Operations Strategy

47,466 views

Published on

Operations

Published in: Business, Economy & Finance
4 Comments
74 Likes
Statistics
Notes
No Downloads
Views
Total views
47,466
On SlideShare
0
From Embeds
0
Number of Embeds
100
Actions
Shares
0
Downloads
0
Comments
4
Likes
74
Embeds 0
No embeds

No notes for slide

Operations Strategy

  1. 1. Operations Strategy Framework to improve Products, Services & Operations Processes Anand Subramaniam
  2. 2. <ul><li>“When you reach for the stars, </li></ul><ul><li>you may not quite get them, </li></ul><ul><li>but you won't come up with </li></ul><ul><li>a handful of mud either.&quot; </li></ul><ul><ul><li>- Leo Burnett </li></ul></ul>
  3. 3. Highlights <ul><li>Competing Priorities </li></ul><ul><li>Operations Strategy Framework </li></ul><ul><li>Operations Strategy Linkages </li></ul><ul><li>Integration New Product / Services Process </li></ul><ul><li>Operations Strategy & Performance Objectives </li></ul><ul><li>Success Factors & Scorecard </li></ul>
  4. 4. Competing Priorities
  5. 5. Competing Priorities <ul><li>Corporate strategy </li></ul><ul><li>environmental scanning </li></ul><ul><li>core competencies </li></ul><ul><li>core processes </li></ul><ul><li>global strategies </li></ul><ul><li>Competitive priorities </li></ul><ul><li>cost </li></ul><ul><li>quality </li></ul><ul><li>time </li></ul><ul><li>flexibility </li></ul><ul><li>Market analysis </li></ul><ul><li>segmentation </li></ul><ul><li>needs analysis </li></ul>
  6. 6. Competing Priorities <ul><li>Corporate strategy </li></ul><ul><li>environmental scanning </li></ul><ul><li>core competencies </li></ul><ul><li>core processes </li></ul><ul><li>global strategies </li></ul>Cost 1. Low-cost operations Quality 2. Top quality 3. Consistent quality Time 4. Delivery speed 5. On-time delivery 6. Development speed Flexibility 7. Customisation 8. Variety 9. Volume flexibility <ul><li>Competitive priorities </li></ul><ul><li>cost </li></ul><ul><li>quality </li></ul><ul><li>time </li></ul><ul><li>flexibility </li></ul><ul><li>Market analysis </li></ul><ul><li>segmentation </li></ul><ul><li>needs analysis </li></ul>
  7. 7. Competing Priorities <ul><li>Capabilities </li></ul><ul><li>current </li></ul><ul><li>needed </li></ul><ul><li>planned </li></ul><ul><li>Functional area strategies </li></ul><ul><li>finance • operations </li></ul><ul><li>marketing • others </li></ul><ul><li>New Service/ </li></ul><ul><li>Product Design </li></ul><ul><li>design </li></ul><ul><li>analysis </li></ul><ul><li>development </li></ul><ul><li>full launch </li></ul><ul><li>Corporate strategy </li></ul><ul><li>environmental scanning </li></ul><ul><li>core competencies </li></ul><ul><li>core processes </li></ul><ul><li>global strategies </li></ul><ul><li>Market analysis </li></ul><ul><li>segmentation </li></ul><ul><li>needs analysis </li></ul><ul><li>Competitive priorities </li></ul><ul><li>cost </li></ul><ul><li>quality </li></ul><ul><li>time </li></ul><ul><li>flexibility </li></ul>
  8. 8. Operations Strategy Framework
  9. 9. Order - Winners & Qualifiers <ul><li>Order Winners </li></ul><ul><li>To be present in the market, </li></ul><ul><li>should include: </li></ul><ul><ul><li>Quality </li></ul></ul><ul><ul><li>Price </li></ul></ul><ul><ul><li>Reputation </li></ul></ul><ul><ul><li>Number of years in business </li></ul></ul><ul><ul><li>Reliability </li></ul></ul><ul><ul><li>... </li></ul></ul><ul><li>Order Winner </li></ul><ul><li>To win orders in the market, </li></ul><ul><li>should include: </li></ul><ul><ul><li>Quality </li></ul></ul><ul><ul><li>Price </li></ul></ul><ul><ul><li>Speed of delivery </li></ul></ul><ul><ul><li>Consistency of delivery </li></ul></ul><ul><ul><li>Reliability </li></ul></ul><ul><ul><li>... </li></ul></ul>The relative importance (weights) of various order winners changes as products travel on the product lifecycle curve (over time). They must be continuously monitored and updated for each product and each market segment
