The document discusses various aspects of operations strategy. It covers defining operations strategy and linking it to corporate strategy. It also discusses developing strategies at different time horizons - strategic/long term, tactical/medium term, and operational/short term planning. Key aspects include product/service profiling, implementation of strategies, and adapting strategies to dynamic market conditions. The overall purpose is to effectively manage operations and add value for customers.

1. Operations Strategy
• What is a strategy
• Corporate strategy vs operational
• General, tactical, short term strats
• Methodoly of building Op Strats
• Dynamic markets-lined to Op Strats
• Product/service profiling
• Op Strats Implementation

2. Production & Operations
Management
• What’s operations?
• What is production?
• What are the prerequisites
• What are the functions
(Departments) required for
production
• Line Function/Service function?
Objectives of production??
Strategic operation mgt-
Operational strategies

3. Manufacturing and Service
• What is the difference? Say a dental clinic
and Wheat production?
• Tangible output and intangible output-
Like a deed a performance, an effort, like
Healthcare,Hotels,Training,consulting etc
• Operations management is applicable for
both Manufacturing and service
• Combination of Mftg and Service
organisations? Give Examples?

4. Manufacturing Services
What is manufacturing Service?
Is it different from Service or
Operations/productions?
Is it service or operations?-Hospitals,
contract forming, doctors, hotels

5. Manufacturing Service..Eg
• Rice mill
• Contract Farming
• Automation-Tractors
• Extraction of pulses
• Ploughing
• Forestation??-Lease-25 to 99 years
• BOT( Build,Operate, transfer)

6. Definition
• OPERATIONS MANAGEMENT is the
effective Management of the Conversion
process which converts Land, Labour,
Capital(resources) and Management inputs
into desired output, goods or services
• OPERATION MANAGER’s job is to manage
the process of converting inputs to Desired
outputs. The definition of OM is then the
Management of the conversion process.

7. Systems Approach

8. Importance of Strategies
• Strategies are made based on Basic
choices of primary Basis for competition
amongst the following Four
Charecteristics:
• Quality
• Cost Efficiency
• Dependability
• Flexibility(Response, innovation)

9. Startegies for Operations
• Importance of strategies: All Operation Managers
in different fields face common challenges- to
Improve operations and to do with Planning,
organising and controlling the operation system
and the conversion process (Boston University
study)
• Startegies-Where is the Industry now/? Where will
it be in future? What are the exisiting potential
markets? What Gaps in Market does exist? Do we
have the strengths in filling the gaps?

10. • Operational Strategy means adding Value
to customers
Three Stages of Strategies
• Starategic Planning- Long term
• Tactical Planning- Medium term
• Op Planning & control- Short Term

11. Steps to Strategic mgt
• Scan-Ext and int environment
• Formulation-Corporate strategy;Business
unit(SBU) startegy; Functional strategy
• Strategy implementation-
Procedures;programs;Budgets
• Review and Control-Plan vs Actuals-
midcourse corrections-Alternative
strategies?

12. Operational Strategies
• Operations Management Decisions-
• Strategic (long-term) decisions
• Well the relevant points over here are-
• How will we make the product?
• Where do we locate the facility or
facilities?
• How much capacity do we need?
• When should we add more capacity?
• Should we invest? when?

13. Tactical (intermediate-term) decisions
• How many workers do we need?
• When do we need them?
• Should we work overtime or put on a second
shift?
• When should we have material delivered?
• Should we carry out 100% inspection?
• Should we have a finished goods inventory?
• Outsourcing?

14. Short term strategies(Functional)
• What jobs do we work on today or this
week?
• Who do we assign to what tasks?
• What jobs have priority?
• Leave replacement?
• Overtime for the day?
• Sudden M/c breakdown/Bundh?

15. Op strategy-link to Corporate Strategy
• An operations strategy can be viewed as
part of a planning process that
coordinates operational goals with those
of the larger organizational
Goals(Corporate,Vision,Mission) Since
the goals of the larger organization
change over time, the operations strategy
must be designed to anticipate future
needs.

16. Strategy focus- process
• 􀂃 An operations strategy involves decisions that
relate to:
• 􀂃 the design of a process; and,
• 􀂃 the infrastructure needed to support the
process.
• 􀂃 Process design includes:
– 1) the selection of appropriate technology;
– 2) sizing the process over time;
– 3) the role of inventory in the process; and,
– 4) locating the process.
– 􀂃

17. Strategy wrt Infrastructure
• Infrastructure decisions involve:
• 1) the logic associated with the planning
and control systems;
• 2) quality assurance and control
approaches;
• 3) work payment structures; and,
• 4) the organization of the operations
function.

