Post on 16-Feb-2017
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Chapter 2
Operations strategy
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Design
Deliver
Direct
Develop
Operations Management
Slack et al’s model of operations management
Operations strategy
Social, environmental and economic performance
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
In Chapter 3 - Operations strategy– Slack et. al. identify the following key questions…….
What is strategy and 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 an operations strategy be put together?
Key operations questions
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Operations strategy at Flextronics and Ryanair
For each of these companies.......
1. What do they have to be good at to compete in their markets?
2. How do their operations help them to achieve this?
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Operations strategic decisions
Industrial parks, withLow cost but close
locationsAnd co-located
suppliers
Market requirements
Low costs
Responsivenes
s
Flexibility
Flextronics
Operations strategy at Flextronics
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Operations strategic decisions
Stripped down serviceOne technologyCheap airport
locationsFast turnround
Market requirements
Low prices
Reliability
Basic service
Ryanair
Operations strategy at Ryanair
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
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?
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
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
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
‘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.
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
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
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
The level of analysis is higher
Operations management Operations strategy
Micro -level of the process
Macro -level of the total operation
How is operations strategy different to operations management?
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
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?
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
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?
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
The 4 stage model of operations contribution
Increasing contribution of operations
Incr
easi
ng s
trate
gic
impa
ct
Increasing operations capabilities
Externally supportive
Redefining industry
expectations
STAGE 4Give an Operations Advantage
Driving strategy
After Hayes and Wheelwright
Internally supportive
Clearly the best in the
industry
STAGE 3 Link strategy with operations
Supporting strategy
Externally neutral
As good as competitors
STAGE 2 Adopt best practice
Implementing strategy
Internally neutral
STAGE 1Correct the worst problems
Holding the organisation
back
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Top - down Perspective
What the business wants operations to do
Operations resources
Perspective
What operations resources can
doWhat day-to-day
experience suggests operations
should do
Bottom - up Perspective
Market requirement Perspective
What the market position requires operations to do
Operations strategy
The four perspectives on operations strategy
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Corporate strategy
Business strategy
Emergent sense of what the strategy should be
Operational experience
Top-down and bottom-up perspectives of strategy
Operations strategy
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
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 dynamicsCompetitor activityCore technology dynamicsFinancial 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 staffCurrent technologyRecent performance of the function
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Introduction Growth Maturity Decline
Sal
es
volu
me
Volume
Customers
Competitors
Variety of product/ service design
Slow growth in sales
Innovators
Few/none
Customization or frequent design changes
Rapid growth in sales volume
Early adopters
Increasing numbers
Increasingly standardized
Sales slow and level off
Bulk of market
Stable number
Emerging dominant types
Market needs largely met
Laggards
Declining numbers
Possible move to commodity standardization
The effects of the product / service life cycle
Time
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Introduction Growth Maturity Decline
Sal
es
volu
me
The effects of the product / service life cycle
Time
Likely order winners
Likely qualifiers
Dominant performance
objectives
Product/ service characteristics
QualityRange
FlexibilityQuality
Availability Quality
Price Range
SpeedDependabilityQuality
Low priceDependable supply
QualityRange
CostDependability
Low price
Dependable supply
Cost
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Different competitive factors imply different 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
servicesFlexibility (volume and/or delivery)
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Order-winning, qualifying and less important competitive factors
Neutral
+ve
-ve
Performance
Competitive benefit
Order-winning factors
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Order-winning, qualifying and less important competitive factors
Neutral
+ve
-ve
Performance
Competitive benefit
Qualifying factors
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Order-winning, qualifying and less important competitive factors
Neutral
+ve
-ve
Performance
Competitive benefit
Less important factors
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
Intended Strategy
Realised Strategy
Deliberative Strategy
Mintzberg’s concept of emergent strategy
Unrealized Strategy
Emergent Strategy
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
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
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
The challenge of operations strategy formulation
An operations strategy should be:
Appropriate...
Comprehensive...
Coherent...
Consistent over time...
Slack, Brandon-Jones and Johnston, Essentials of Operations Management, 1st Edition, © Slack, Brandon-Jones and Johnston, 2011
An implementation agenda is needed
When to start?
Where to start?
How fast to proceed?
How to co-ordinate the implementation programme?