Tuck BHPB Operations Strategy Page 1 Prof. Joe Hall (joe.hall@dartmouth.edu)

Operations Strategy: Aligning the Organization for Superior Execution

Tuck BHPB Operations Strategy Page 2 Prof. Joe Hall (joe.hall@dartmouth.edu)

Introduction

Operations is all about how work is organized and

performed

» The goal is execution: getting work done

» It’s about the details, but also the high-level

organizing structure

Operations is focused on business processes

Tuck BHPB Operations Strategy Page 3 Prof. Joe Hall (joe.hall@dartmouth.edu)

Outline

Build an operations strategy framework Apply the framework to your organizations Wrap-up & summary

Tuck BHPB Operations Strategy Page 4 Prof. Joe Hall (joe.hall@dartmouth.edu)

Operations Strategy

A strategy is a well coordinated set of objectives, policies and plans aimed at securing a long-term competitive advantage. It provides vision for the organization.

Corporate

Divisional

Functional

What business are we in?

How do we compete in a given business?

What is the role of operationsin the business?

Tuck BHPB Operations Strategy Page 6 Prof. Joe Hall (joe.hall@dartmouth.edu)

Operations Strategy – Three Components

Mission Operations Objectives Management Levers

Tuck BHPB Operations Strategy Page 7 Prof. Joe Hall (joe.hall@dartmouth.edu)

Target Market Who is our intended customer?

Value Proposition What are the most important elements of our product/service

from the customer’s perspective?

Operating Strategy: Mission + Objectives How do we do what we do?

Delivery System: Levers How is the work organized and performed?

Building an Operations Strategy

Tuck BHPB Operations Strategy Page 9 Prof. Joe Hall (joe.hall@dartmouth.edu)

Operations Strategy – Three Components

Mission Operations Objectives Management Levers

Tuck BHPB Operations Strategy Page 10 Prof. Joe Hall (joe.hall@dartmouth.edu)

Mission of Operations

States a purpose for operations and priority among objectives. It specifies the primary task which must be achieved for operations to succeed. It is derived from the business strategy, objectives, and the particular business situation.

» Corporate mission statement: what you do, who you are

» Operations mission statement: how you do what you do

Tuck BHPB Operations Strategy Page 11 Prof. Joe Hall (joe.hall@dartmouth.edu)

Mission of Operations - Examples

Ford Motor Company: “Quality is Job #1” FedEx: “When it absolutely, positively has to be there

overnight” Northwest Airlines: “Provide safe, clean, on-time air

transportation with luggage, in a professional and consistent manner”

Dartmouth-Hitchcock Medical Center: “We advance health through research, education, clinical practice and community partnerships, providing each person the best care, in the right place, at the right time, every time”

Tuck BHPB Operations Strategy Page 12 Prof. Joe Hall (joe.hall@dartmouth.edu)

Operations Strategy – Three Components

Mission Operations Objectives Management Levers

Tuck BHPB Operations Strategy Page 13 Prof. Joe Hall (joe.hall@dartmouth.edu)

Operations Objectives

Cost Quality Delivery

» Speed» Reliability

Flexibility» New Product/Service Introduction» Volume» Product/Service Mix

Tuck BHPB Operations Strategy Page 14 Prof. Joe Hall (joe.hall@dartmouth.edu)

Objectives: “Winners” vs. “Qualifiers”

Qualifier: must have to enter market Winner: feature that leads the customer to choose

your product or service

Consider the “3 C’s” when ranking objectives:» Customers» Competitors» Capabilities

Tuck BHPB Operations Strategy Page 15 Prof. Joe Hall (joe.hall@dartmouth.edu)

Operations Strategy – Three Components

Mission Operations Objectives Management Levers

Tuck BHPB Operations Strategy Page 16 Prof. Joe Hall (joe.hall@dartmouth.edu)

Management Levers

Capacity Management

Facilities

Inventory

Planning and Control

Human Resources

New Products / New Services

Process and Technology

Quality Management

Sales and Operations Planning

Supply Chain Management

Tuck BHPB Operations Strategy Page 17 Prof. Joe Hall (joe.hall@dartmouth.edu)

Framework Intro Wrap-Up

Establish a framework for an operations strategy» Operations mission» Objectives» Management levers

Goal: define a consistent direction and establish how to get there

Tuck BHPB Operations Strategy Page 18 Prof. Joe Hall (joe.hall@dartmouth.edu)

Operations Strategy Break-Out

Tuck BHPB Operations Strategy Page 19 Prof. Joe Hall (joe.hall@dartmouth.edu)

Operations Strategy - Breakout Who is your target market? What is your value proposition – what does your target market want? Specify an operations mission statement for your organization

» It should say something about how you execute» The focus is “how you do what you do”

Carefully define each operations objective for your organization:» Cost» Quality» Delivery» Flexibility

Rank order these four objectives» Which are more important, which are less important?

What measurable targets do you, or should you, employ for these objectives?

Tuck BHPB Operations Strategy Page 20 Prof. Joe Hall (joe.hall@dartmouth.edu)

Operations Strategy - Homework

For each of the seven management levers:

» What are the current policies for each?» Are they consistent with the other levers?» Are they consistent with the operations objectives?» What action programs must be put in place to remedy

any problems?» Who will carry out these programs? When?

• Capacity Management• Human Resources• New Products / New Services• Process and Technology

• Quality Management• Sales and Operations Planning• Supply Chain Management

Tuck BHPB Operations Strategy Page 21 Prof. Joe Hall (joe.hall@dartmouth.edu)

Wrap-Up

Establish a framework for an operations strategy» Operations mission» Objectives» Management levers

Goal: define a consistent direction and establish how to get there

Operations can be a powerful competitive weapon!