18. Methodology of Op Strats
• Checking The Markets
• Out come of a Market debate- Marketing
meets, product launch, Road shows
• Linked to market-Trends/Analysis
• Linked to seasons
• Analysis-Why product sells?(Focus on
aspect after analysis)
• Order winners, Order qualifiers

19. Dynamic markets/General Strats
• Technology strategies
• Time to Market
• Issues in NPI/NPD
• Strategic nature of process(Restrictions)
• Business Implications of process choice
• Hybrid process
External, Internal, Environmental, Legal,
Safety considerations-Input to General
strategies

20. Product/Service profiling
• Company based/plant based profile
• Extension of product to Service to build
USPs
• Downsizing
• Capacity Decisions

21. Op Strategy Implementation
• Evaluating Various Trade offs, Alternate
• Focused Manufacturing
• Product focus/process focus
• Make or Buy Merits/Demerits
• Value chain approach
• JIT, Lean
• CAD/Cam, CIM
• Delivering Value to customer

22. Strategy Concept
• Order qualifiers- Charecteristics of a firm
or products to be considered as a source
of purchase
• Order Winners- Charecteristics of a firm
that distinguish it from its competition so
that it is selected as a source of purchase

23. Focus on core Capabilities
• While making Strategies-Core strengths..
• These Core capabilities allow the firm to
establish its competitive priorities in the
market
• These are skill sets in operations that
differentiate itself from competitors
• Integration of Manufacturing and service
“Create Value to customers”
CAC concept-Customer activity cycle

24. Criteria for Buy
• High investment reqd to make.
• Longer time for creation of new facility
• Cost considerations-costlier inside
• No skill sets available-longer gestation
• Better top line/bottom line with existing facility
• Customized earlier by customer
• Approvals against standards already.
• Deviation from core strengths.
• Better demands on flexibility on cost delivery
• Lower inventory/working capital costs
Approach: Cost analysis, economic analysis, break even

25. Packaging as a Op strategy
• Design
• Statutory markings
• Ease of handling and Usage
• Reheat/Repack
• Health & safety+ Food safety & standards
Authority reqts,
• Transportation
• Recyclable?
• Automated/semiautomatic-
Cost,Health,shelflife,sealing(N2, Vaccum)

26. Aspects of OP Strategies
• Inventory control
• Quality Control
• Production schedule/control
• Productivity/op cost control
• Constructing control systems
• Implementing and operating control
systems
• Modifying policies and designs

27. STRATEGIC SOURCING
By
Sripathy K.R

28. Strategic Sourcing
• Difference b/w Strategic sourcing and
Normal Sourcing- Strategic function is
Dynamic decision making based on
inputs- more inputs and info-better
decision making
• Long term, Medium Term and short term
• Long term-policies, cost down, make or
buy decisions etc.- Done on annualised,
and or 2 to 3years basis

29. Long term, mid and short term
• Midterm strats- Qtrly, half yearly, even
monthly,-linked to Annual strats
• Short term- Daily, weekly, within a month,
keeps changing depending on dynamic
situations- cash purchase, alternate
transport, anticipate strikes bundh etc,
Keep updated news on a daily basis,
more input info required, more dynamic to
meet short term targets etc..

30. Objectives of sourcing mgt
• Profit maximization
• Maximization of Customer service
• Technology innovations to overcome
resistance to growth and competition
• Good employer employee relations
• Meet social objectives

31. Policies and Procedures
• Policies to be in line with Vision and Mission of
company
• Supplier friendly
• Provide for improving relationship
• To keep users and Suppliers happy
• Procedures- Systematic way-transactions,
Negotiations, P.O reviews, Vendor rating,
Receipts, Inspection, Handling rejections,
CAPAs, Selection of vendors, completion of
records…

32. Soucing Mgt-Main Objectives
• The five R s(material, Qty, Place, cost, time)
• Continuity of supplies
• Reducing overall cost of buying-use scientific
tools and techniques
• Establish Buyer-supplier relationship(partner)
• Maintain ethical practices/standards
• Effective control of Inventory-smooth cash
flow

33. Sourcing/Purchase Function
• Selection of suppliers
• Analysis of costs/bid/tenders
• Price negotiations-Structure of cost..?-
Invoice+transportation+inspection+ordering
costs
• Purchase order process
• Follow up- communications-
schedule/ECOs,modifications,stoppages,insp
ection arrangements
• IQC follow up-storing
• Post buying activities/Master BOMs/MIS
generation

34. Purchase order Review
• P.O/Contract!rate contract, Work orders
• Conditions of contract
• FOB,CIF,FOR,DDP, DDU, taxation
structure, Payment terms, delivery date,
breach/cancellation, damages,
Claims,Inspection terms, Acceptance
criteria, Vendor rating, Amendments,
Samples, Forms for transit….

