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Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.1 Chapter 3 Operations strategy.

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Presentation on theme: "Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.1 Chapter 3 Operations strategy."— Presentation transcript:

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2 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.1 Chapter 3 Operations strategy Photodisc. Cartesia

3 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.2 Design Planning and control Operation’s performance Operations strategy Improvement Operations management Operations strategy Slack et al.’s model of operations management

4 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.3 Key operations questions In Chapter 3 – Operations strategy – Slack et al. identify the following key questions: What is strategy and what is operations strategy? What is the difference between a ‘top-down’ and a ‘bottom-up’ view of operations strategy? What is the difference between a ‘market requirements’ and an ‘operations resources’ view of operations strategy? How can an operations strategy be put together?

5 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.4 Operations strategy at Flextronics and Ryanair For each of these companies: What do they have to be good at to compete in their markets? How do their operations help them to achieve this?

6 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.5 Operations strategic decisions Industrial parks, with –low cost but close locations –and co-located suppliers Market requirements Low costs Responsiveness Flexibility Flextronics Operations strategy at Flextronics

7 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.6 Operations strategic decisions Stripped down service One technology Cheap airport locations Fast turnround Market requirements Low prices Reliability Basic service Ryanair Operations strategy at Ryanair

8 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.7 Setting broad objectives that direct an enterprise towards its overall goal. Planning the path (in general rather than specific terms) that will achieve these goals. Stressing long-term rather than short-term objectives. Dealing with the total picture rather than stressing individual activities. Being detached from, and above, the confusion and distractions of day-to-day activities. What is strategy?

9 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.8 Strategic decisions are those decisions which: are widespread in their effect on the organization to which the strategy refers, define the position of the organization relative to its environment and move the organization closer to its long-term goals. Strategic decisions

10 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.9 ‘Operations’ is not the same as ‘operational’ ‘Operations’ are the resources that create products and services. ‘Operational’ is the opposite of strategic, meaning day-to- day and detailed. So, one can examine both the operational and the strategic aspects of operations.

11 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.10 How is operations strategy different to operations management? The time scale is longer Short-term for example, capacity decisions 1–12 months Demand Long-term for example, capacity decisions 1–10 years Demand Operations managementOperations strategy

12 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.11 The level of analysis is higher Operations managementOperations strategy Micro-level of the process Macro-level of the total operation How is operations strategy different to operations management? (Continued)

13 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.12 The level of aggregation is higher Operations managementOperations strategy Detailed For example: ‘Can we give tax services to the small business market in Antwerp?’ Aggregated For example: ‘What is our overall business advice capability compared with other capabilities?’ How is operations strategy different to operations management? (Continued)

14 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.13 The level of abstraction is higher Operations managementOperations strategy Concrete For example: ‘How do we improve out purchasing procedures?’ Philosophical For example: ‘Should we develop strategic alliances with suppliers?’ How is operations strategy different to operations management? (Continued)

15 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.14 What is the role of the operations function? Operations as implementer of strategy Operations implements strategy Operations drives strategy Operations as driver of strategy Operations supports strategy Operations as supporter of strategy

16 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.15 The 3 key attributes of operations strategy The 3 key attributes of operations strategy Operations contribution Implementing be Dependable Operationalize strategy explain Practicalities be Dependable Operationalize strategy explain Practicalities Supporting be Appropriate Understand strategy Contribute to decisions be Appropriate Understand strategy Contribute to decisions Driving be Innovative provide Foundation of strategy Develop long-term Capabilities be Innovative provide Foundation of strategy Develop long-term Capabilities The strategic role of the operations function

17 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.16 The 4 stage model of operations contribution Increasing contribution of operations Increasing strategic impact Increasing operations capabilities Externally supportive Redefining industry expectations STAGE 4 Give an operations advantage Driving strategy After Hayes and Wheelwright Internally supportive Clearly the best in the industry STAGE 3 Link strategy with operations Supporting strategy Externally neutral As good as competitors STAGE 2 Adopt best practice Implementing strategy Internally neutral STAGE 1 Correct the worst problems Holding the organization back

