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Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.1
3.1
Chapter 3
Operations strategy
Photodisc. Cartesia
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.2
3.2
Design
Planning and control
Operation’s performance
Operations strategy
Improvement
Operations management
Operations strategy
Slack et al.’s model of operations management
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.3
3.3
Key operations questions
In Chapter 3 – Operations strategy – Slack et al. identify the following key questions:
•What is strategy and what is operations strategy?
•What is the difference between a ‘top-down’ and a ‘bottom-up’ view of operations strategy?
•What is the difference between a ‘market requirements’ and an ‘operations resources’ view of operations strategy?
•How can an operations strategy be put together?
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.4
3.4
Operations strategy at Flextronics and Ryanair
For each of these companies:
• What do they have to be good at to compete in their markets?
• How do their operations help them to achieve this?
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.5
3.5
Operations strategic decisions
•Industrial parks,
with–low cost but
close locations– and co-located
suppliers
Market requirements
•Low costs
•
Responsiveness
• Flexibility
Flextronics
Operations strategy at Flextronics
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.6
3.6
Operations strategic decisions
•Stripped down
service•One technology•Cheap airportlocations•Fast turnround
Market requirements
•Low prices
•Reliability
•Basic service
Ryanair
Operations strategy at Ryanair
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.7
3.7
•Setting broad objectives that direct an enterprise towards its overall goal.
•Planning the path (in general rather than specific terms) that will achieve these goals.
•Stressing long-term rather than short-term objectives.
•Dealing with the total picture rather than stressing individual activities.
•Being detached from, and above, the confusion and distractions of day-to-day activities.
What is strategy?
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.8
3.8
Strategic decisions are those decisions which: are
widespread in their effect on the organization to
which the strategy refers, define the position of the
organization relative to its environment and move
the organization closer to its long-term goals.
Strategic decisions
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.9
3.9
‘Operations’ is not the same as ‘operational’
‘Operations’ are the resources that create products and services.
‘Operational’ is the opposite of strategic, meaning day-to-day and detailed.
So, one can examine both the operational and the strategic aspects of operations.
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.10
3.10
How is operations strategy different to operations management?
The time scale is longer
Short-termfor example,
capacity decisions
1–12 months
De
ma
nd
Long-termfor example,
capacity decisions
1–10 years
De
ma
nd
Operations management Operations strategy
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.11
3.11
The level of analysis is higher
Operations management Operations strategy
Micro-levelof the process
Macro-levelof the total operation
How is operations strategy different to operations management? (Continued)
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.12
3.12
The level of aggregation is higher
Operations management Operations strategy
Detailed
For example:
‘Can we give tax services to the small business market in Antwerp?’
Aggregated
For example:
‘What is our overall business advice
capability compared with other capabilities?’
How is operations strategy different to operations management? (Continued)
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.13
3.13
The level of abstraction is higher
Operations management Operations strategy
Concrete
For example:
‘How do we improve out purchasing procedures?’
Philosophical
For example:
‘Should we develop strategic alliances with
suppliers?’
How is operations strategy different to operations management? (Continued)
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.14
3.14
What is the role of the operations function?
Operations as implementer of
strategy
Operations implements strategy
Strategy
Operations
Operations drives strategy
Operations as driver of strategy
Strategy
Operations
Operations supports strategy
Operations as supporter of
strategy
Strategy
Operations
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.15
3.15
The 3 key attributes of operations strategy
Operations contribution
Implementing be Dependable
Operationalize strategy
explain Practicalities
Supporting be Appropriate
Understand strategy
Contribute to decisions
Driving be Innovative
provide Foundation of strategy
Develop long-term Capabilities
The strategic role of the operations function
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.16
3.16
The 4 stage model of operations contribution
Increasing contributio
n of operatio
ns
Incr
ea
sing
str
ate
gic
imp
act
Increasing operations capabilities
Externally supportive
Redefining industry
expectations
STAGE 4Give an operations advantage
Driving strategy
After Hayes and Wheelwright
Internally supportive
Clearly the best in the
industry
STAGE 3 Link strategy with operations
Supporting strategy
Externally neutral
As good as competitors
STAGE 2 Adopt best practice
Implementing strategy
Internally neutral
STAGE 1Correct the worst problems
Holding the organization
back
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.17
3.17
Top-down perspective
What the business wants operations to do
Operations resources
perspective
What operations resources can
doWhat day-to-day
experience suggests operations
should do
Bottom-up perspective
Market requirement perspective
What the market position requires operations to do
Operations strategy
The four perspectives on operations strategy
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.18
3.18
Corporate strategy
Business strategy
Emergent sense of what the strategy should be
Operational experience
Top-down and bottom-up perspectives of strategy
Operations strategy
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.19
3.19
The strategy hierarchy
Key strategic decisions
Influences on decision-making
Business strategy
What is the mission?What are the strategic objectives of the firm?