  10. 10. Operation Strategy - Framework Infrastructure Process Choice <ul><li>Functional support for operations </li></ul><ul><li>Manufacturing planning and control systems </li></ul><ul><li>Quality assurance and control </li></ul><ul><li>Manufacturing systems engineering </li></ul><ul><li>Clerical procedures </li></ul><ul><li>Compensation agreements </li></ul><ul><li>Work structuring </li></ul><ul><li>Organisational structure </li></ul><ul><li>Choice of alternative processes </li></ul><ul><li>Tradeoffs embodied in process choice </li></ul><ul><li>Role of inventory in process configuration </li></ul><ul><li>Make of buy decisions and supply chain management </li></ul><ul><li>Capacity size </li></ul><ul><li>Capacity timing </li></ul><ul><li>Capacity location </li></ul><ul><li>Price </li></ul><ul><li>Conformance quality </li></ul><ul><li>Delivery speed </li></ul><ul><li>Delivery reliability </li></ul><ul><li>Volume flexibility </li></ul><ul><li>Color range </li></ul><ul><li>Product range </li></ul><ul><li>Design </li></ul><ul><li>Brand image </li></ul><ul><li>Technical support </li></ul><ul><li>After sales support </li></ul><ul><li>Product markets and segments </li></ul><ul><li>Range </li></ul><ul><li>Mix </li></ul><ul><li>Volumes </li></ul><ul><li>Standardisation vs. customisation </li></ul><ul><li>Level of innovation </li></ul><ul><li>Leader vs. follower alternatives </li></ul><ul><li>Growth </li></ul><ul><li>Survival </li></ul><ul><li>Profit </li></ul><ul><li>Return on investment </li></ul><ul><li>Other financial measures </li></ul>Manufacturing Strategy Order Winning Criteria Marketing Strategy Corporate Objectives
  11. 11. Operation Strategy - Elements Operations Mission & Strategy Product Design Procurement Quality Management Schedule Location Layout Process Design Reliability & Maintenance Inventory Human Resources & Job Design
  12. 12. Operations Strategy Linkage
  13. 13. Linkage – Corporate & Operations Strategy Capabilities Performance Gap? No Yes Operations strategy <ul><li>Decisions </li></ul><ul><li>Designing and Improving Processes </li></ul><ul><li>Planning and Managing Projects </li></ul><ul><li>Designing Value Chains </li></ul><ul><li>Operating Value Chains </li></ul>New Service/ Product Design Market analysis Competitive priorities Corporate strategy
  14. 14. Operations & Supply Chain Framework
  15. 15. Reconcile Operations & Marketing Operations Resources Understanding Resources and Processes Strategic Reconciliation Market Requirements Understanding Markets Capacity Supply networks Process technology Development and organisation 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
  16. 16. Integration New Product / Services Process
  17. 17. Products / Services - New Development Process <ul><li>Post-launch review </li></ul>Full Launch <ul><li>Market promotions </li></ul><ul><li>Sales personnel briefed </li></ul><ul><li>Distribution processes activated </li></ul><ul><li>Old services or products withdrawn </li></ul><ul><li>Production of new offering and ramp-up </li></ul><ul><li>Need to rethink the new offering or production processes </li></ul>Development <ul><li>Detailed specifications </li></ul><ul><li>Process design </li></ul><ul><li>Marketing program design </li></ul><ul><li>Personnel training </li></ul><ul><li>Testing and pilot runs </li></ul><ul><li>Service or product not profitable </li></ul>Analysis <ul><li>Detailed review of market potential and production costs </li></ul>Design <ul><li>Development strategy </li></ul><ul><li>Idea generation and screening </li></ul><ul><li>Service package or product architecture formulation </li></ul><ul><li>Production feasibility </li></ul>
  18. 18. Process Design Strategies Effective Process Design <ul><li>Vertical Integration </li></ul><ul><li>In-house </li></ul><ul><li>Outsource </li></ul><ul><li>Capital Intensity </li></ul><ul><li>Low automation </li></ul><ul><li>High automation </li></ul><ul><li>Customer Involvement </li></ul><ul><li>Low involvement </li></ul><ul><li>High involvement </li></ul><ul><li>Resource Flexibility </li></ul><ul><li>Specialised </li></ul><ul><li>Enlarged </li></ul><ul><li>Process Structure </li></ul><ul><li>Customer-contact position (services) </li></ul><ul><li>Product-process position (manufacturing) </li></ul><ul><li>Strategy for Change </li></ul><ul><li>Process Reengineering </li></ul><ul><li>Process Improvement </li></ul>
