Operations managers must develop an operations strategy that is consistent with the firm's corporate strategy. An operations strategy involves key decisions such as which products to produce internally and which to purchase, how many facilities are needed and where to locate them, what processes and technologies to use, how to distribute products to customers, which suppliers to use and how much to source from them, what human resources and skills are required, and quality measures. The operations strategy provides support for the firm's overall differentiated strategy and competitive approach through efficient and effective execution of operations.

1. Role and development of operation strategy

2. DEVELOPMENT OF OPERATION STRATEGY

3. Develop an Operations Strategy-What products can be produced in which facility and how much?-Which products are going to be produced internally, and which ones will be purchased?-How many facilities are needed?

4. Develop an Operations Strategy-Where will the facilities be located, with how much capacity?-What type of processes will be utilized to produce products?-How much flexibility is required from each process and each product?

5. Develop an Operations Strategy-What level of technology (automation, etc.) will be used?-Are the resources going to be owned or bought?-How will the products be distributed to the end customers?

6. Develop an Operations Strategy-Which suppliers will provide materials, and how much?-What kind of human skills are needed?-And so on.

7. Develop an Operations StrategyOperations decisions given regarding these issues must be consistent with the firm’s corporate strategy.These decisions made by operations managers are going to be viewed in detail throughout this course.

8. OPERATIONS STRATEGY

9. ROLE OF OPERATION STRATEGY

10. Operations’ Role in Corporate StrategyOperations provides support for a differentiated strategyOperations serves as a firm’s distinctive competence in executing similar strategies better than competitorsCopyright 2006 John Wiley & Sons, Inc.2-10

11. Operations Strategy at Wal-MartCopyright 2006 John Wiley & Sons, Inc.2-11

12. Operations Strategy: Products and ServicesMake-to-Orderproducts and services are made to customer specifications after an order has been receivedMake-to-Stockproducts and services are made in anticipation of demandAssemble-to-Orderproducts and services add options according to customer specificationsCopyright 2006 John Wiley & Sons, Inc.2-12

13. Operations Strategy: Human ResourcesWhat are the skill levels and degree of autonomy required to operate production system?What are the training requirements and selection criteria?What are the policies on performance evaluations, compensation, and incentives?Will workers be salaried, paid an hourly rate, or paid a piece rate?Will profit sharing be allowed, and if so, on what criteria?Copyright 2006 John Wiley & Sons, Inc.2-13

14. Operations Strategy: Human Resources (cont.)Will workers perform individual tasks or work in teams?Will they have supervisors or work in self-managed work groups?How many levels of management will be required?Will extensive worker training be necessary?Should workforce be cross-trained?What efforts will be made in terms of retention?Copyright 2006 John Wiley & Sons, Inc.2-14

15. Operations Strategy: QualityWhat is the target level of quality for our products and services?How will it be measured? How will employees be involved with quality?What will the responsibilities of the quality department be? Copyright 2006 John Wiley & Sons, Inc.2-15

16. Operations Strategy: Quality (cont.)What types of systems will be set up to ensure quality? How will quality awareness be maintained?How will quality efforts be evaluated?How will customer perceptions of quality be determined? How will decisions in other functional areas affect quality?Copyright 2006 John Wiley & Sons, Inc.2-16

17. Operations Strategy: SourcingVertical Integrationdegree to which a firm produces parts that go into its productsStrategic DecisionsHow much work should be done outside the firm? On what basis should particular items be made in-house?When should items be outsourced?How should suppliers be selected?Copyright 2006 John Wiley & Sons, Inc.2-17

18. Operations Strategy: Sourcing (cont.)What type of relationship should be maintained with suppliers?What is expected from suppliers?How many suppliers should be used?How can quality and dependability of suppliers be ensured?How can suppliers be encouraged to collaborate?Copyright 2006 John Wiley & Sons, Inc.2-18

19. THANK YOU