18 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.17 Top-down perspective What the business wants operations to do Operations resources perspective What operations resources can do What day-to-day experience suggests operations should do Bottom-up perspective What day-to-day experience suggests operations should do Bottom-up perspective Market requirement perspective What the market position requires operations to do Operations strategy The four perspectives on operations strategy

19 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.18 Corporate strategy Business strategy Emergent sense of what the strategy should be Operational experience Top-down and bottom-up perspectives of strategy Operations strategy

20 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.19 The strategy hierarchy Key strategic decisions Influences on decision-making Business strategy What is the mission? What are the strategic objectives of the firm? How to compete? Customer/market dynamics Competitor activity Core technology dynamics Financial constraints Corporate strategy What business to be in? What to acquire? What to divest? How to allocate cash? Economic environment Social environment Political environment Company values and ethics Functional strategy How to contribute to the strategic objectives? How to manage the function’s resources? Skills of function’s staff Current technology Recent performance of the function

21 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.20 Introduction Growth Maturity Decline Sales volume Volume Customers Competitors Variety of product/ service design Slow growth in sales Innovators Few/none Customization or frequent design changes Rapid growth in sales volume Early adopters Increasing numbers Increasingly standardized Sales slow and level off Bulk of market Stable number Emerging dominant types Market needs largely met Laggards Declining numbers Possible move to commodity standardization The effects of the product / service life cycle Time

22 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.21 Introduction Growth Maturity Decline Sales volume The effects of the product / service life cycle (Continued) Time Likely order winners Likely qualifiers Dominant performance objectives Product/ service characteristics Quality range Quality range Flexibility quality Flexibility quality Availability quality Price range Speed dependability quality Speed dependability quality Low price dependable supply Low price dependable supply Quality range Quality range Cost dependability Cost dependability Low price Dependable supply Cost

23 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.22 Different competitive factors imply different performance objectives Competitive factors If the customers value these … Performance objectives Then, the operations will need to excel at these … Low price Cost High quality Quality Fast delivery Speed Reliable delivery Dependability Innovative products and services Flexibility (products/services) Wide range of products and services Flexibility (mix) The ability to change the timing or quantity of products and services Flexibility (volume and/or delivery)

24 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.23 Order-winning, qualifying and less important competitive factors Neutral +ve –ve Performance Competitive benefit Order-winning factors

25 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.24 Order-winning, qualifying and less important competitive factors (Continued) Neutral +ve –ve Performance Competitive benefit Qualifying factors

26 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.25 Neutral +ve –ve Performance Competitive benefit Less important factors Order-winning, qualifying and less important competitive factors (Continued)

27 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.26 Intended strategy Realized strategy Deliberative strategy Mintzberg’s concept of emergent strategy Unrealized strategy Emergent strategy

28 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.27 What you HAVE in terms of operations capabilities What you NEED to ‘compete’ in the market Operations resources Market requirements What you WANT from your operations to help you ‘compete’ What you DO to maintain your capabilities and satisfy markets Strategic reconciliation Reconciling market requirements and operations resources

29 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.28 The challenge of operations strategy formulation An operations strategy should be: Appropriate… Comprehensive… Coherent… Consistent over time…

30 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.29 An implementation agenda is needed When to start? Where to start? How fast to proceed? How to co-ordinate the implementation programme?

31 Slack, Chambers and Johnston, Operations Management, 6 th Edition, © Nigel Slack, Stuart Chambers, and Robert Johnston 2010 3.30 The five P’s of operations strategy implementation Purpose — a shared understanding of the motivation, boundaries and context for developing the operations strategy. Point of Entry — the point in the organization where the process of implementation starts. Process — How the operations strategy formulation process is made explicit. Project Management — The management of the implementation. Participation — Who is involved in the implementation.


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