The three levels of operations strategy process include: 1) Fit - Aligning resources with requirements 2) Sustainability - Developing a sustainable competitive advantage 3) Risk - Including the impact of uncertainty and increasing complexity Formulating an operations strategy presents difficulties due to dispersed managers, running ongoing operations, and inertia of resources. Many models include strategic fit, competitive objectives, performance comparisons, and an iterative gap analysis.

1. The three levels of operations strategy process Level 1 - Fit Align resources with requirements Level 2 - Sustainability Develop sustainable competitive advantage Level 3 - Risk Include impact of uncertainty Increasing complexity

2. Operations Strategy Formulation Putting an operations strategy together presents some particular difficulties : Senior operations managers are often geographically dispersed The operation still needs running Predominance of line management Complexity of operations resources Inertia of operations resources

3. Operations Strategy Formulation There are many formulation process stage models. They often includ e: Links between competitive strategy objectives and operations objectives (strategic fit) The use of ‘ competitive objectives ’ as the translation device between strategic and operations objectives Judging the importance of competitive objectives against customer/market requirements Current performance judged against competitor performance An iterative process The concept of an ‘ ideal ’ of ‘ greenfield ’ operation against which to compare current operations. A gap-based analysis

4. Level of market requirements Level of operations resource capability In operations strategy ‘fit’ is the alignment between market and operations capability Line of fit Alignment between market and operations capability Y X

5. ‘ Fit’ means that the operations resources and processes are aligned with the requirements of its markets. Line of fit Market requirements Operations resource capability ‘ Fit’ can also mean that market requirements are moved to exploit operations resource capabilities

6. Operations Capabilities Operations Strategy Decision Areas Operations Performance Objectives Market Positioning Market Segmentation Competitor Activity Understand markets Define competitive position State market requirements in terms of operations performance objectives Make strategic operations decisions … to enhance core capabilities ‘ Fit’ operations resources to market requirements ‘fit’

7. Operations Capabilities Operations Strategy Decision Areas Operations Performance Potential Market Positioning Tangible and Intangible Resources Operations Processes Determine competitive position Define market potential of operations performance Make appropriate strategic operations decisions Identify core capabilities Understand resources and processes ‘ Fit’ market positioning to operations resources capabilities

8. Quality Performance objectives Capacity Supply Network Process Technology Development and Organi z ation Resource Usage Market Competitiveness Decision areas IBM operations strategy matrix (1970-1985) Speed Dependability Flexibility Cost Critical Critical Critical Critical Critical Critical Critical

9. Level of market requirements Level of operations resource capability y1 x1 The level of ‘fit’ may not always be ‘tight’ Line of fit ‘ Ideal’ market requirements Ideal resource capability Tight fit A Y y2 X x2 B Minimum resource capability Minimum market requirements

10. Quality Performance objectives Capacity Supply Network Process Technology Development and Organization Resource Usage Market Competitiveness Decision areas ‘ Fit’ is concerned with ensuring comprehensiveness, correspondence, coherence and criticality Speed Dependability Flexibility Cost Critical Critical Critical Critical Critical Coherence Correspondence Comprehensive?

14. Product family Reliability Into stock point Variable Critical: Project delay Good Features Fit for purpose Few features Many features/ High absolute level Total reliability essential High Flexibility design Standard range only Standard only Quality Acceptable at price Acceptable All designs customer specified All products customised Stable market Little variation required Volume variations low Highly cyclic variable market Volume variations high Delivery lead-time Ex-stock Short Not significant Long Volume Price cost Price competition dominant Low Non-price competition dominant High Achieved performance Uses of profiling in the Platts-Gregory procedure Market requirements