Please enable JavaScript.
Coggle requires JavaScript to display documents.
Session 9: Operations Strategy - Coggle Diagram
Session 9: Operations Strategy
What is operations strategy?
"pattern of strategic decisions and actions that set the role, objectives and activities of the operation" (Slack et al., 2010)
effects decisions of capacity and facilities, supply chain development, technology and workforce.
capacity and facilities
How many facilities should we have?
How big should each site be?
Where should these be located?
Do the sites to similar or different things?
supply chain development
How much of the total value chain do we own?
How many suppliers should we have?
How global is our supply network?
Do we outsource non-core activity?
technology
How automated are our processes?
How integrated are our systems?
How dedicated is our technology?
What scale should our technology operate at?
workforce
How hierarchal is our management structure?
How central is our planning and coordination?
How do we group our departments?
How do we manage shifts and work patterns?
Need to consider long-term strategy
3 themes to how operations should be defined and reconciled (Slack and Lewis, 2002)
Market influence: decisions are taken in context of the market positions of the organisation, considering different requirements for different market segments.
Competencies/Capabilities: Can organisations exploit their operations' competences or capabilities in the marketplace?
Entrepreneurial Vision: some operations can be driven by a corporate or entrepreneurial vision. Entrepreneurs take personal views of how to configure operations ignoring corporate theory of how operations should be designed.
Market Influence Model
Operations strategy is highly influenced by competitive and marketing strategies
Competitive strategy dictates performance operation.
Competing on price forces low-cost strategies.
Competing on quality forces a mixture of strategies to meet high or low standards.
Marketing strategy dictates operations requirements.
Due to decisions on choice of market to enter, market positioning and choice of segment/type of customer.
Market requirements are different for the same product in different segments.
Performance Objectives
Quality: defined in various ways. High-performance products have clear specifications. Sometimes a lower standard is still appropriate for customers' needs. Spec might be achievable but must be gotten right every time (conformance quality).
Speed: operations sometimes need to be done quickly. Time is a key objective. Any form of customer waiting time, can be a speed objective. Speed measure is referred to as throughput time, time taken for a resource to work through a process.
Flexibility: ability to change what you do. Three main types:
1) Variety - ability to produce more than one type of product,
2) Mix - ability to cope with different type of customers or products at the same time,
3) Volume - ability to adjust how much you produce dependent on market demand.
Sometimes change is needed very quickly. So, response flexibility is needed (ability to change in great magnitude over time in a planned way).
Sustainability: "capable of being maintained at length without interpretation of weakening or loss in power or quality". Three aspects: environmental, economic and social sustainability.
Dependability: keeping your promises, focusing on delivery on those promises. Not to be confused with quality. Think of logistics operations where schedule adherence is key.
Cost: customers will consider price as one of the main buying criteria. Producers in markets that are price-sensitive will have to adjust their operations strategy to take account of the cost impact of their decisions.
Linking Operations Strategy and Performance Objectives
Performance objectives are the drivers for operation strategy decisions.
Essential that decisions are consistent with market performance requirements.
Quality
Determined by operations strategy decisions linked to process design and employee involvement
Adapting operations strategy to achieve higher levels of quality include:
selecting suppliers on the basis of quality over price.
a focus on employee training and skills development to minimise staff errors.
Speed
Decisions that help achieve speed-based objectives include:
locating near their consumer base to minimise journey times.
having spare capacity or inventory to maintain availability.
Flexibility
As there are many types of availability, there are many decisions that improve flexibility:
smaller, more flexible machines.
less technology and a greater reliance on people.
spare capacity to cope with peaks in demand.
Sustainability
Most decisions aim to improve sustainability performance and focus on environmental issues:
having site locations spread globally to reduce logistics emissions and to spread social benefits of employment.
Dependability
Difficult to design into an operation.
2 issues emerge:
promises made at the order taking stage must be realistic and achievable.
control systems must be capable of progressing work to the required schedule.
Cost
Factor in all operation strategies and can have a huge range of decisions and practices to improve costs:
automation to reduce labour costs
out of town retail locations to reduce purchase or rental costs for sites.
Key to note that:
Strategies change over time and over a products life cycle. Market requirements change and performance objectives change.
Performance Trade-Offs
Operations cannot be good at everything, there will be trade-offs between different performance objectives.
Managers need to consider these trade-offs when planning.
Focused Operations
Challenge when one operations serves different markets with different needs. Managers need to decide whether or not they divide operations into different processes.
Allows each one to concentrate on a narrower range of products, services or performance objectives.
Operations are focused in 4 main ways
By Market Segment: operations where a different process or facility is used for each market segment.
By Concentrating on One Specific Performance Objective: Split facilities into separate sections by performance requirements.
By Volume: systems divided by volume, making prototypes in specialist facilities away from the higher-volume operations.
By Technology Speciality: need to be split because they use different technologies. Healthcare is a good example.