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Operations Strategy. Chapter 2. How Operations Strategy fits the Operations Management Philosophy . Operations As a Competitive Weapon Operations Strategy Project Management. Process Strategy Process Analysis Process Performance and Quality Constraint Management Process Layout

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how operations strategy fits the operations management philosophy
How Operations Strategy fits the Operations Management Philosophy

Operations As a Competitive

Weapon

Operations Strategy

Project Management

Process Strategy

Process Analysis

Process Performance and Quality

Constraint Management

Process Layout

Lean Systems

Supply Chain Strategy

Location

Inventory Management

Forecasting

Sales and Operations Planning

Resource Planning

Scheduling

operations strategy1
Operations Strategy
  • Operations strategy is the means by which operations implements the firm’s corporate strategy and helps to build a customer-driven firm.
  • It links long-term and short-term operations decisions to corporate strategy.
  • It is the core of managing processes and value chains.
corporate strategy and key operations management decisions

Market analysis

Competitive priorities

New Service/

Product Development

No

Performance

Gap?

Yes

Operations strategy

  • Decisions
  • Managing Processes
  • Managing Value Chains

Capabilities

Corporate Strategy and Key Operations Management Decisions

Corporate strategy

customer driven operations strategy
Customer-DrivenOperations Strategy
  • Corporate strategy views the organization as a system of interconnected parts, each working with the others to achieve desired goals.
  • Operations Strategy supports the corporate strategy and requires continuous cross-functional interaction.
  • The operations strategy should be customer driven.
developing a corporate strategy
Developing a Corporate Strategy
  • Developing a corporate strategy involves three considerations:
    • Monitoring and adapting to the environment
    • Identifying and developing core competencies
    • Developing the firm’s core processes
  • Adapting requires environmental scanning to monitor trends for opportunities and threats.
  • Core Competencies are the unique resources and strengths an organization possesses.
core competencies
Core Competencies
  • Core competencies include…
    • A well-trained and flexible Workforce
    • Having well-located & flexible Facilities
    • Having Market and Financial Know-How.
    • Expertise in Systems and Technology.
  • The core competencies should determine the firm’s core processes.
    • These can include customer relations, new service/product development, order fulfillment, and supplier relationships.
    • A firm may have all of these or focus on a subset of them, as determined by its core competencies.
global strategies
Global Strategies
  • A global strategy may include buying foreign services or parts and entering or expanding foreign markets.
  • Two effective global strategies are:
    • Strategic Alliances
      • Collaborative efforts
      • Joint ventures
      • Technology licensing
    • Locating abroad
market analysis
Market Analysis
  • A Market Analysis is one key to developing a customer-driven strategy, and is accomplished in two parts.
    • Market Segmentation, which identifies groups of customers with enough in common to warrant developing services and/or products for them.
    • Needs Assessment identifies the needs of each market segment. Needs include such things as:
      • Service or product needs
      • Delivery system needs
      • Volume needs
arriving at the competitive priorities

Market analysis

  • segmentation
  • needs analysis
  • Competitive priorities
  • cost
  • quality
  • time
  • flexibility

Arriving at the Competitive Priorities

  • Corporate Strategy
  • environmental scanning
  • core competencies
  • core processes
  • global strategies
competitive priorities

Competitive Priorities

Cost 1. Low-cost operations

Quality 2. Top quality

3. Consistent quality

Time 4. Delivery speed

5. On-time delivery

6. Development speed

Flexibility 7. Customization

8. Variety

9. Volume flexibility

competitive capabilities
Competitive Capabilities
  • The Competitive Capabilities are the cost, quality, time and flexibility dimensions of competitive priorities that a process or value chain actually possesses and is able to deliver.
    • Low Cost means delivering a service or product at the lowest possible cost to the satisfaction of the customer.
quality as a competitive capability
Quality as aCompetitive Capability
  • Top Quality: Delivering an outstanding service or product.
    • Considerable interaction with the customers may be required to determine what that means.
  • Consistent Quality: Producing services or products that meet design specifications on a consistent basis.
time as a competitive capability
Time as aCompetitive Capability
  • Delivery Speed is quickly filling a customer’s order.
    • Lead Time is the time between receipt of an order and filling the order.
  • On-Time Delivery means meeting the delivery time promises.
  • Development Speed is quickly introducing a new service or product.
  • Time-Based Competition is a strategy that focuses on development speed and delivery speed.
flexibility as a competitive capability
Flexibility as aCompetitive Capability
  • Customization means satisfying the unique needs of each customer by changing the service or product designs.
  • Variety involves handling a wide assortment of services or products efficiently.
  • Volume Flexibility requires accelerating or decelerating the rate of production quickly to handle large fluctuations in demand.
order winners and order qualifiers
Order Winners and Order Qualifiers
  • These are criteria used by customers in service or product selection.
  • Order Winners are criteria for differentiating services or products of one firm from those of another.
    • Price, quality, time, flexibility, after sales support, reputation, etc.
  • Order Qualifiers are demonstrated levels of performance required to do business in a particular market segment.
service or product development strategies
Service or Product Development Strategies
  • Product Variety: Offering a wide assortment.
  • Design: Ease of use and desirable features.
  • Innovation: Translate new technology into new products.
  • Service: Products with services added.

Leader: Being first to introduce new services and/or products.

Middle of the Road: Wait for the leaders to introduce new services and/or products.

Laggard: Wait to see if the leader’s new services and/or products catch on in the market.

service package
Service Package
  • A Service Package is a collection of goods and services provided by a service process to its customers. It consists of four features:
    • Supporting Facility: The physical resources that must be in place before a service can be offered.
    • Facilitating Goods: The materials purchased or consumed by the customer or the items provided by the customer to receive a service.
    • Explicit Services: The readily observable benefits.
    • Implicit Services: Psychological benefits.
quality function deployment qdf
Quality Function Deployment (QDF)
  • Quality Function Deployment (QDF) is a means of translating customer requirements into the appropriate technical requirements for service or product development. Questions it seeks to answer are…
    • What do our customers want?
    • How well are we doing relative to our competition?
    • What technical measures relate to our customers’ needs?
    • What are the relationships between what our customers want and the technical measures?
    • How does our service or product performance compare to the competition?
    • What are the potential technical trade-offs?
slide20

QualityFunctionDeployment

© 2007 Pearson Education

“House of Quality”

Voice of the Engineer

Competitive Analysis

Voice of the Customer

Correlations

Technical Comparison

development process

Service or product not profitable

Design

Specifications are developed for new services or products

Need to rethinkthe idea.

Analysis

A critical review of how it will be produced, resource requirements and capabilities.

Post-launch review

Development

Cross-functional coordination, process design.

Full Launch

Sales & promotion

Development Process
concurrent engineering
Concurrent Engineering
  • Concurrent Engineering brings product engineers, process engineers, marketers, buyers, information specialists, quality specialists, and suppliers together to design a product and the processes that will meet customer expectations.
    • This is an essential cross-functional effort during the service and/or product development phase to insure a timely and well-coordinated process that brings value to the customer.
corporate strategy and key operations management decisions1

Market analysis

Competitive priorities

New Service/

Product Development

No

Performance

Gap?

Yes

Operations strategy

  • Decisions
  • Managing Processes
  • Managing Value Chains

Capabilities

Corporate Strategy and Key Operations Management Decisions

Corporate strategy

matching capabilities to priorities
Matching Capabilities to Priorities

The table below shows how a credit card division matched their capabilities to their priorities and uncovered gaps in their operating strategy.