The operations function is fashionable! The consultancy services market % of world revenues of 40 largest firms  Marketing...
Operations Resources Market Requirements OPERATIONS STRATEGY Strategic Reconciliation Operations strategy reconciles the r...
Operations strategy is ….. “…  the  decisions which shape the long-term capabilities of  the company’s  operation s  and t...
Macro level of the total operation Level of  analysis Time scale Short-term for example, capacity decisions 1-12 months De...
Corporate strategy Business strategy Emergent sense of what the strategy should be Operational experience Operations strat...
PERFORMANCE OBJECTIVES <ul><li>Dependability </li></ul><ul><li>Speed of delivery </li></ul><ul><li>Product mix flexibility...
Performance Objectives Market Positioning Customer Needs Competitors’ Actions The market perspective on operations strateg...
R esources   The operations resource perspective analysis of the lighting company Tangible <ul><li>Equipment </li></ul><ul...
Operations Strategy Decision Areas The operations resource perspective on operations strategy Tangible and Intangible Reso...
Operations strategy is the strategic reconciliation of market requirements with operations resources Performance Objective...
Operations has to cope with the clash between the nature of external markets and the nature of internal resources Operatio...
Operations strategy is the strategic reconciliation of market requirements with operations resources Strategic Reconciliat...
Market Requirements Operations Resources What you HAVE in terms of operations capabilities What you NEED to “compete” In t...
Operations can kick-start two virtuous cycles World Class Operations Understanding of the processes Competencies embedded ...
narrow wide Variety of items per order small large Number of items per order Existing ‘effective’ capability Existing ‘eff...
<ul><li>2 x distribution centers </li></ul><ul><li>State-of-art packing and  information technology </li></ul><ul><li>Proc...
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Chap01

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Chap01

  1. 1. The operations function is fashionable! The consultancy services market % of world revenues of 40 largest firms Marketing/sales 2 Operations and process management 31 Corporate strategy 17 IT strategy 17 Benefits/Actuarial 16 Organizational design 11 Financial 6
  2. 2. Operations Resources Market Requirements OPERATIONS STRATEGY Strategic Reconciliation Operations strategy reconciles the requirements of the market with the capabilities of operations resources
  3. 3. Operations strategy is ….. “… the decisions which shape the long-term capabilities of the company’s operation s and their contribution to overall strategy through the on-going reconciliation of market requirements and operations resources … ”
  4. 4. Macro level of the total operation Level of analysis Time scale Short-term for example, capacity decisions 1-12 months Demand 1-10 years Demand Long-term for example, capacity decisions Level of aggregation Detailed F or example “ Can we give tax services to the small business market in Antwerp?” Aggregated F or example “ What is our overall business advice capability compared with other capabilities?” Level of abstraction Concrete F or example “ How do we improve our purchasing procedures?” Philosophical F or example “ Should we develop strategic alliances with suppliers?” Operations management Operations strategy Operations strategy is different to operations management Micro level of the process
  5. 5. Corporate strategy Business strategy Emergent sense of what the strategy should be Operational experience Operations strategy Top-down and bottom-up perspectives of strategy
  6. 6. PERFORMANCE OBJECTIVES <ul><li>Dependability </li></ul><ul><li>Speed of delivery </li></ul><ul><li>Product mix flexibility </li></ul><ul><li>Speed to market </li></ul>MARKET POSITION <ul><li>Innovative products </li></ul><ul><li>Time to market </li></ul><ul><li>Product range </li></ul><ul><li>Coordinated launches </li></ul>D ifferentiation on : CUSTOMERS Segmentation on : <ul><li>Age - youth </li></ul><ul><li>Purpose - general </li></ul>COMPETITORS Traditionally weak in : The market perspective analysis of the garment company <ul><li>promotion </li></ul><ul><li>design innovation </li></ul>
