02 - operations strategy - lecture
DESCRIPTION
Operations strategyTRANSCRIPT
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STRM046: Managing Operations and the Supply Chain
Operations strategy
MBA - MASTER OF BUSINESS ADMINISTRATION
Dr Luciano Batista BSc MSc PhD MILT Senior Lecturer in Operations Management Member of CELAS Centre for Excellence in Logistics and Supply Chain Member of the Chartered Institute of Logistics and Transport UK Editorial Member of the International Journal of Supply Chain and Operations Resilience
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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
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Operations strategy at Ryanair
1. What do they have to be good at to compete in their markets?
2. How do their operations help them to achieve this?
Source: Slack et al. (2010)
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Operations strategic decisions
Stripped down service
One technology Cheap airport
locations Fast turnround
Market requirements
Low prices
Reliability
Basic service
Ryanair
Operations strategy at Ryanair
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Understanding strategy
What is strategy?
Definition of the future direction and actions of a company defined as approaches to achieve specific objectives. It is about
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
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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
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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.
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How is operations strategy different to operations management?
The time scale is longer
Short-term for example,
capacity decisions
1-12 months
Dem
and
Long-term for example, capacity
decisions
1-10 years
Dem
and
Operations management Operations strategy
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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?
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The level of aggregation is higher
Operations management Operations strategy
Detailed
For example.....
Number of customer orders on a specific day
Aggregated
For example.....
Evolution of customer orders over the last 12
months
How is operations strategy different to operations management?
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The level of abstraction is higher
Operations management Operations strategy
Concrete
For example
How do we improve our purchasing procedures?
Philosophical
For example
Should we develop strategic alliances with
suppliers?
How is operations strategy different to operations management?
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The 4 stage model of operations contribution In
crea
sin
g st
rate
gic
imp
act
Increasing operations capabilities
Externally supportive
Redefining industry
expectations
STAGE 4 Give an Operations Advantage
Driving strategy
Based on Hayes & Wheelwright framework
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 1 Correct the worst problems
Holding the organisation
back
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Top - down Perspective
What the business
wants operations to do
Operations resources
Perspective
What operations resources can do
What 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
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Corporate strategy
Business strategy
Emergent sense of what the strategy should be
Operational experience
Top-down and bottom-up perspectives of strategy
Operations strategy
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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 dynamics
Competitor activity
Core technology dynamics
Financial constraints
Corporate strategy
What business to be in? What to acquire? What to divest? How to allocate cash?
Economic environment Social environment Political environment Company values and ethics
Functional strategy
How to contribute to the
strategic objectives?
How to manage the
functions resources?
Skills of functions staff
Current technology
Recent performance of the
function
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Introduction Growth Maturity Decline
Sale
s vo
lum
e
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
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Different competitive factors imply different performance objectives
Competitive factors If the customers value these ...
Performance objectives Then, 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 services Flexibility (volume and/or delivery)
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Intended Strategy
Realised Strategy
Deliberative Strategy
Mintzbergs concept of emergent strategy
Unrealized Strategy Emergent Strategy
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An implementation agenda is needed
When to start?
Where to start?
How fast to proceed?
How to co-ordinate the implementation programme?
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Thank you
MBA - MASTER OF BUSINESS ADMINISTRATION
Dr Luciano Batista BSc MSc PhD MILT Senior Lecturer in Operations Management