Operations Strategy

Based on slides for Chase Acquilano and Jacobs, Operations Management, McGraw-Hill

Strategy Overview - Four phases:

Environmental analysis Strengths, Weaknesses, Opportunities, Threats

Determining the mission On line sample statement for Wal-Mart "To give ordinary folk the

chance to buy the same thing as rich people." Go to http://www.muhlenberg.edu/committees/stratplanning/ View the current mission statement -- Comments??

Forming a StrategyImplementing Main Strategy and Forming

Functional Area Strategies

Form a strategy - Examples

Strategy often flows from competitive dimensions. Examples:

Low price Flexibility Speed Service Dependability Broad product lines

Question: How does a firm’s strategy impact operations?Example: Nordstrom? Wal-Mart? Muhlenberg College?

Forming a strategy

What are some alternate strategies for an

automobile manufacturer such as GM or Ford?

What are some strategies for a Fast food chain

like McDonald’s?

What are some alternate strategies for a

software manufacturer like Microsoft?

What are implications for operations?

Strategic Operations Decisions

Decision Goods Services

Goods and service design Product usually tangibleProduct not tangible -- new range of

attributes

Quality Many standards Subjective standards

Process and capacity design Customer not involved in processCustomer directly involved in process;

capacity must match demand

Location selectionMay need to be near raw materials or labor

force May be near customer

Layout design Layout can enhance efficiencyLayout can enhance product as well as

production

Human resources and job designFocus on tech skills; labor standards

consistent Direct workforce needs people skills

Supply chain management Supply chain relationships criticalSupply chain relations important but not as

critical

Inventory Goods may be inventoried Cannot be inventoried

Scheduling Inventory may allow leveling of production Must meet customers immediate schedule

Maintenance Maintenance often preventive Maintenance often repair at customer's site

Productivity Total measure Productivity = Outputs/ Inputs

Partial measures of productivity =

Output/Labor or Output/ Capital or

Output/ Materials or Output/ Energy

Multifactor measures of productivity =

Output/[Labor + Capital + Energy]

Output / [Labor + Capital + Materials]

Example

You have just determined that your service employees have used a total of 2400 hours of labor this week to process 560 insurance forms. Last week the same crew used only 2000 hours of labor to process 480 forms.

Is productivity increasing or decreasing?Answer: Last week’s productivity = 480/2000 =

0.24, and this week’s productivity is = 560/2400 = 0.23. So, productivity is decreasing slightly.