OPERATIONS STRATEGY

SUBMITTED TO, SUBMITTED BY,

DR MATHEW JOSEPH ALAN JOSEPH
ASSISTANT PROFESSOR,BIMS JERISH JAMES
Abstract

Many companies' operations strategies resemble roadmaps: they are very

detailed, yet poorly communicated across the organization and inflexible in
reacting to environmental changes. In contrast, an operations strategy which is
clearly outlined, widely understood and allows flexibility to adapt to changes in
the environment more closely resembles a compass. For a strategy to be
effective it must not only be appropriate (i.e., be well‐fitted to its competitive
environment) but it also must be communicated and widely understood
throughout the organization. This research examines the theoretical arguments
regarding why such strategic consensus is important and presents an
exploratory analysis of data from seven manufacturing plants. One of the
weaknesses of the extant literature on operations strategy is that the majority of
studies rely on responses provided by a single informant per company. This
study employs a combination of survey and case study methods to gather data
from seven manufacturing plants within the metalworking industry. The results
of the study suggest that there are strategic areas where there is substantial
disagreement between levels of the firm. Across the sample, operators tended to
rate investments in technology disproportionately higher than managers. In
addition to this systematic variation, individual case studies revealed that
operators and managers in some firms exhibited significant inconsistencies in
their manufacturing priorities, indicating a lack of strategic consensus.
Furthermore, the methodology employed in this study illustrates one approach
to obtaining more holistic, multiple respondent research on operations strategy.

Introduction

Operations/Organizational strategy is critical to operations management success

and make a business more competitive. Everything done in an organization has
to add value towards meeting the needs of the customers - and delivering
something of value. Through consistent checks and metrics against a desired
norm, a business can stay ahead of the competition and achieve success.
Strategies within a company's operations will ensure the customer is
continuously satisfied.

Corporate Strategy

The strategy of an organization is based on what is being produced and who it is

sold to. Combined with the value that the company adds, these factors governs
the processes on a continuous basis. These processes contain customers,
suppliers, and internal departments - such as finance, human resources, and
operations. Corporate strategy involves:
 1. Mission Statement
2. External Environment
3. Distinctive Competencies
4. Competitive Priorities

Mission Statement

The Mission Statement depicts the direction and purpose of the organization.
Not all businesses follow through with their mission statement. In this case,
their mission statement is more of a vision - something that the organization
intends to do. A vision references desire and thought - but a mission is a defined
leadership through goals and priorities.

Goals are qualitative and general within the context of a mission statement.
They are linked to priorities, but not usually money. Mission statements
generally discuss the product of the company, the customers, the company's
differentiation, and the culture within the organization. In fact, mission
statements are culture specific.

An example mission statement may be "Our mission is to allow our customers

to grow their own businesses through our quality software services that we
provide at high quality and low cost with the customer's business systems in
mind."

The mission statement should take into account the company's products,
services, markets, values and concern for public image. The wording should
convey a sense of priorities in how products and services are delivered. The
statement also includes how the organization separates itself from other
organizations of its kind.

So what does the mission statement do for the bottom line other than ensure
consistency and direction? A study conducted by Watson/Wyatt indicated,
"Companies whose employees understand the mission enjoy 29% greater return
than other firms." A Workplace Employee Insight Survey states "75% of
employees do not think their company’s mission statement has become the way
they do business."

External Environment

The world has varying cultures, values and perspectives. All these differences
make it a challenge to manage operations in a planned and consistent way.

Regarding cultures, international events such as disease, weather, tariffs, trade

impositions, environmental standards, and terrorist attacks require contingency
planning for organizations. Organizations also need to be prepared for the long
term impacts. Issues that can be planned for (such as tariffs, trade impositions,
and environmental standards) need to be understood and integrated into
strategic efforts. However, reading the news might help in this type of macro
planning.

In the technical community, innovations will arise and will impact the
competitive advantage. Likewise, your company's innovation impacts the
competitive advantage of other companies.

A good way to mitigate any threats to competitive advantage is through

business partnerships. These will help overcome international issues and will
allow your company to leverage their competitive advantage when delivering
value to your customer. Additionally, this might help to overcome any location-
based challenges. An inclusive corporate can help mitigate location-based
challenges as well. Partnering with high-performing companies will help to
persist high productivity levels.

There are a number of different ways to get involved in a partnership.

Basic collaboration involves just doing for another business what they are not
good at - or vise versa.
A Joint Venture is a more contractual collaboration involving defined roles and
sharing of responsibilities.
Licensing allows your company to sell the products from another company to
your customers.
Changing your business's location may bring you closer to a customer.

