© Nigel Slack and Michael Lewis 2003 The operations function is fashionable! The consultancy services market % of world revenues of 40 largest firms Marketing/sales

© Nigel Slack and Michael Lewis 2003

The operations function is fashionable!

The consultancy services market

% of world revenues of 40 largest firms

Marketing/sales2

Operations and process management

31

Corporate strategy17

IT strategy17

Benefits/Actuarial16

Organizational design

11

Financial6


Operations Resources

Market Requirements

OPERATIONS STRATEGY

Strategic Reconciliation

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


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 …”


Microlevel of the process

Macrolevel of the total operation

Level of analysis

Time scale

Short-termfor example, capacity

decisions

1-12 months

Dem

and

1-10 years

Dem

and

Long-termfor example, capacity

decisions

Level of aggregation

DetailedFor example“Can we give tax services to the small business market in

Antwerp?”

AggregatedFor example

“What is our overall business advice capability compared

with other capabilities?”

Level of abstraction

ConcreteFor example

“How do we improve our purchasing procedures?”

PhilosophicalFor example“Should we develop strategic

alliances with suppliers?”

Operations management Operations strategy

Operations strategy is different to operations management


Corporate strategy

Business strategy

Emergent sense of what the strategy

should be

Operational experience

Operations strategy

Top-down and bottom-up perspectives of strategy


PERFORMANCE OBJECTIVES

•Dependability•Speed of delivery•Product mix flexibility•Speed to market

MARKET POSITION

•Innovative products•Time to market•Product range •Coordinated launches

Differentiation on:

CUSTOMERS Segmentation on:

•Age - youth•Purpose - general

COMPETITORS

Traditionally weak in:

The market perspective analysis of the garment company

•promotion•design innovation


Performance Objectives

Market Positioning

Customer Needs

Competitors’ Actions

The market perspective on operations strategy

Required performance

Understanding markets


Resources

The operations resource perspective analysis of the lighting company

Tangible•Equipment•Staff

Intangible•Reputation•Relationships

(internal and external)•Experience

•Application of leading-edge lighting and sound technology

•Articulation of client requirements

Capabilities

• Integration of equipment supply and client

requirements

•Design process

•Supplier liaison process

Processes

•Location•Virtual reality technology•Supplier development•Equipment tracking system•Organizational structure•Staff meetings

Operations Strategy Decisions


Operations Strategy

Decision Areas

The operations resource perspective on operations strategy

Tangible and Intangible Resources

Operations Capabilities

Operations Processes

Understanding resources and

processes

Strategic decisions


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


Market Positioning

Customer Needs

Competitors’ Actions

Required performance

Understanding markets

Operations Strategy

Decision Areas

Tangible and Intangible Resources

Operations Capabilities


Understanding resources and

processes

Strategic decisions


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

Operations Resources are….

Difficult to change

Technically constrained

Complex

Market Requirements are….

Dynamic

Heterogeneous

Ambiguous


Strategic Reconciliation Market Requirements

Understanding Markets


Understanding Resources and

Processes

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

CapacitySupply networksProcess technologyDevelopment and organization

QualitySpeedDependabilityFlexibilityCost



Operations Competences

Market Positioning

Market Segmentation

Competitor Activity

Strategic Decisions

Operations Strategy

Decisions

Required Performance



What you HAVE

in terms of operations capabilities

What you NEED

to “compete”In the market

Market Requirements


What you WANT

from your operations to

help you “compete”

What you DO

to maintain your

capabilities and satisfy

markets

Strategic

Reconciliation


Operations can kick-start two virtuous cycles

World Class Operations

Understanding of the processes

Competencies embedded in the

operation

Capabilities enhance innovation and improvement

Developing the resources which let the operation’s

performance stay ahead of the competition

Internal and

Competitiveness Strong marketing

High margin

Investment

Developing customers’ competitors’ and

stockholders; perceptions and expectations

External


nar

row

wid

e

Var

iety

of

item

s p

er o

rder

small largeNumber of items per order

Existing ‘effective’ capability

Existing ‘effective’ capability

Lafage Cosmetics’ requirements

Catalogue customers

Store delivery

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


•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

• Cost efficiency• Fast delivery

• As above plus• wider range of requirements• more demand fluctuations?

•Traditional ‘representative’ sales channels declining in popularity

Operations Resources Market Requirements

Hagen Style – Operations resources and market requirements

•New channels• catalogue• Internet • discount

stores

Documents

© Nigel Slack and Michael Lewis 2003 The operations function is fashionable! The consultancy services market % of world revenues of 40 largest firms Marketing/sales