Cost efficiency
  • Fast delivery
  • Traditional ‘representative’ sales channels declining in popularity
  • 2 x distribution centers
  • State-of-art packing and information technology
  • Processes ‘fine tuned’ to traditional ‘representative’ sales channels
  • Good at what it does
    • cost efficient
    • fast throughput
  • As above plus
    • wider range of requirements
    • more demand fluctuations?
  • New channels
    • catalogue
    • Internet
    • discount stores

Hagen Style – Operations resources and market requirements