Chapter 2 Operations Strategy

Core Competency Core Competency- What your company does well enough to sustain a competitive advantage When companies focus on their core competencies the whole system may benefit Operations often serves as firm’s distinctive competence –Example: UPS receives small freight, re-organizes for distribution, tracks packages and delivers more efficiently than many competitors –Example: FedEx competes on speed and reliability (but at a higher cost)

Strategic Planning Mission and Vision Corporate Strategy Voice of the Business Voice of the Customer Marketing Strategy Operations Strategy Financial Strategy

Strategy Formulation 1.Define a primary task 2.Assess core competencies 3.Determine order winners & order qualifiers 4.Positioning the firm

Definitions: Order Qualifiers: the characteristics of a product or service that qualify it to be considered for purchaseOrder Qualifiers: the characteristics of a product or service that qualify it to be considered for purchase Order Winner: the characteristic of a product or service that wins orders in the marketplaceOrder Winner: the characteristic of a product or service that wins orders in the marketplace

Competing on Cost Eliminate all wasteEliminate all waste Invest inInvest in Updated facilities & equipmentUpdated facilities & equipment Streamlining operationsStreamlining operations Training & developmentTraining & development

Competing on Differentiation Includes Competing on QualityIncludes Competing on Quality Please the customerPlease the customer Understand customer attitudes toward and expectations of qualityUnderstand customer attitudes toward and expectations of quality

Competing on Response Includes Competing on Flexibility Produce wide variety of productsProduce wide variety of products Introduce new productsIntroduce new products Modify existing products quicklyModify existing products quickly Respond to customer needsRespond to customer needs

Competing on Response Includes Competing on Speed Fast movesFast moves Fast adaptationsFast adaptations Tight linkagesTight linkages

Processes & Technology Strategic Scaling Project One-time production of product to customer order Batch production Process many jobs at same time in batch Mass production Produce large volumes of standard product for mass market Continuous production Very high volume commodity product

Product-Process Matrix Volume Low LowHighHigh Projects Batch Production Mass Production Continuous Production Standardization

Service-Process Matrix Volume Low LowHighHigh Professional Service Service Shop Mass Service Service Factory Standardization