IE 31: Module 7 Part 2

• Operations Strategy - concerned with setting

  broad policies and plans for using the

  resources of a firm to best support its

  long-term competitive strategy.

  It involves decisions that relate to the design

  of a process (technology selection, process

  sizing, inventory role, etc) and the

  infrastructure (planning & systems control,

  QA, QC, work payment structure, organization

  of the operations function) needed to support

  the process.
• Strategy – describes how a firm intends to create and sustain value for its share holders
• 3 Major Components of Operations Strategy

  1. Operations effectiveness – relates to the

  core business processes that are needed to

  run the business

  2. Customer Management – understanding

  customer needs and leveraging customer

  relationships better

  3. Product innovation – development of new

  products, markets, and relationships to

  sustain growth.
• 3 LEVELS OF STRATEGY

  CORPORATE LEVEL STRATEGY

  • This is the highest level of strategy

  which sets the long-term direction and

  scope for the whole organization.

  • If the company comprises more than

  one business unit, corporate level

  strategy will be concerned with what

  those businesses should be, how

  resources will be allocated between

  them, and how relationships among

  the various business units with the

  corporate center should be managed

  • often express their strategy in the form

  of a corporate mission or vision

  statement
• 3 LEVELS OF STRATEGY

  BUSINESS LEVEL STRATEGY

  • primarily concerned with how a

  particular business unit should

  compete within its industry, and

  what its strategic aims and

  objectives should be

  • business unit’s strategy may be

  constrained by lack of resources or

  strategic limitations placed upon it

  by the corporate center

  • In single - proprietorships,

  business level strategy is

  synonymous with corporate level

  strategy because of the nature and

  size of the enterprise
• 3 LEVELS OF STRATEGY

  FUNCTIONAL LEVEL STRATEGY

  • bottom level of strategy is that of the

  individual function (operations,

  marketing, finance, etc.)

  • concerned with how each function

  contributes to the business strategy,

  what their strategic objectives should

  be, and how they should manage their

  resources in pursuit of those

  objectives
• Competitive Dimensions In Operations Management

  What are the different competitive dimensions?

  • Cost – “Make it Cheap”

  • Product Quality and Reliability – “Make it Good”

  • Delivery Speed – “Make it Fast”

  • Delivery Reliability – “Deliver it When Promised”

  • Coping with Changes in Demand – “Change its Volume”

  • Flexibility and New Product Introduction Speed – “Change It”

  • Other Product-Specific Criteria – “Support It”
• Competitive Dimensions In Operations Management

  • Technical liaison and support - supplier to provide technical assistance for product development specially during the early stages of design and manufacturing
  • Meeting launch date - manufacturing while development work is still being completed - strict coordination between firms and working simultaneously
  • Supplier after-sale support and response speed - support after sale of a product - spare parts, modification kits
  • Other dimensions - colors available, size, weight, location of the fabrication site, customization available, and product mix options
• Dealing With Trade Offs In Competitive Dimensions

  1. Order qualifiers are the basic criteria that

  permit the firms products to be considered

  as candidates for purchase by customers

  2. Order winners are the criteria that

  differentiates the products and services of

  one firm from another (e.g., cost of the

  product (price), product quality and

  reliability)
• Operations Strategy in Services

  1. Process-based: capacities that transforms

  material or information and provide advantages

  on dimensions of cost and quality

  2. Systems-based: capacities that are

  broad-based involving the entire operating

  system and provide advantages of short lead

  times and customize on demand

  3. Organization-based: capacities that are difficult

  to replicate and provide abilities to master new

  technologies
• Productivity is a common measure on how well

  resources are being used. In the broadest sense, it

  can be defined as the following ratio: