1. Introduction & Strategy Module
Introduction & Administrative
What is operations
Process view of Ops
What is a good operation?
A Strategic Framework for Ops
Aligning strategy and operations:
Focus
Relationship between process choice and strategy
Shouldice Hospital
Wriston Manufacturing
J.A. Van Mieghem/Operations/Strategy

2. Course: Goals and Overview
Operations as a managerial integration function
Evaluation and Improvement
Course is structured to answer:
What is an improvement?
 Strategic role of ops
Where target improvements?
 Identify metrics by linking process flows with financial flows
How improve?
 Improve each metric
© J. A. Van Mieghem
J.A. Van Mieghem/Operations/Strategy

3. “The planning and execution of work” (JVM 2008)
What is Operations?
“The planning and execution of work” (JVM 2008)
“Creation and delivery of products and services to customers” (JVM 2008)
J.A. Van Mieghem/Operations/Strategy

4. 3 Views of Operations Competencies Operations Strategy Resources
Processes
Max NPV
Operations strategy is a plan for developing resources and configuring processes such that the resulting competencies maximize NPV
© J. A. Van Mieghem
J.A. Van Mieghem/Operations/Strategy

5. A process is a well-structured transformation of inputs into outputs
Goods
Services
Inputs
Flow units/Entities
(customers, data,
material, cash, etc.)
Network of
Activities and Buffers
Labor & Capital
Resources
© J. A. Van Mieghem
J.A. Van Mieghem/Operations/Strategy

6. The three ‘colors’ of operational excellence
“The formal structures, processes and systems through which resources are managed in support of the operating system”
“The way assets and resources are configured and optimised to create value and minimise losses”
Management Infrastructure
Operating System
Mindsets, Capabilities & Behaviors
“The way people think, feel and conduct themselves in the workplace, individually and collectively”
Source: John Drew
J.A. Van Mieghem/Operations/Strategy

7. What defines a “good process”? Delivered value / Supply chain surplus
Delivered value of process =
benefit to process customers – total process cost
Benefit driven by customer value
Variety V
(flexibility)
Quality Q:
of product or outcome
of service
Time T:
Rapid, reliable delivery
New product development
Price p (Cost)
J.A. Van Mieghem/Operations/Strategy

8. A question I am looking for a small batch of printed books
Copyright 2007 J. A. Van Mieghem. All rights reserved. For permissions, contact
A question
4/6/2017
I am looking for a small batch of printed books
Which location seems better: a printer in the US or in China?
© J. A. Van Mieghem
Do no copy nor poste on the Internet.

9. A question… Competitive analysis: cost v. quantity
Copyright 2007 J. A. Van Mieghem. All rights reserved. For permissions, contact
A question… Competitive analysis: cost v. quantity
4/6/2017
$25
Caxton Printers (Caldwell, Idaho)
$20
BioPrint (Minneapolis, MN)
Imaging Hawaii (Honolulu)
$15
Jostens (Topeka, KS)
Cost/book
AsianPrinting (middleman in L.A., CA)
$10
BookMasters (Grand Rapids, MI) $5
Aomeiya (Shandong, China)
Lithopak (Shenzhen, China) $ -
1,000
2,000
3,000
4,000
5,000
Lotsize
© J. A. Van Mieghem
Do no copy nor poste on the Internet.

10. A question… Competitive analysis: cost v. responsiveness
Copyright 2007 J. A. Van Mieghem. All rights reserved. For permissions, contact
4/6/2017
Responsiveness (weeks)
Caxton Printers (Caldwell, Idaho)
BookMasters
(Grand Rapids) 2
BioPrint (Minneapolis, MN) 3
Imaging Hawaii (Honolulu + Hong Kong)
Jostens (Topeka, KS)
AsianPrinting (middleman in L.A., CA)
BookMasters (Grand Rapids, MI)
Aomeiya
(Shandong) 7
Aomeiya (Shandong, China) 8
Lithopak (Shenzhen, China)
$25
$20
$15
$10 $5
Cost efficiency ($/book)
© J. A. Van Mieghem
Do no copy nor poste on the Internet.

11. What defines a good operation?
structures the processes and resources to
align and adapt
the operational competencies
with the needs of the customer(s)
© J. A. Van Mieghem
J.A. Van Mieghem/Operations/Strategy

12. A Framework for designing an Operations Strategy and Structure
What is our strategic position: how do we compete & provide value in the market?
What is the value proposition to our customers?
Rank (p, T, Q, V)
Given our strategic position, what must operations do particularly well?
Which competencies must ops develop?
Rank (c, T, Q, Flex)
Given needed competencies, how should operations processes be structured to develop competencies that support strategy?
Process choice (structure) and management
competitive
strategy
operational
competencies
Resources
& Processes
J.A. Van Mieghem/Operations/Strategy

13. What defines a good operation
What defines a good operation? Achieving alignment at Shouldice Hospital
© J. A. Van Mieghem
J.A. Van Mieghem/Operations/Strategy

14. Wriston Manufacturing
Handouts to be distributed in class
© J. A. Van Mieghem
J.A. Van Mieghem/Operations/Strategy

15. Wriston’s HED Division Plant Network Exhibit 2A
Total Burden Rates
(total overhead cost / direct labor cost) 1 2 3 4 5 6 7
Free capacity and Throughput $0
$50
$100
$150
$200
Sandusky, OH
Essex,
Canada
Detroit, MI
Saginaw,
Lima,
Lebanon, PA
Tiffin,
Fremont,
Maysville, KY
© J. A. Van Mieghem
J.A. Van Mieghem/Operations/Strategy

16. The Fundamentals: Competitive Advantage through Tailored Operations
Copyright 2007 J. A. Van Mieghem. All rights reserved. For permissions, contact
4/6/2017
Recall the two fundamental strategies:
Doing the same things as rivals but better
Doing different things
Focused, tailored operations are more competitive than generics
What is your plan to get to or push out the frontier?
efficient
frontier
Customization A
Cost efficiency
© J. A. Van Mieghem
Do no copy nor poste on the Internet.

17. The Concept of Operational Focus
Cost efficiency
Flexibility
(responsiveness)
World-class
Emergency Room
specialty non-emergency
Shouldice Hospital
One general
hospital
efficient frontier = current state of best practice
A focused process attempts to deliver one specific and narrow customer value proposition (i.e., its priority ranking is clear and constant for all patients)
It is optimized to deliver the needed competencies for one narrow patient segment
Focus does not imply standardization: ER is focused on providing timeliness and flexibility to patient needing emergency care
© J. A. Van Mieghem
J.A. Van Mieghem/Operations/Strategy

18. Summary: Introduction & Strategy Module
Operations is the process of bringing goods and services to customers
Process view = viewing an organization as a transformation of inputs into outputs through a network of activities and buffers, utilizing resources, IT and mgt
A good operation maximizes value or supply chain surplus
A strategic framework for operations for increasing the value of operations by aligning the competencies of the operations structure (resources & processes) with corporate strategy
Aligning strategy and operations can be achieved through:
Focus
Process choice
Cases:
Shouldice Hospital
Wriston Manufacturing
J.A. Van Mieghem/Operations/Strategy