35. Sourcing Process
• Selection of Suppliers
• Analyzing Bids, Enquiries float process
• Price Negotiations
• Budgeting and Master creation
• Issuance of PO-What is needed? Terms?
• Follow up Actions
• Cost Analysis and Market study
• Price catalogs information library

36. Selection of Suppliers
• Financial Capability
• Manufacturing Capability/Capacity
• Total Value of Business
• Service Facility
• Business reputation and other customers
• Production processes and Specifications to
which manufactured
• Rating-Quality, Delivery, Ethics, promptness,
Competitive bids
• Sustenance capacity-Scale up capability

37. Critical Success Factors
• Selection
• Old supplier or new
• Long term association
• Price negotiations/ Transparency
• Systems and processes from either side
• Consolidation?
• Logistics improvement
• Avoid/reduce premium cost

38. Objectives, Scope, Responsibility,
Limitations
• Centralized Buying- Advantages
– Develops specialized Knowledge
– Better performance
– Diverts influence and domination of other depts lead to
greater profitability
– Rate contracts can be handled easily
Disadvantages-
- Slower process for distributed production units
- Local buying increases
- No flexibility for design/development and cause delays

39. Limitations/Challenges for Smooth
• Resource
function
• Support from other depts for evaluation, Quality Impr etc
• Cash Flow/Supplier satisfaction/Advance payments
• Supplier payments in time
• No proper credits from supplier
• Establish relationship-till such time constrained
conditions
• Strikes/Holidays? Weather conditions, floods,
communication breakdowns/Hurricanes??
• Price limitations
• Last minute rush?? By departments
• Closures of trading agencies, suppliers
• Tier 3/4, buying from unknown sources
• One time requirements/Small quantum requirements

40. SCM/Sourcing/purchase is an
Emerging Profession
• Important function
• Intelligence is required
• Market knowledge
• Cost consciousness
• Business Acumen
• Knowledge of Technology & updates
• Ability to get along with people
• Negotiating skills
• Analytical skills
• Project management knowledge
• Lean Management skills

41. Stores and Inventory Mgt
• Storage devices/methods
• Part no-codification
• Material handling
• What’s inventory and why manage?
• Production inventory,
MRO(maintenance,repair&Operating
supplies), In process inventory,FG
Inventory, In transit
• VMI ? Inventory liability?

42. Codification
• Why codification/classification
• Grouping and clear gradings/sub classifications
• Levels in Product file
• Avoids duplicate stocks
• Help standardisation and substitute
• Reduction of varieties and sizes
• Faster retrieval/Aggregate planning
• Proper accounting of issues & inventory control
• Accuracy in commn and better communication with
vendors
• Easy Computerisation/parts search, MRP/ERP

43. Classifications/grouping
• Raw materials
• Components
• Spares
• Consumables
• Tools/eqpt
• Packing materials
• WIP, FG, Hardware/software
• Mechanical, Molded, Plastics,
• Sub Assembly, HLA, System/subsystem, bought
out/mftrd, import, local,semi finished, project reqt

44. Stores Organisation
Types of materials
Ease of handling
Ease of retrieval
Conditions of storage
Safety (of people, material, O/A safety)
Geography- warehouses
Geography-Distribution
FIFO, LIFO and controls
Input Package Design, SPQ, issue patterns
Matll Handling friendly

45. Inventory Costs
• Ordering Costs
• Carrying costs-
obsolescence,pilferage/wastage/deterioration,financial,
taxes,frieght,insurance,import clearance costs
• Capital-interest land/bldg/storage/Storage space-
storage conditions
• matl handling,
• Inventory service-Handling, stock
levels,warehousing/outsourcing/maintenance
• Inventory risks-storage, losses, obsolescence,
damage,deterioration
• Out of stock-back ordering, premium, lost prodn,
• Capacity costs-Overtime,idletime

46. Various MEANS of inventory control
• Fixed order Quantity(MOL)
• Fixed interval system
• Two Bin system
• Optional replenishment
• MRP- monthly/qtrly
• ABC Analysis
• Forecasting based on Trends
• JIT, Kanban, Pull System
• Safety stock/Buffer stock incl VMI

47. Role of IT in SCM
• EDI network-Vendor, customer, Branch
office, Distributors, Transportation, Retailer,
Govt agencies etc,
• ERP
• E- procurement
• E-Commerce-Online mktg, e-auctions, e-
bid, online servicing, on line inventory
status etc- Go Global !
• Support systems-RFID, Barcode,
Smartcard, GPS, Condition monitoring…

48. Safety Management
• Safety policy
• Safe work procedures (Precautions/care), storage/handling
• Safety Training, Group Meetings, first aid trg
• Accident/incident reporting/analysis-Also Near Miss accidents
logging/analysis
• In house safety rules/regulations/guide for Sub contractors,
service providers, safety week, PPEs, Dos/Donts-posters
• Safety promotion, Facilitation of proper tools/equipment
• Safety Audit/inspection
• Maintenance regime
• Hazard analysis/control, mitigation
• Occupational health/safety procedures/programs
• Emergency preparedness,& Documentation and control