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Chapter 2 Operations Strategy Ch 2 - 2 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Strategy Formulation 1. Define primary task 2. Assess.

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Presentation on theme: "Chapter 2 Operations Strategy Ch 2 - 2 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Strategy Formulation 1. Define primary task 2. Assess."— Presentation transcript:

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2 Chapter 2 Operations Strategy

3 Ch 2 - 2 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Strategy Formulation 1. Define primary task 2. Assess core competency 3. Determine order winners & order qualifiers 4. Position the firm Michael E. Porter’s Competitive Strategy

4 Ch 2 - 3 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Competing On Cost Eliminate all waste Invest in –updated facilities & equipment –streamlining operations –training & development

5 Ch 2 - 4 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Competing On Quality Please the customer –Understand customer attitudes toward and expectations of quality

6 Ch 2 - 5 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Competing On Flexibility Produce wide variety of products Introduce new products Modify existing products quickly Respond to customer needs

7 Ch 2 - 6 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Competing On Speed Fast moves Fast adaptations Tight linkages

8 Ch 2 - 7 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Process-Centered Strategies Processes cut across functional lines and departments Strategy is led by competencies

9 Ch 2 - 8 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Changing Focus from Function to Process

10 Ch 2 - 9 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Exploiting Core Competencies Enhance value a competency provides to customers Transform internal competence into salable item Apply competencies to new products & services Create new ways of working & finding markets

11 Ch 2 - 10 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 2/e Policy Deployment Focuses employees on common goals & priorities Translates strategy into measurable objectives Aligns day-to-day decisions with strategic plan

12 Ch 2 - 11 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 2/e Strategic Planning Mission & Vision Business Strategy Marketing Strategy Operations Strategy Financial Strategy Voice of the Business Voice of the Customer

13 Ch 2 - 12 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Derivation of an Action Plan

14 Ch 2 - 13 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Operations Role In Corporate Strategy Provide support for overall strategy of a firm Serve as firm’s distinctive competence Must be consistent Must be consistent with overall strategy

15 Ch 2 - 14 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Operations Strategy Products Processes and Technology Capacity Human Resources Quality FacilitiesSourcing Services Operating Systems

16 Ch 2 - 15 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Products & Services Make-to-order –made to customer specifications after order received Make-to-stock –made in anticipation of demand Assemble-to-order –add options according to customer specification

17 Ch 2 - 16 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Processes & Technology 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 processes –very high volume commodity product

18 Ch 2 - 17 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Product-Process Matrix Volume Low High Projects Batch production Mass production Continuous production Standardization

19 Ch 2 - 17 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Product-Process Matrix Labor Intensity Low High Professional Service Shop Mass Service Factory Customization

20 Ch 2 - 19 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Capacity & Facilities How much capacity to provide Size of capacity changes Handling excess demand Hiring/firing workers Need for new facilities

21 Ch 2 - 20 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Facilities Best size for facility? Large or small facilities Facility focus Facility location Global facility

22 Ch 2 - 21 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Human Resources Skill levels required Degree of autonomy Policies Profit sharing Individual or team work Supervision methods Levels of management Training

23 Ch 2 - 22 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Quality Target level Measurement Employee involvement Training Systems needed to ensure quality Maintaining quality awareness Evaluating quality efforts Determining customer perceptions

24 Ch 2 - 23 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Sourcing Degree of vertical integration Supplier selection Supplier relationship Supplier quality Supplier cooperation

25 Ch 2 - 24 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Operating Systems Execute strategy daily Information technology support Effective planning & control systems Alignment of inventory levels, scheduling priorities, & reward systems

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