Operations strategy reconciles market requirements with internal operations resources through strategic decisions. It balances the dynamic and ambiguous nature of external markets with the difficult to change and technically constrained nature of internal resources. Operations strategy considers both market and resource perspectives to determine the necessary operational capabilities and performance objectives required to achieve the desired market position.

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. Operations Resources Market Requirements OPERATIONS STRATEGY Strategic Reconciliation Operations strategy reconciles the requirements of the market with the capabilities of operations resources

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. 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. Corporate strategy Business strategy Emergent sense of what the strategy should be Operational experience Operations strategy Top-down and bottom-up perspectives of strategy

7. Performance Objectives Market Positioning Customer Needs Competitors’ Actions The market perspective on operations strategy Required p erformance Understanding m arkets

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. 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. 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. 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. 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. 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. 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