1. The operations function is fashionable!
The consultancy services market
% of world revenues of 40 largest firms
Financial 6
Marketing/sales 2
Organizational design 11
Operations and process management 31
Benefits/Actuarial 16
IT strategy 17
Corporate strategy 17
© Nigel Slack and Michael Lewis 2003

2. Strategic Reconciliation
Operations Resources
OPERATIONS STRATEGY
Market Requirements
Operations strategy reconciles the requirements of the market with the capabilities of operations resources
© Nigel Slack and Michael Lewis 2003

3. Operations strategy is …..
“… the decisions which shape the long-term capabilities of the company’s operations and their contribution to overall strategy through the on-going reconciliation of market requirements and operations resources …”
© Nigel Slack and Michael Lewis 2003

4. Operations strategy is different to operations management
Short-term
Long-term
for example, capacity decisions
for example, capacity decisions
Time scale
Demand
Demand
1-12 months
1-10 years
Micro
level of the process
Macro
level of the total operation
Level of analysis
Detailed
Aggregated
Level of aggregation
For example
For example
“Can we give tax services to the small business market in Antwerp?”
“What is our overall business advice capability compared with other capabilities?”
Concrete
Philosophical
Level of abstraction
For example
For example
“How do we improve our purchasing procedures?”
“Should we develop strategic alliances with suppliers?”
Operations strategy is different to operations management
© Nigel Slack and Michael Lewis 2003

5. Top-down and bottom-up perspectives of strategy
Corporate strategy
Business strategy
Operations strategy
Emergent sense of what the strategy should be
Operational experience
Top-down and bottom-up perspectives of strategy
© Nigel Slack and Michael Lewis 2003

6. The market perspective analysis of the garment company
CUSTOMERS
Segmentation on:
Age - youth
Purpose - general
PERFORMANCE OBJECTIVES
MARKET POSITION
Dependability
Speed of delivery
Product mix flexibility
Speed to market
Differentiation on:
Innovative products
Time to market
Product range
Coordinated launches
COMPETITORS
Traditionally weak in:
promotion
design innovation
The market perspective analysis of the garment company
© Nigel Slack and Michael Lewis 2003

7. The market perspective on operations strategy
Customer Needs
Market Positioning
Performance Objectives
Competitors’ Actions
Required performance
Understanding markets
The market perspective on operations strategy
© Nigel Slack and Michael Lewis 2003

8. Operations Strategy Decisions Capabilities
Resources
Tangible
Equipment
Staff
Intangible
Reputation
Relationships
(internal and external)
Experience
Operations Strategy Decisions
Capabilities
Application of leading- edge lighting and sound technology
Articulation of client requirements
Location
Virtual reality technology
Supplier development
Equipment tracking system
Organizational structure
Staff meetings
Processes
Integration of equipment supply and client requirements
Design process
Supplier liaison process
The operations resource perspective analysis of the lighting company
© Nigel Slack and Michael Lewis 2003

9. Tangible and Intangible Resources
Operations Capabilities
Operations Strategy Decision Areas
Operations Processes
Understanding resources and processes
Strategic decisions
The operations resource perspective on operations strategy
© Nigel Slack and Michael Lewis 2003

10. Tangible and Intangible Resources
Customer Needs
Operations Capabilities
Operations Strategy Decision Areas
Market Positioning
Performance Objectives
Operations Processes
Competitors’ Actions
Understanding resources and processes
Strategic decisions
Required performance
Understanding markets
Operations strategy is the strategic reconciliation of market requirements with operations resources
© Nigel Slack and Michael Lewis 2003

11. Operations has to cope with the clash between the nature of external markets and the nature of internal resources
Operations Resources are….
Market Requirements are….
Difficult to change
Dynamic
Technically constrained
Heterogeneous
Ambiguous
Complex
© Nigel Slack and Michael Lewis 2003

12. Operations strategy is the strategic reconciliation of market requirements with operations resources
Understanding Resources and Processes
Market Requirements
Understanding Markets
Market Positioning
Market Segmentation
Competitor Activity
Operations Processes
Operations Resources
Operations Competences
Strategic Decisions
Operations Strategy Decisions
Required Performance
Performance Objectives
Quality
Speed
Dependability
Flexibility
Cost
Capacity
Supply networks
Process technology
Development and organization
© Nigel Slack and Michael Lewis 2003

13. What you HAVE What you DO What you WANT What you NEED
Operations Resources
Market Requirements
Strategic
Reconciliation
What you HAVE
in terms of operations capabilities
What you DO
to maintain your capabilities and satisfy markets
What you WANT
from your operations to help you “compete”
What you NEED
to “compete”
In the market
© Nigel Slack and Michael Lewis 2003

14. Operations can kick-start two virtuous cycles
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
World Class Operations
© Nigel Slack and Michael Lewis 2003

15. Existing ‘effective’ capability
Lafage Cosmetics’ requirements
wide
Existing ‘effective’ capability
Variety of items per order
Store delivery
Catalogue customers
narrow
small
large
Number of items per order
Hagen Style – Comparison of new demands placed on the order fulfilment processes by potential new business opportunities
© Nigel Slack and Michael Lewis 2003

16. Hagen Style – Operations resources and market requirements
Cost efficiency
Fast delivery
Traditional ‘representative’ sales channels declining in popularity
2 x distribution centers
State-of-art packing and information technology
Processes ‘fine tuned’ to traditional ‘representative’ sales channels
Good at what it does
cost efficient
fast throughput
As above plus
wider range of requirements
more demand fluctuations?
New channels
catalogue
Internet
discount stores
Hagen Style – Operations resources and market requirements
© Nigel Slack and Michael Lewis 2003