OPERATIONS STRATEGY& PROCESS


Learning Objectives:

1. To understand the competitive priorities available to an organization and their relationships

2. To consider the impact of strategy on operations also of operations on strategy


Organization Strategy

 

Corporate strategy focuses on the questions:

         Where are we going?

         How are we going to compete?

         How are we going to meet customer needs in order to accomplish our objectives?

 

Typical steps in setting an organization's strategy:

1. Establishing Goals

2. Market and Competitive Analysis

- See the Society of Competitive Intelligence Professionals site for information

3. Identification of Products, Markets and Competitive Priorities

4. Establishment of Policy Guidelines and Constraints

 

Mission - Why are we in the business?

Vision - What do we want our organization to look like 5 years from now?

Strategic Goals- Specific intended targets that indicate how the organization will achieve its mission and vision

Operations Strategy

Once the organization has a clear picture of where it is heading the operations strategy can be addressed.

- by excelling in one or two key areas of operations a company may gain an edge over its competition.

The relationship between Operations and Corporate Strategy

PRODUCT STRATEGY

Definition = combination of physical, service and other characteristics to meet customer needs

Product Differentiation

         design a product to meet customers’ needs

         to create a competitive advantage

MARKET STRATEGY

Grouping of customers based on important difference in their needs, preferences and/or ability to buy

Options

         mass

         differentiation

         niche-focus

COMPETITIVE PREMISE

How do we intend to compete in the market place?

What will we offer our customers that is

1.      important to them

2.      different from our competitors

3.      economically feasible

4.      difficult to match / imitate

Competitive Priorities

(also known as COMPETITIVE ADVANTAGES; DISTINCTIVE COMPETENCIES)

Competitive priorities: the elements in which operations must excel in order to support

corporate strategy.

A company cannot excel on all dimensions and must select the ones most important to its operations and organizational strategy. (Market qualifying v.s. order winning)

1. cost and/or price

2. quality and dependability

3. performance

4. delivery

5. flexibility

the ability to respond to rapid changes in customer demand and requirements for existing

6. innovativeness

ability to introduce and incorporate new ideas into products and processes

Top Ranked Competitive Priorities

1990 Competitve Priorities

1996 Competitve Priorities

Conformance quality

Conformance quality

On-time delivery

Product reliability

Product reliability

On-time delivery

Performance quality

Low price

Low Price

Fast delivery

 

Performance quality

 

Speedy new product introduction

Market Qualifying/Order Winning Priorities

Market qualifying - characteristics a product mus have to be in the market

- which are market qualifying for a luxury car?

Order winning - characteristics make a product different and cause customers to buy

- which are market winning for a Porsche 911?

BUSINESS SYSTEM FOCUS

What are the key value adding activities

Which activities will be done:

         Within the organization (internal)?

         By others (external)?

         Jointly?

Business system - the combination of all activities (physical vs. service; primary vs. support; internal, joint, external) that must be performed to product and market a product

Developing an Operations Strategy

1.      Segment the markets by product groups

2.      Identify product requirements, demand patterns and profit margins for each group

3.      Determine market qualifying and order winning attributes for each product group

4.      Convert these attributes into specific performance characteristics - most focus will be on order winning.


 

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