14458150 Operations Strategy

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Operations Strategy


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HowOperations Strategy

fits the Operations Management

Philosophy

Operations As a CompetitiveWeapon

Operations Strategy

Project Management Process StrategyProcess Analysis

Process Performance and QualityConstraint Management

Process Layout

Lean Systems

Supply Chain StrategyLocation

Inventory ManagementForecasting

Sales and Operations PlanningResource Planning

Scheduling


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Outline

1. Starbucks

2. Operations Strategy

3. Corporate Strategy

4. Customer-Driven

Operations Strategy

5. Competitive Priorities and Capabilities

6. New Service or Product Development

7. Operation Strategy as a Pattern of Decisions


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Starbucks

If someone says, Lets go out for coffee,Starbucks often comes to mind.

Entrepreneur Howard Schultz had anoperations strategy in mind in 1990 when hebought the 17-store Seattle chain and turnedit into a global success.

Service strategy was key.

Offering a variety of specialized productsand services, such as Internet access,phone ahead ordering, and CD burning,all in a socially interactive atmosphere.


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Operations Strategy

Operations strategyis the means by which

operations implements the firms corporate

strategy and helps to build a customer-drivenfirm.

It links long-term and short-term operations

decisions to corporate strategy.

It is the core of managing processes and

value chains.


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Customer-Driven

Operations Strategy

Corporate strategyviews the organization

as a system of interconnected parts, each

working with the others to achieve desiredgoals.

Operations Strategysupports the

corporate strategy and requires continuous

cross-functional interaction.

The operations strategy should be customer

driven.


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Developing a Corporate

Strategy

Developing a corporate strategy involvesthree considerations:

1. Monitoring and adapting to the environment

2. Identifying and developing core competencies

3. Developing the firms core processes

Adapting requires environmental scanningto monitor trends for opportunities and

threats. Core Competencies are the unique

resources and strengths an organizationpossesses.


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Core Competencies

Core competencies includeA well-trained and flexible Workforce

Having well-located & flexible Facilities

Having Market andFinancial Know-How.Expertise in Systems and Technology.

The core competencies should determinethe firms core processes.

These can include customer relations, newservice/product development, order fulfillment,and supplier relationships.

A firm may have all of these or focus on a subsetof them, as determined by its core competencies.


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Global Strategies

A global strategy may include buying

foreign services or parts and entering or

expanding foreign markets.

Two effective global strategies are:

1. Strategic Alliances

a) Collaborative efforts

b) Joint ventures

c) Technology licensing

2. Locating abroad


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Market Analysis

A Market Analysis is one key to developing

a customer-driven strategy, and is

accomplished in two parts.

Market Segmentation, which identifies groups of

customers with enough in common to warrant

developing services and/or products for them.

Needs Assessment identifies the needs of each

market segment.Needs include such things as:

Service or product needs

Delivery system needs

Volume needs


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Competitive priorities cost quality time

flexibility

Market analysis segmentation needs analysis

Arriving at the

Competitive Priorities

Corporate Strategy environmental scanning core competencies core processes

global strategies


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Competitive Priorities

Cost 1. Low-cost operations

Quality 2. Top quality

3. Consistent qualityTime 4. Delivery speed

5. On-time delivery

6.

Development speedFlexibility 7. Customization

8. Variety

9. Volume flexibility


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Competitive Capabilities

The Competitive Capabilities are the cost,

quality, time and flexibility dimensions of

competitive priorities that a process or value

chain actually possesses and is able to

deliver.

LowCost means delivering a service orproduct at the lowest possible cost to the

satisfaction of the customer.


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Top Quality: Delivering an outstanding

service or product.

Considerable interaction with the customers

may be required to determine what that

means.

Consistent Quality: Producing servicesor products that meet design

specifications on a consistent basis.

Qualityas a

Competitive Capability


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Time as a


Delivery Speedis quickly filling acustomers order.Lead Time is the time between receipt of an

order and filling the order.

On-Time Deliverymeans meeting thedelivery time promises.

Development Speedis quickly introducing

a new service or product.Time-BasedCompetition is a strategy

that focuses on development speed anddelivery speed.


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Customization means satisfying the unique

needs of each customer by changing the

service or product designs.

Variety involves handling a wide assortment

of services or products efficiently.

Volume Flexibility requires accelerating or

decelerating the rate of production quickly to

handle large fluctuations in demand.

Flexibilityas a



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Northrup GrummanNewportNews Ship Building

The worlds only producer of full-sized

aircraft carriers

Long lead times of 8 years or more

often involve many changes.

Their processes have a high degree of

flexibility to handle changes in design.

Flexibility in workforce skills as well as

process flexibility is necessary.


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OrderWinners

and OrderQualifiers

These are criteria used by customers in

service or product selection.

Order Winners are criteria for

differentiating services or products of one

firm from those of another.

Price, quality, time, flexibility, after sales

support, reputation, etc.Order Qualifiers are demonstrated levels

of performance required to do business in

a particular market segment.


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Service or Product

Development Strategies

Product Variety: Offering a wide assortment.

Design: Ease of use and desirable features.

Innovation: Translate new technology into newproducts.

Service: Products with services added.

Leader: Being first to introduce new services and/orproducts.

Middle of the Road: Wait for the leaders tointroduce new services and/or products.

Laggard: Wait to see if the leaders new servicesand/or products catch on in the market.


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Service Package

A Service Package is a collection of goods andservices provided by a service process to itscustomers. It consists of four features:

1. Supporting Facility: The physical resourcesthat must be in place before a service can beoffered.

2. Facilitating Goods: The materials purchasedor consumed by the customer or the items

provided by the customer to receive a service.3. Explicit Services: The readily observable

benefits.

4. Implicit Services: Psychological benefits.


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QualityFunction

Deployment (QDF)

Quality Function Deployment (QDF) is a means oftranslating customer requirements into the appropriate technical

requirements for service or product development. Questions it

seeks to answer are1. What do our customers want?

2. How well are we doing relative to our competition?

3. What technical measures relate to our customers needs?

4. What are the relationships between what our customers

want and the technical measures?

5. How does our service or product performance compare to

the competition?

6. What are the potential technical trade-offs?


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Quality

FunctionDeployment

Voice of

the

Customer

Competitive

Analysis

Voice of

the

Engineer

Correlations

TechnicalComparison

House of QualityHouse of Quality


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Development Process

Service or productService or product

not profitablenot profitable

Need to rethinkNeed to rethink

the idea.the idea.

PostPost--launchlaunch

reviewreview

DesignDesign

Specifications aredeveloped for new

services or products AnalysisAnalysis

A critical review of how

it will be produced,

resource requirementsand capabilities. DevelopmentDevelopment

Cross-functional

coordination,

process design. Full LaunchFull Launch

Sales & promotion


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Concurrent Engineering

Concurrent Engineering brings product

engineers, process engineers, marketers,

buyers, information specialists, quality

specialists, and suppliers together to design

a product and the processes that will meet

customer expectations.

This is an essential cross-functional effort duringthe service and/or product development phase to

insure a timely and well-coordinated process that

brings value to the customer.


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Corporate Strategy and KeyOperations Management Decisions

Capabilities

PerformanceGap?

NoNo

YesYes

Operations strategy

Decisions

Managing Processes

Managing Value Chains

New Service/

Product Development

Market analysis

Competitive priorities

Corporate strategy


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MatchingCapabilities

to Priorities

The table below shows how a credit card division

matched their capabilities to their priorities and

uncovered gaps in their operating strategy.


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Case Study

1.Case Study in page 65 ofyour

textbook.

2. Answer the questions. (group)

Documents

14458150 Operations Strategy