Ops Mgmt - Directing - Chapter 2.Strategy

Ops Mgmt - Directing - Chapter 2.Strategy

1. Role of Strategies (Relationship)

   • Role of Business Strategy - fed by
     • 3.Role of Ops Strategy
       • 1. Plans best use of resources - provides plans and policies 2. supports 'longer range' Business strategy
       • Diff between Ops Efficiency & Strategy
         • Operational Efficiency
           • Defin: Performing tasks well / better than competitors (Wiley, 2013)
         • Strategy
           • Defin: plan for competing in the marketplace
           • Ops Strategy - focuses on ensuring tasks performed are the right tasks
     • Defines long range plans for company overall
     • 2.Role of Mkting Strategy
       • 1.Defines Mkting Plan to support Business strategy
     • 1.Role of Finance Strategy
       • develops financial plans to support business functions

2. Ops Strategy

   • Defin: A Plan for Design and Mgmt of Ops Functions
   • Developed after business strategy
   • Focuses on Competitive Priorities to meet long run business strat
     • Defin: Capabilities giving comp edge
     • Competitive Priorities
       • Priorities are: 1. Cost 2. Quality 3. Time 4. Flexibility
         • Options avail to compete on 1. all 2. some 3. trade-offs
           • Why need Trade-offs?
             • 1. To emphasise priorities support business strategy
             • 2. Focus on "order qualifiers" and "order winners"
               • Order Winners
                 • Which priorities are order winners? e.g Dell competes on all 4 priorities / Mcdonalds consistency / Fedex speed / SW.Airlines cost / Pizzeria home made taste
               • Order Qualifiers
                 • Which priorities are order qualifiers? > must meet markets comp priorities since market expects it
       • 1. Cost
         • Focuses on offering product lower price than competition
           • Pros / Cons. typically high volume prods / limited product range little customisation / some automation to reduce unit cost / can use lower skill labour / uses product focused layouts / low cost not nec low quality
       • 2. Quality
         • Focuses on subjective nature of quality
           • 2 major Quality dimensions
             • 1. High Performance Design
               • High perform features
               • High Durability
               • Excellent C.Serv
             • 2. Product & Service Consistency
               • Meets Design Spec
               • Close tolerances
               • Error free Delivery
             • Quality must address 1. Product Design Quality (meet requirements) and 2. Process Quality (error free)
       • 3. Time
         • Focuses on Time / Speed top comp priority
           • Pros / Cons - issues involve rapid / on time delivery - gives shorter time between order placement and deliv product exactly when needed each time
       • 4. Flexibility
         • Focuses on flex to meet dynamic business change
           • Type 1 - Product Flex (1.wide variety goods / easily customised to spec cust req 2. easily drop or add product)
           • Type 2 - Volume Flex (ability to rapidly incr/decr prod to match market demand)
       • Translating Competitive priorities to create Production Requirements - 2 types
         • Structure (Decisions relating to Prod Process) 1. characteristics of facil used 2.appropriate tech selection 3. flow of goods and svcs
         • Infrastructure (Decisions relating to planning & control sys of ops) 1. Org of Ops function 2. Skill / Pay of Workers / 3. QA approaches
         • CASE STUDY: Structure & Infrastructure: DELL 1. Focus Cust Serc / Speed / Cost. 2.ERP system for direct order 3.Make to order Prod and Assy lines (lowers costs / increases turns) 4.Suppliers ship to warehouse 15mins from assy plant 5. Dell have UPS shipping

3. Strategy Dev - 3 Critical Factors to consider

   • 2.Env Scanning (understand the market) ie SWOT / trends / opps
     • e.g Political trends, social trends, economic trends, market place trends, global trends
   • 1.Mission (business goal) - ie defines business - who are clients? what is business?
     • eg Dell "to be most successful computer co in the world"
   • 3.Core Competencies (unique company strengths)
     • e.g strength of workers, tech expert, modern facil, best tech, logistics, mkt understanding
   • Feeds Business Strategy (long range plan for org)

4. Technology

   • Strategic role of Tech
     • Need tech to support competitive priorities
       • 3 types:
         • 1.Product Tech (new tech e.g teflon)
         • 2. Process Tech (improves process) e.g CAD
         • 3. Information Tech (enables communication) e.g EDI
   • Using Tech as a Tool for comp adv
     • Pro
       • 1. improve processes 2. maintain up to date standards 3. Comp Adv
         • Tech = crucial strategic decisions. At its best supports comp adv / can req change to strat plans / can req change to ops strat
     • Con / Risks
       • 1. Costly 2. Can overstate benefits 3. Obsolescence

5. Chapter Summary - 1. Business strategy = long range

   • 2. Indiv functional strategies support it
     • 3. Business Strategy developed by env scan / consider mission / consider core comp
       • 4. Role of Ops Str is long range plan for use of resources to deliver co's goods and svcs. Business Strat guides Ops Strat
         • 5. Ops Strategy focuses on developing specific capabilities (4 categ of comp priorities)
           • 6. Tech used by co's for comp adv & to support chosen priorities
   • Day to day tactical - need to fit into long term strategic framework
     • Ops strategy - functional set of processes. Together resources enable business strat
       • Conflict - effective mgmt of resources often leads to org conflict. e.g Mkt vs Ops - aim to satisfy customers. Ops vs Acs or Finance - aiming for efficiency
         • To realise l.term.obj - examine potential for success / competing ind / comp adv
           • Bus Strat creation process > starts with identif & quantif of org obj. Part of 2 / 4 yr plan. > identifies SWOT & expectations to achieve mission. These expectations set SMART targets for success - plans and activities then created. Imp to do Env Scans to assess nature of curr and future env
             • 3 factors influencing bus strat
               • 1 Mission Stmt
                 • 2. Nature of curr / future trading env (assessed by Env Scan)
               • 3. recog of org core compet - by identifying these can develop op processes and build rel with stakeholders
                 • Core Compet provide adaptable long term platform
                   • Defin: Partic set of skills or knowledge set
             • Ops v Business Strat Video https://www.youtube.com/watch?v=EQCo-7SMJ_c

6. 5 Critical Compet

   • The diagram depicts five critical internal operational competencies (blue spots), the particular business capability is influenced by each competency (white spots) and how this ultimately translates to what the organisation can offer to its customers (pink spots). The shape of an operations strategy will always be a form of ‘trade-off’ because it is almost impossible to excel simultaneously at all aspects of operations: it can be successful if it is based upon a single clear goal, determined by a prioritisation of operations objectives of cost, quality, speed, dependability and flexibility (see also https://www.youtube.com/watch?v=ZRcDVm6G50Y)

7. Porters 5 Competitive Forces that shape strategy https://www.youtube.com/watch?v=mYF2_FBCvXw

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