OPST
OPST
OPST
Session 1
An Introduction to Operations Strategy
Analysis at the
level of the supply
network
Strategic
analysis
Analysis at the
level of the
operation
Analysis at the
level of the
process
Operational
analysis
Operations strategy is
the total pattern of decisions
that shape the long-term capabilities
of any type of operation ...
and their contribution to overall strategy
through the on-going reconciliation of market
requirements and operations resources
so as to achieve a sustainable fit between the two
whilst managing the risks of misalignment.
Operations strategy
Long-term
Operations strategy
Macro
Level of
aggregation
(Concerned with
resources at an
aggregated level)
Operations strategy
Aggregated
Level of abstraction
(Concerned with
the conceptual)
How do we improve
our purchasing
procedures?
Operations strategy
Philosophical
Should we develop
strategic alliances with
suppliers?
The four perspectives on operations strategy topdown, bottom-up, market requirements and
operations resources
Top-down
Operations
strategy should
interpret higher
level strategy
Operations
resources
Market requirements
Operations strategy should
satisfy the organisations
markets
Operations strategy
should learn from
day-to-day
experiences
Bottom-up
Business strategy
Top-down
Quality
Speed
Market
Dependability
requirements
Flexibility
Cost
Capacity
Supply networks
Operations
Process technology
resources
Development and
organisation
Bottom-up
Emergent sense of
what the strategy
should be
Operational
experience
Top down
Corporate strategy
Business strategy
Operations strategy
Operational experience
Bottom up
Top down
Group building corporate capability in
high technology products and
services
Metrology division competes on fast-tomarket innovations
Bottom up
Operations
resources
OPERATIONS
STRATEGY
Market requirements
Operations
capabilities
Customer
needs
Operations
strategy
decision areas
Performance
objectives
Operations
processes
Understanding
resources
and processes
Market
positioning
Competitors
actions
Strategic decisions
Capacity
Supply networks
Process technology
Development and
organisation
Required performance
Quality
Speed
Dependability
Flexibility
Cost
Understanding
markets
Capabilities
Application of leading
edge lighting and sound
technology
Articulation of client
requirements
Processes
Integration of equipment
supply and client
requirements
Design process
Supplier liaison process
Operations strategy
decisions
Location
Virtual reality technology
Supplier development
Equipment racking system
Organisational structure
Staff meetings
Performance
objectives
Aesthetically innovative
designs
Presentation advice
High customisation of
lighting solutions
Fast and dependable
supply
Customers
Professional theatres
(static, low margins)
Exhibitions (slow growth,
low margins)
Conferences etc. (fast
growth, higher margins
Market position
Traditionally differentiated
on high service level in
theatre and exhibition
markets, innovation and
service in conference
market
Competitors
Big groups dominating
professional theatres
In-house operations
growing in exhibitions
market
Conference market still
fragmented
PERFORMANCE OBJECTIVES
Dependability
Speed of delivery
Product mix flexibility
Speed to market
MARKET POSITION
Differentiation on:
Innovative products
Time to market
Product range
Coordinated launches
COMPETITORS
Traditionally weak in:
promotion
design innovation
Market
requirements
Operations
resources
What you
HAVE
What you
DO
in terms of
operations
capabilities
to maintain
your
capabilities
and satisfy
markets
What you
WANT
What you
NEED
from your
operations to
help you
compete
to compete in
the market
Strategic
reconciliation
Operations strategy is ..
Output
Total assets
Profit
Output
Profit
Output
Output
=
Total assets
Revenue
Output
Cost
Output
Average
revenue
Average
cost
Output
Fixed assets
Capacity
Capacity
Total assets
Fixed assets
Utilisation
Process
Development
technology and organisation
Supply network
Process
technology
Development and
organisation
Structural issues
Infrastructural issues
Market competitiveness
Performance objectives
Resource usage
Quality
Speed
Dependability
Operations strategy
Flexibility
Cost
Capacity
Supply
network
Process
technology
Decision areas
Development
and
organisation
7-Eleven Japan
Largest retailer in Japan
Sells 15.X as much per store as nearest rival
History of cautious expansion and technical and service innovation
Field Counsellors spread operations knowledge (also distance training)
Expansion by territory to reduce distribution costs
Early use of TIS (Total Information System)
TIS controls stock replenishment by twice a day delivery (sales analysed twice
a day)
New systems not Internet-based
New service includes:
Bank terminals
Downloading games
Downloading music to MD
Internet ordering and collection
RESOURCE DEPLOYMENT
Distribution centre
grouping by
temperature
Speed and
dependability combined
to indicate AVAILABILITY
Distribution centres
and inventory
management systems
give fast stock
replenishment
FLEXIBILITY of
response to sales and
customer trends
COST in terms of
minimising
operating cost
capital cost
working capital
Area dominance
reduces distribution
and advertising costs
Location of stores
Size of stores
7-11 JAPAN
Pivotal
Critical
Secondary
CAPACITY
TIS gives
comprehensive and
sophisticated analysis
of sales & supply
patterns daily
Common distribution
centers give small
frequent deliveries
from fewer sources
SUPPLY
NETWORKS
Market Competitiveness
Information sharing
and parenting system
spreads service
ideas
QUALITY of products
and services
The Total
Information System
(TIS)
Franchisee
relationships
New
product/service
development
Approach to
operations
improvement
PROCESS
TECHNOLOGY
DEVELOPMENT AND
ORGANISATION