  19. 19. Product / Process Matrix Process Characteristics Complex and highly customised process, unique sequence of tasks Jumbled flows, complex work with many exceptions Disconnected line flows, moderately complex work Connected line, routine work Continuous flows, highly repetitive work Less Complexity, Less Divergence, More Line Flows Less Customisation and Higher Volume Product Design Continuous process Project process Line process Batch process Job process One of a kind products, made to customer order Low volume, low standardi-sation Multiple products, moderate volume Few major products, higher volume High volume, high standardi-sation, commodity products
  20. 20. Operations Strategy & Performance Objectives
  21. 21. Operation Strategy & Performance Understanding m arkets Understanding resources and processes Performance Objectives Market Positioning Customer Needs Competitors’ Actions Required p erformance Operations Strategy Decision Areas Tangible and Intangible Resources Operations Capabilities Operations Processes Strategic decisions
  22. 22. Eg. Performance Objectives PERFORMANCE OBJECTIVES <ul><li>Dependability </li></ul><ul><li>Speed of delivery </li></ul><ul><li>Conformance quality </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 based on : CUSTOMERS Segmentation based on : COMPETITORS Traditionally weak in : <ul><li>Promotion </li></ul><ul><li>Design innovation </li></ul><ul><li>Conformance quality </li></ul><ul><li>Purchase volume </li></ul><ul><li>End-item application </li></ul><ul><li>OEM or replacement </li></ul><ul><li>Geographic location </li></ul>Pump Manufacturer
  23. 23. Eg. Operations Strategy Resources Tangible <ul><li>Equipment / Staff </li></ul>Intangible <ul><li>Reputation / Relationships </li></ul><ul><li>Experience </li></ul><ul><li>Application of leading - edge technology & electronic controls </li></ul><ul><li>Articulation of client requirements </li></ul>Capabilities <ul><li>Integration of equipment </li></ul><ul><li>Supply and client requirements </li></ul><ul><li>Design process </li></ul><ul><li>Supplier liaison process </li></ul>Processes <ul><li>Location </li></ul><ul><li>Computer simulation capability </li></ul><ul><li>Internet specking by customers </li></ul><ul><li>Supplier development </li></ul><ul><li>Order tracking system </li></ul><ul><li>Organisational structure/culture </li></ul><ul><li>Staff meetings </li></ul>Operations Strategy Decisions Pump Manufacturer
  24. 24. Success Factors & Scorecard
  25. 25. Critical Success Factors Decisions Options Product Customised, or standardised Quality Define customer expectations and how to achieve them Process Facility size, technology, capacity Location Near supplier or near customer Layout Work cells or assembly line Human resource Specialised or enriched jobs Supply chain Single or multiple suppliers Inventory When to reorder, how much to keep on hand Schedule Stable or fluctuating production rate Maintenance Repair as required or preventive maintenance Marketing Service Distribution Promotion Channels of distribution Product positioning (image, functions) Finance/Accounting Leverage Cost of capital Working capital Receivables / Payables Financial control Lines of credit Production / Operations
  26. 26. Scorecard
  27. 27. Integrating Key Performance Indicators Customer Metrics Operational Metrics Financial Metrics Customer Service Safety Stock Holding Cost Supplier Reliability (Lead Time Variability) Forecast Error ROI Return On Investment ROCE – Return On Capital Employed Average Inventory Fill Rates On - time Delivery Price Quality Turns Total Assets Days Sales Outstanding Cash to Cash Cycle Asset Utilisation Back Orders / Expediting Growth Logistics costs Customer Metrics Operational Metrics Financial Metrics Customer Service Safety Stock Holding Cost Supplier Reliability (Lead Time Variability) Forecast Error ROI Return On Investment ROCE – Return On Capital Employed Average Inventory Fill Rates On - time Delivery Price Quality Turns Total Assets Days Sales Outstanding Cash to Cash Cycle Asset Utilisation Back Orders / Expediting Growth Logistics costs Directly Proportional Indirectly Proportional Directly Proportional Indirectly Proportional
  28. 28. <ul><li>“A candle loses nothing by lighting another candle.&quot; </li></ul><ul><ul><li>- Erin Majors </li></ul></ul>
  29. 29. <ul><li>Good Luck </li></ul><ul><li>http://www.linkedin.com/in/anandsubramaniam </li></ul>

×