Lecture 4 MBF2213 Operations Management Prepared by Dr Khairul Anuar. L4: People in Operations

Transcription

1 Lecture 4 MBF2213 Operations Management Prepared by Dr Khairul Anuar L4: People in Operations 1

2 Lecture 3 MBF2213 Operations Management Prepared by Dr Khairul Anuar L3: Operations Strategy 2

3 Slack et al. s model of operations management 3

4 Key operations questions 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 operations strategy form the basis for operations improvement? How can an operations strategy be put together? 4

5 What is strategy? 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. 5

6 Strategic decisions 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. 6

7 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. 7

8 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? 8

9 Operations strategy at Flextronics Operations strategic decisions Industrial parks, with low cost but close locations and co-located suppliers Flextronics Market requirements Low costs Responsiveness Flexibility 9

10 Operations strategy at Ryanair Operations strategic decisions Stripped down service One technology Cheap airport locations Fast turnround Market requirements Low prices Reliability Basic service 10

11 The strategic role of the operations function The three key attributes of operations strategy Implementing Operations contribution Be dependable Operationalise strategy Explain practicalities Supporting Driving Be appropriate Understand strategy Contribute to decisions Be innovative Provide foundation of strategy Develop long-term capabilities 11

12 The 4 stage model of operations contribution 12

13 Demand Demand How is operations strategy different to operations management? Operations management Operations strategy The time scale is longer Short-term for example, capacity decisions 1 12 months Long-term for example, capacity decisions 1 10 years 13

14 How is operations strategy different to operations management? (Continued) Operations management Micro-level of the process Operations strategy Macro-level of the total operation The level of analysis is higher 14

15 How is operations strategy different to operations management? (Continued) Operations management Operations strategy The level of aggregation is higher For example: Detailed 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? 15

16 How is operations strategy different to operations management? (Continued) Operations management Operations strategy The level of abstraction is higher For example: Concrete How do we improve out purchasing procedures? Philosophical For example: Should we develop strategic alliances with suppliers? 16

17 The four perspectives on operations strategy Operations resources perspective What operations resources can do Top-down perspective What the business wants operations to do Operations strategy What day-to-day experience suggests operations should do Bottom-up perspective Market requirement perspective What the market position requires operations to do 17

18 The strategy hierarchy Key strategic decisions Influences on decision making Corporate strategy What business to be in? What to acquire? What to divest? How to allocate cash? Economic environment Social environment Political environment Company values and ethics Business strategy What is the mission? What are the strategic objectives of the firm? How to compete? Customer/market dynamics Competitor activity Core technology dynamics Financial constraints 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

19 Top-down and bottom-up perspectives on operations strategy can reinforce each other 19

20 Different competitive factors and performance objectives Competitive factors If the customers value these... Low price Performance objectives Then, the operations will need to excel at these... Cost High quality Fast delivery Reliable delivery Innovative products and services Wide range of products and services The ability to change the timing or quantity of products and services Quality Speed Dependability Flexibility (products/services) Flexibility (mix) Flexibility (volume and/or delivery) 20

21 The strategic role of the operations function The 3 key attributes of operations strategy Implementing Operations contribution be Dependable Operationalize strategy explain Practicalities Supporting Driving be Appropriate Understand strategy Contribute to decisions be Innovative provide Foundation of strategy Develop long-term Capabilities 21

22 Top-down and bottom-up perspectives of strategy Corporate strategy Business strategy Operations strategy Emergent sense of what the strategy should be Operational experience 22

23 The effects of the product/service life cycle 23

24 24

25 Some typical structural and infrastructural operations strategy decisions 25

26 Reconciling market requirements and operations resources Operations resources Market requirements What you HAVE What you DO What you WANT What you NEED in terms of operations capabilities to maintain your capabilities and satisfy markets from your operations to help you compete to compete in the market Strategic reconciliation 26

27 In operations improvement should achieve fit between market requirements and operations performance, but deviation from the line of fit between market requirements and operations performance can expose the operation to risk (1 of 2) 27

28 In operations improvement should achieve fit between market requirements and operations performance, but deviation from the line of fit between market requirements and operations performance can expose the operation to risk (2 of 2) 28

29 29

30 Nine-point performance scale For this product/service is achieved performance Better than competitors Same as competitors 1 - Consistently considerably better than our nearest competitor 2 - Consistently clearly better than our nearest competitor 3 - Consistently marginally better than our nearest competitor 4 - Often marginally better than most competitors 5 - About the same as most competitors 6 - Often close to main competitors Worse than competitors 7 - Usually marginally worse than main competitors 8 - Usually worse than most competitors 9 - Consistently worse than most competitors 30

31 The importance performance matrix 31

32 Strategic resources and sustainable competitive advantage Operations resources can give sustainable competitive advantage if they are Scarce Not very mobile Difficult to imitate Difficult to substitute for 32

33 The four stages of the process of operations strategy 33

34 The challenge of operations strategy formulation An operations strategy should pass the following questions Is it comprehensive? Is it coherent? Does it correspond with strategic objectives? Does it identify critical issues? 34

35 The challenge of operations strategy formulation An operations strategy should be: Appropriate Comprehensive Coherent Consistent over time 35

36 An implementation agenda is needed When to start? Where to start? How fast to proceed? How to co-ordinate the implementation programme? 36

37 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. 37