Operations Strategy. What is Operations Strategy ?. Operations Strategy is concerned with setting broad policies and plans for using firm resources to best support long-term competitive strategy. Operations strategy needs to support overall corporate strategy. Competitive Dimensions. Cost
Operations Strategy is concerned with setting broad policies and plans for using firm resources to best support long-term competitive strategy.
Operations strategy needs to support overall corporate strategy.
Make it cheap
Make it good
Make it fast
Deliver as promised
Handle Changes in Demand
Make more than one type
First mover advantage
All of the competitive dimensions are important…
why not try to excel along every one?
Trade-offs: Decisions that arise because of the inability of processes to excel simultaneously across all competitive dimensions.
Order winners: Criterion that differentiates one firm from another.
Examples: Cost (Southwest Airlines), service quality (Ritz-Carlton Hotels), Flexibility (Dell)
Order qualifier: Criterion that permits the firm’s products to even be considered for purchase.
Example: basic quality necessary to be considered a good car (consumer reports).
Southwest Airlines overall corporate strategy is to
“serve price- and convenience-sensitive customers.”
The next step is to analyze the process level…
Productivity is a common measure for how well a company is utilizing its resources
Example: Consider the following case. A bank has net output (income) of $500,000. The bank employs 40,000 people.
The partial labor productivity is 500,000 / 40,000 = 12.5
What does this tell you?
The productivity index is a relative measure.
It has to be compared with something else:
The important thing is to be consistent in measurement!