How to compete?
Customer/market dynamicsCompetitor activityCore technology dynamicsFinancial constraints
Corporate strategy
What business to be in?What to acquire?What to divest?How to allocate cash?
Economic environmentSocial environmentPolitical environmentCompany values and ethics
Functional strategy
How to contribute to the
strategic objectives?
How to manage the
function’s resources?
Skills of function’s staff
Current technology
Recent performance of the
function
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.20
3.20
Introduction Growth Maturity Decline
Sa
les
volu
me
Volume
Customers
Competitors
Variety of product/ service design
Slow growth in sales
Innovators
Few/none
Customization or frequent design changes
Rapid growth in sales volume
Early adopters
Increasing numbers
Increasingly standardized
Sales slow and level off
Bulk of market
Stable number
Emerging dominant types
Market needs largely met
Laggards
Declining numbers
Possible move to commodity standardization
The effects of the product / service life cycle
Time
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.21
3.21
Introduction Growth Maturity Decline
Sa
les
volu
me
The effects of the product / service life cycle (Continued)
Time
Likely order winners
Likely qualifiers
Dominant performance
objectives
Product/ service characteristics
Qualityrange
Flexibilityquality
Availability quality
Price range
Speeddependabilityquality
Low pricedependable supply
Qualityrange
Costdependability
Low price
Dependable supply
Cost
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.22
3.22 Different competitive factors imply different performance objectives
Competitive factorsIf the customers value these …
Performance objectivesThen, the operations will need to
excel at these …
Low price Cost
High quality Quality
Fast delivery Speed
Reliable delivery Dependability
Innovative products and services Flexibility (products/services)
Wide range of products and services Flexibility (mix)
The ability to change the timing or quantity of products and
servicesFlexibility (volume and/or delivery)
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.23
3.23 Order-winning, qualifying and less importantcompetitive factors
Neutral
+ve
–ve
Performance
Competitive benefit
Order-winning factors
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.24
3.24 Order-winning, qualifying and less importantcompetitive factors (Continued)
Neutral
+ve
–ve
Performance
Competitive benefit
Qualifying factors
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.25
3.25
Neutral
+ve
–ve
Performance
Competitive benefit
Less important factors
Order-winning, qualifying and less importantcompetitive factors (Continued)
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.26
3.26
Intended strategy
Realized strategy
Deliberative strategy
Mintzberg’s concept of emergent strategy
Unrealized strategy
Emergent strategy
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.27
3.27
What you HAVE
in terms of operations capabilities
What you NEED
to ‘compete’ in the
market
Operations resources
Market requirements
What you WANT
from your operations to
help you ‘compete’
What you DO
to maintain your
capabilities and satisfy
markets
Strategic reconciliation
Reconciling market requirements and operations resources
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.28
3.28 The challenge of operations strategy formulation
An operations strategy should be:
Appropriate…
Comprehensive…
Coherent…
Consistent over time…
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.29
3.29
An implementation agenda is needed
When to start?
Where to start?
How fast to proceed?
How to co-ordinate the implementation programme?
Slack, Chambers and Johnston, Operations Management, 6th Edition,© Nigel Slack, Stuart Chambers, and Robert Johnston 20103.30
3.30
The five P’s of operations strategy implementation
Purpose — a shared understanding of the motivation, boundaries and context for developing the operations strategy.
Point of Entry — the point in the organization where the process of implementation starts.
Process — How the operations strategy formulation process is made explicit.
Project Management — The management of the implementation.
Participation — Who is involved in the implementation.