Operations Strategy and

Competitiveness
Operations Strategy
Main components
n Operations effectiveness
n Customer management
n Product innovation
n

Support corporate strategy

Change with time

Competitive Dimensions
Cost or Price
n Make the Product/ Deliver the Service
Cheap


Quality
n Make a Great Product or Deliver a
Great Service
n

Delivery Speed
n Make Product or Deliver Service
Quickly
n

Delivery Reliability
Competitive Dimensions
Coping with Changes in Demand
n Change Its Volume
n

Flexibility and New Product

Introduction Speed
n Change It
n

Other Product-Specific Criteria

n Support It
w Technical liaison and support
w Meeting a launch date
w Supplier after-sale support
w Other dimensions
Trade-offs
Cost

Flexibility Delivery

Quality

Plant-within-a-plant (PWP)
Straddling
Order Qualifiers and
Winners
Order qualifiers
n basic criteria that permit the
firms products to be considered
as candidates for purchase by
customers

Order winners
n criteria that differentiates the
products and services of one firm
from another
 (Prof.Terry Hill, Oxford University)
Corporate Strategy Design
Process
Kaplan and Norton
n The Strategy Focused Organization
n Generic Strategy Map template
 Corporate Strategy Design
Process
Strategy Map What it is about!
Financial Perspective Improve Shareholder Value

Customer Perspective Customer Acquisition/Retention

Internal Perspective Operational excellence

Learning and Growth Perspective A Motivated and Prepared

Workforce
Financial Perspective

Revenue Growth Strategy

n Build the franchise
w Develop new sources of revenue
n Increase customer value
w Work with existing customers to
expand relationships with company

Financial Perspective

Productivity Strategy
n Improve cost structure
w Lower direct and indirect costs
n Increase asset utilization
w Reduce working and fixed capital

Customer Perspective

Product leadership
Customer intimacy
Operational excellence



Internal Perspective

Product leadership
Customer intimacy
Operational excellence
Regulatory & environmental
excellence



Learning and Growth
Perspective

Strategic competencies
Strategic technologies
Climate for action

Strategic Fit
Fitting operational activities to
strategy
 Manufacturing Strategy Framework
Customer
Needs

New product : Old product

New product Competitive Order fulfillment

development dimensions & requirements After sales service

Quality, Dependability, Speed, Flexibility, and Price

Enterprise capabilities
Operations and &Supplier
Operations SupplierCapabilities
capabilities
R&DR&D Technology Systems
Technology People
Systems Distribution
People Distribution

Support Platforms
Human resource
Financial management Information management
management
Developing a Manufacturing
Strategy
Segment market according to
product group
Identify product requirements,
demand patterns, and profit
margins of each group
Determine order qualifiers and
winners for each group
Convert order winners into specific
performance requirements
Operations Strategy in
Services
Generally inseparable from
corporate strategy
Internet Complements
Strategy
Replace traditional activities?
Attacking through
Operations
Capabilities
n Process-based
w transforms material or information
w advantages on cost and quality
n Systems-based
w Involves entire operating system
w advantages of short lead times,
increased product range,
customization, fast new product
development
n Organization-based
w master new technologies, introduce
new products faster than
competition
 Productivity
Common measure on how well
resources are being used
Relative measure
In the broadest sense, it can be
defined as the ratio:
 Outputs
 Inputs

Total factor measure of
Productivity

= Outputs
 Inputs


or
= Goods and services produced
All resources used
Partial Productivity
Measures

Output or Output or Output or

Output

Labor Capital Materials
Energy

Multifactor Productivity
Measures


Output

Labor + Capital + Energy



or


Output
 Labor + Capital + Materials

 Example
 You have just determined that your service
employees have used a total of 2400 hours of
labor this week to process 560 insurance forms.
Last week the same crew used only 2000 hours
of labor to process 480 forms.


 Which productivity measure should be used?

 Answer: Could be classified as a Total
Measure or Partial Measure.


 Is productivity increasing or decreasing?

 Answer: Last week’s productivity = 480/2000
= 0.24, and this week’s productivity is =
Question 1
 An operations strategy is concerned with
which of the following?
a. Setting specific policies and plans
b. Short-term competitive strategies
c. Coordination of operational goals
d. All of the above
e. None of the above

Answer: c. Coordinat ion of operat ional goals

Question 2
Typically a strategy breaks down into what


major components?
a. Operations effectiveness
b. Customer management
c. Production innovation
d. All of the above
e. None of the above

Answer: d. All of t he above

Question 3
A criterion that differentiates the products


and services of one firm from another can

be which of the following?
a. An order qualifier
b. An order winner
c. PWP
d. KPI
e. None of the above

Answer: b. An order winner

Question 4
 A travel agency processed 240 customers on
Day 1 with a staff of 12, and 360 customers the
on Day 2 with a staff of 15. What can be said
about the productivity shift from Day 1 to Day
2?
a. An increase in productivity from Day 1 to Day 2
b. A decrease in productivity from Day 1 to Day 2
c. The same productivity from Day 1 to Day 2
d. Can not be computed from data above
e.Answer:
None of a.
theAnabove
increase in product ivit y from
Day 1 t o Day 2(Day 1 product ivit y =
240/12= 20
Day 2 product ivit y = 360/15= 24)
Question 5
In addition to traditional financial measures,


what critical questions can a Balanced

Scorecard help a company answer?
a. How do customers see us?
b. What must we excel at?
c. How can we continue to improve and create
value?
d. All of the above
e. None of the above

Answer: d. All of t he above