  7. 7. Performance Objectives Market Positioning Customer Needs Competitors’ Actions The market perspective on operations strategy Required p erformance Understanding m arkets
  8. 8. R esources The operations resource perspective analysis of the lighting company Tangible <ul><li>Equipment </li></ul><ul><li>Staff </li></ul>Intangible <ul><li>Reputation </li></ul><ul><li>Relationships </li></ul><ul><li>( i nternal and external) </li></ul><ul><li>Experience </li></ul><ul><li>Application of leading - edge lighting and sound technology </li></ul><ul><li>Articulation of client requirements </li></ul>C apabilities <ul><li>Integration of equipment supply and client requirements </li></ul><ul><li>Design process </li></ul><ul><li>Supplier liaison process </li></ul>P rocesses <ul><li>Location </li></ul><ul><li>Virtual reality technology </li></ul><ul><li>Supplier development </li></ul><ul><li>Equipment tracking system </li></ul><ul><li>Organi z ational structure </li></ul><ul><li>Staff meetings </li></ul>O perations Strategy Decisions
  9. 9. Operations Strategy Decision Areas The operations resource perspective on operations strategy Tangible and Intangible Resources Operations Processes Understanding resources and processes Strategic decisions Operations Capabilities
  10. 10. Operations strategy is the strategic reconciliation of market requirements with operations resources Performance Objectives Market Positioning Customer Needs Competitors’ Actions Required p erformance Understanding m arkets Operations Strategy Decision Areas Tangible and Intangible Resources Operations Processes Understanding resources and processes Strategic decisions Operations Capabilities
  11. 11. Operations has to cope with the clash between the nature of external markets and the nature of internal resources Operations Resources are…. Difficult to change Technically constrained Complex Market Requirements are…. Dynamic Heterogeneous Ambiguous
  12. 12. Operations strategy is the strategic reconciliation of market requirements with operations resources Strategic Reconciliation Market Requirements Understanding Markets Operations Resources Understanding Resources and Processes Capacity Supply networks Process technology Development and organi z ation Quality Speed Dependability Flexibility Cost Operations Processes Operations Resources Operations Competences Market Positioning Market Segmentation Competitor Activity Strategic Decisions Operations Strategy Decisions Required Performance Performance Objectives
  13. 13. Market Requirements Operations Resources What you HAVE in terms of operations capabilities What you NEED to “compete” In the market What you WANT from your operations to help you “compete” What you DO to maintain your capabilities and satisfy markets Strategic Reconciliation
  14. 14. Operations can kick-start two virtuous cycles World Class Operations Understanding of the processes Competencies embedded in the operation Capabilities enhance innovation and improvement Developing the resources which let the operation’s performance stay ahead of the competition Internal and Competitiveness Strong marketing High margin Investment Developing customers’ competitors’ and stockholders; perceptions and expectations External
  15. 15. narrow wide Variety of items per order small large Number of items per order Existing ‘effective’ capability Existing ‘effective’ capability Lafage Cosmetics’ requirements Catalogue customers Store delivery Hagen Style – Comparison of new demands placed on the order fulfilment processes by potential new business opportunities
  16. 16. <ul><li>2 x distribution centers </li></ul><ul><li>State-of-art packing and information technology </li></ul><ul><li>Processes ‘fine tuned’ to traditional ‘representative’ sales channels </li></ul><ul><li>Good at what it does </li></ul><ul><ul><li>cost efficient </li></ul></ul><ul><ul><li>fast throughput </li></ul></ul><ul><li>Cost efficiency </li></ul><ul><li>Fast delivery </li></ul><ul><li>As above plus </li></ul><ul><ul><li>wider range of requirements </li></ul></ul><ul><ul><li>more demand fluctuations? </li></ul></ul><ul><li>Traditional ‘representative’ sales channels declining in popularity </li></ul>Operations Resources Market Requirements Hagen Style – Operations resources and market requirements <ul><li>New channels </li></ul><ul><ul><li>catalogue </li></ul></ul><ul><ul><li>Internet </li></ul></ul><ul><ul><li>discount stores </li></ul></ul>
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