Embed Size (px)
Citation preview
1
Lecture 4
MBF2213 | Operations ManagementPrepared by Dr Khairul Anuar
L4: People in Operations
2
Lecture 3
MBF2213 | Operations ManagementPrepared by Dr Khairul Anuar
L3: Operations Strategy
Slack et al.’s model of operations management
3
Key operations questions
Identify the following key questions:
• What is strategy and what is operations strategy?
• What is the difference between a ‘top-down’ and a
‘bottom-up’ view of operations strategy?
• What is the difference between a ‘market
requirements’ and an ‘operations resources’ view of
operations strategy?
• How can operations strategy form the basis for operations
improvement?
• How can an operations strategy be put together?4
• Setting broad objectives that direct an enterprise towards its overall goal.
• Planning the path (in general rather than specific terms) that will achieve these goals.
• Stressing long-term rather than short-term objectives.
• Dealing with the total picture rather than stressing individual activities.
• Being detached from, and above, the confusion and distractions of day-to-day activities.
What is strategy?
5
Strategic decisions are those decisions which are widespread in
their effect on the organization to which the strategy refers,
define the position of the organization relative to its
environment and move the organization closer to its long-term
goals.
Strategic decisions
6
‘Operations’ is not the same as ‘operational’
‘Operations’ are the resources that create products and services.
‘Operational’ is the opposite of strategic, meaning day-to-day and detailed.
So, one can examine both the operational and the strategic aspects of operations.
7
Operations strategy at Flextronics and Ryanair
For each of these companies:
• What do they have to be good at to compete in their markets?
• How do their operations help them to achieve this?
8
Operations strategic decisions
• Industrial parks, with
– low cost but close locations
– and co-located suppliers
Market requirements
• Low costs
• Responsiveness
• Flexibility
Flextronics
Operations strategy at Flextronics
9
Operations strategic decisions
• Stripped down service
• One technology• Cheap airport
locations• Fast turnround
Market requirements
• Low prices
• Reliability
• Basic service
Operations strategy at Ryanair
10
The three key
attributes
of operations strategy
Operations contribution
Implementing Be dependable
Operationalise strategy
Explain practicalities
Supporting Be appropriate
Understand strategy
Contribute to decisions
Driving Be innovative
Provide foundation of strategy
Develop long-term capabilities
The strategic role of the operations function
11
The 4 stage model of operations contribution
12
How is operations strategy different to operations management?
The time scale is longer
Short-termfor example,
capacity decisions
1–12 months
Dem
and
Long-termfor example, capacity
decisions
1–10 years
Dem
and
Operations management Operations strategy
13
The level of analysis is higher
Operations management Operations strategy
Micro-levelof the process
Macro-levelof the total operation
How is operations strategy different to operations management? (Continued)
14
The level of aggregation is higher
Operations management Operations strategy
Detailed
For example:
‘Can we give tax services to the small business market in
Antwerp?’
Aggregated
For example:
‘What is our overall business advice capability
compared with other capabilities?’
How is operations strategy different to operations management? (Continued)
15
The level of abstraction is higher
Operations management Operations strategy
Concrete
For example:
‘How do we improve out purchasing procedures?’
Philosophical
For example:
‘Should we develop strategic alliances with
suppliers?’
How is operations strategy different to operations management? (Continued)
16
Top-down perspective
What the business wants operations to
do
Operations resources
perspective
What operations resources can do
What day-to-day experience suggests operations should do
Bottom-up perspective
Market requirementperspective
What the market position requires operations to do
Operations strategy
The four perspectives on operations strategy
17
The strategy hierarchy
Key strategic decisions
Influences on decision making
Business strategy
What is the mission?
What are the strategic objectives of the firm?
How to compete?
Customer/market dynamics
Competitor activity
Core technology dynamics
Financial constraints
Corporate strategy
What business to be in?What to acquire?What to divest?How to allocate cash?
Economic environmentSocial environmentPolitical environmentCompany values and ethics
Functional strategy
How to contribute to the
strategic objectives?
How to manage the
function’s resources?
Skills of function’s staff
Current technology
Recent performance of the
function
Top-down and bottom-up perspectives on operations strategy can reinforce each other
19
Different competitive factors and performance objectives
Competitive factorsIf the customers value these ...
Performance objectivesThen, the operations will need to
excel at these ...
Low price Cost
High quality Quality
Fast delivery Speed
Reliable delivery Dependability
Innovative products and services Flexibility (products/services)
Wide range of products and services Flexibility (mix)
The ability to change the timing or quantity of products and services Flexibility (volume and/or delivery)
20
The 3 key attributes
of operations strategyOperations contribution
Implementing be Dependable
Operationalize strategy
explain Practicalities
Supporting be Appropriate
Understand strategy
Contribute to decisions
Driving be Innovative
provide Foundation of strategy
Develop long-term Capabilities
The strategic role of the operations function
21
Corporate strategy
Business strategy
Emergent sense of what the strategy should be
Operational experience
Top-down and bottom-up perspectives of strategy
Operations strategy
22
The effects of the product/service life cycle
23
24
Some typical structural and infrastructural operations strategy decisions
25
What you HAVE
in terms of operations capabilities
What you NEED
to ‘compete’ in the market
Operations resources
Market requirements
What you WANT
from your operations to
help you ‘compete’
What you DO
to maintain your
capabilities and satisfy
markets
Strategic reconciliation
Reconciling market requirements and operations resources
26
In operations improvement should achieve ‘fit’ between market requirements and operations performance, but deviation from the line of ‘fit’ between market requirements and operations performance can expose the operation to risk(1 of 2)
27
In operations improvement should achieve ‘fit’ between market requirements and operations performance, but deviation from the line of ‘fit’ between market requirements and operations performance can expose the operation to risk (2 of 2)
28
29
For this product/service is achieved performance …
Better than competitors
1 - Consistently considerably better than our nearest competitor
2 - Consistently clearly better than our nearest competitor
3 - Consistently marginally better than our nearest competitor
Nine-point performance scale
4 - Often marginally better than most competitors
5 - About the same as most competitors
6 - Often close to main competitors
Same as competitors
7 - Usually marginally worse than main competitors
8 - Usually worse than most competitors
9 - Consistently worse than most competitors
Worse than competitors
30
The importance–performance matrix
31
Strategic resources and sustainable competitive advantage
Operations resources can give sustainable competitive advantage if they are…
Scarce
Not very mobile
Difficult to imitate
Difficult to substitute for
32
The four stages of the process of operations strategy
33
The challenge of operations strategy formulation
An operations strategy should pass the following questions…
Does it identify critical issues?
Is it comprehensive?
Is it coherent?
Does it correspond with strategic objectives?
34
The challenge of operations strategy formulation
An operations strategy should be:
Appropriate…
Comprehensive…
Coherent…
Consistent over time…
35
An implementation agenda is needed
When to start?
Where to start?
How fast to proceed?
How to co-ordinate the implementation programme?
36
The five P’s of operations strategy implementation
• Purpose — a shared understanding of the motivation, boundaries and context for developing the operations strategy.
• Point of Entry — the point in the organization where the process of implementation starts.
• Process — How the operations strategy formulation process is made explicit.
• Project Management — The management of the implementation.
• Participation — Who is involved in the implementation.
37
