1. The three levels of operations strategy process
Increasing complexity
Level 1 - Fit
Align resources with requirements
Level 2 - Sustainability
Develop sustainable competitive advantage
Level 3 - Risk
Include impact of uncertainty

2. Operations Strategy Formulation
Putting an operations strategy together presents some particular difficulties:
Senior operations managers are often geographically dispersed
The operation still needs running
Predominance of line management
Complexity of operations resources
Inertia of operations resources

3. Operations Strategy Formulation
There are many formulation process stage models.
They often include:
Links between competitive strategy objectives and operations objectives (strategic fit)
The use of ‘competitive objectives’ as the translation device between strategic and operations objectives
Judging the importance of competitive objectives against customer/market requirements
Current performance judged against competitor performance
An iterative process
The concept of an ‘ideal’ of ‘greenfield’ operation against which to compare current operations.
A gap-based analysis

4. Level of market requirements
In operations strategy ‘fit’ is the alignment between market and operations capability
Level of market requirements
Line of fit
Alignment between market and operations capability Y X
Level of operations resource capability

5. Operations resource capability
‘Fit’ means that the operations resources and processes are aligned with the requirements of its markets.
‘Fit’ can also mean that market requirements are moved to exploit operations resource capabilities
Line of fit
Market requirements
Operations resource capability

6. ‘Fit’ operations resources to market requirements ‘fit’
Market Segmentation
Operations Strategy Decision Areas
Market Positioning
Operations Performance Objectives
Operations Capabilities
Competitor Activity
State market requirements in terms of operations performance objectives
Make strategic operations decisions
… to enhance core capabilities
Define competitive position
Understand markets
‘Fit’ operations resources to market requirements ‘fit’

7. ‘Fit’ market positioning to operations resources capabilities
Tangible and Intangible Resources
Potential Market Positioning
Operations Strategy Decision Areas
Operations Performance
Operations Capabilities
Operations Processes
Define market potential of operations performance
Make appropriate strategic operations decisions
Determine competitive position
Identify core capabilities
Understand resources and processes
‘Fit’ market positioning to operations resources capabilities

8. IBM operations strategy matrix (1970-1985)
Resource Usage
Critical
Critical
Critical
Quality
Speed
Market Competitiveness
Performance objectives
Dependability
Flexibility
Critical
Critical
Critical
Critical
Cost
Development and Organization
Supply Network
Process Technology
Capacity
Decision areas
IBM operations strategy matrix ( )

9. The level of ‘fit’ may not always be ‘tight’
Minimum resource capability
Ideal resource capability
Line of fit B y2
‘Ideal’ market requirements Y
Level of market requirements
Tight fit
Minimum market requirements y1 A x1 X x2
Level of operations resource capability
The level of ‘fit’ may not always be ‘tight’

10. ‘Fit’ is concerned with ensuring comprehensiveness, correspondence, coherence and criticality
Resource Usage
Correspondence
Comprehensive?
Critical
Quality
Coherence
Speed
Market Competitiveness
Performance objectives
Dependability
Flexibility
Cost
Process Technology
Development and Organization
Supply Network
Capacity
Decision areas

11. Resource Usage
Provide resources to support quality
Use quality as performance criteria
Continuous quality emphasis with suppliers
Purchase using quality criteria
Work on functional barriers
Built-in quality in processes
Statistical process control
Enhance quality capability
Quality as a performance criteria
Long-term plans
Quality culture
Continuous improvement
Quality performance measurement and control
Operational supervision is important
Communication
Appropriate org. structure
Quality
Market Competitiveness
Performance objectives
Speed
Dependability
Flexibility
Cost
Development and Organization
Supply Network
Process Technology
Capacity
Decision areas
To be strategic, quality initiatives need to comprehensively cover all decision areas

12. The Hill framework of operations strategy formulation
Step 1
Step 2
Step 3
Step 4
Step 5
Corporate objectives
Marketing strategy
How do products or services win orders?
Operations strategy
Process choice
Infrastructure
Growth
Profit
ROI
Other ‘financial’ measures
Product/service markets and segments
Range
Mix
Volumes
Standardisation or customisation
Innovation
Leader or follower
Price
Quality
Delivery speed
Delivery dependability
Product/service range
Product/service design
Brand image
Technical service
Process technology
Trade-offs embodied in process
Role of inventory
Capacity, size, timing, location
Functional support
Operations planning and control systems
Work structuring
Payment systems
Organisational structure
The Hill framework of operations strategy formulation

13. The Platts-Gregory procedure
OPPORTUNITIES AND THREATS?
THE EXISTING OPERATION
Facilities
Capacity
Span of process
Processes
Human resources
Quality
Control policies
Suppliers
New Products
WHAT THE MARKET WANTS?
Features
Quality
Delivery
Flexibility
Price
WHAT DO WE NEED TO DO TO IMPROVE THE REVISED OPERATIONS STRATEGY?
HOW THE OPERATION PERFORMS
Features
Quality
Delivery
Flexibility
Price
The Platts-Gregory procedure

14. Uses of profiling in the Platts-Gregory procedure
Product family
Market requirements
Achieved performance
Delivery lead-time
Ex-stock Short
Not significant Long
Reliability
Into stock point Variable
Critical: Project delay Good
Features
Fit for purpose Few features
Many features/ High absolute level
Quality
Acceptable at price Acceptable
Total reliability essential
High
Flexibility design
All designs customer specified
All products customised
Standard range only Standard only
Volume
Stable market
Little variation required Volume variations low
Highly cyclic variable market
Volume variations high
Price cost
Price competition dominant
Low
Non-price competition dominant
High
Uses of profiling in the Platts-Gregory procedure