Distinctive Competencies

Distinctive Competencies are how resources are managed to increases value of

goods and services provided to customer. These are the basis of strategies
regarding aspects such as workforce, technologies, quality assurance, capacity,
location, inventory, facilities, and equipment. Knowing your organization's
distinctive competencies increases the probability of success.

When employees are aware of the company's distinctive competencies, they will
engineer more innovative products, reach new customers, utilize supply chain
and be more efficient and productive. Where the company lacks, other
companies can be found to partner with to gain competencies.

Competitive Priorities

Competitive priorities come from understanding markets and customers and a

strategic perspective. Your company must know what they really like, what is
important to them, what is of particular value, who are the competitors and what
are they are offering. This body of knowledge is often called a “needs
assessment. Customers have different priorities and their needs can change
rapidly based on environmental conditions.

Competitive Priorities lead to operating advantages in providing goods and

services to satisfy customers. Internal processes are built with these priorities in
mind such that customers can efficiently determine the products satisfy their
needs. When priorities are define, processes, supply chain and distinctive
competencies are strategically built around them to be as competitive as
possible.

Priorities are connected and balanced to meet the needs of the customer. Cost
can be increased is speed is priority. Quality can decrease if cost decreases.
These are examples of the variation. Examples of competitive priorities are:

Cost

Often times, providing lower cost product and services is a key to success.
Given enough time a competitor that will try to produce the same value for a
lower cost. Management should look to get the optimum levels of productivity
with the least amount of waste in order to drive down cost. Buying input
materials and services more cheaply will also certainly drive down cost.

Quality

Quality assurance can be a distinctive competency if quality is a competitive

priority as well. Quality is how consistently products and services meet
customer expectations. Not every customer wants the product the same way, but
quality assurance ensures it is delivered within requirements. Quality can be
seen by the customer as high performance design and consistency.

High-performance design is the level of operational performance. Quality and

performance can include tight tolerances of measurement, durability, safety, or
courteousness.

Consistent quality is the second component of quality. It measures the

frequency that the product or service meets specifications. The customer
expects the same quality with each order. The customer wants and expects on a
consistent basis with the expectation of performance.
Time

Delivery or lead-time is the measurement period between when a customer

places an order to when it is received by that customer. Something like fine
jewelery would have a longer lead time than a block of wood. On-time delivery
is the frequency in which the time of the delivery is expected and realized.
While different companies have different standards for timeliness, what is
important are the promises made and the expectations of customers in having
those promises made.

Development Speed is a measurement of how fast a new service/product is

brought to market. This includes the time from idea through design and then
production - such that it is available to your customer base. When competition is
high, speed is crucial. When time is a factor, supply chain loyalty becomes less
of an issue.

Flexibility

Flexibility is how quickly and efficiently the company can transition to satisfy
the customers’ needs.

Customization is the ability to satisfy the unique requirements of a customer. It

allows the company to make changes upon customer request. Operating systems
account for flexibility to accommodate the customer. The degree of
customization is a valuable competitive advantage.

Volume Flexibility is the ability to change the rate of production to satisfy

varying degrees of volume demand. This requires management of distinctive
competencies such as capacity, inventory, work force and quality assurance to
meet that demand.

Review of literature

“Operations management may be defined as a systematic approach to address

all the issues pertaining to the transformation process that converts some inputs
into output that are useful and could fetch revenue to the organizations.” It
attempts to balance cost with revenue to achieve highest operating profits
possible. What operation management department do is, that they design a
method by which inputs is converted into output that is most beneficial to the
organization Operations strategy is the total pattern of decisions which shape
the long-term capabilities of any type of operations and their contribution to the
overall strategy. Companies and organizations making products and delivering,
be it for profit or not for profit, rely on a handful of processes to get their
products manufactured properly and delivered on time. Each of the process acts
as an operation for the company. To the company this is essential. That is why
managers find operations management more appealing. We begin this section
by looking at what operations actually are. Operations strategy is to provide an
overall direction that serves the framework for carrying out all the
organization’s functions.

Core operations strategy

Corporate Strategy and Cross-Functional Interactions

Corporate strategies involve seeing a company as a system of interconnected

parts. Just as the muscles of the heart depend on brain functions in a human
body, each department in a company depends on the others to stay healthy and
achieve desired outcomes. The additional core strategies that a company uses
should support the corporate strategy and use cross-functional interactions.

Customer-driven Strategies

Operational strategies should include customer-driven approaches to meet the

needs and desires of a target market. To do so, a company must develop
strategies that evaluate and adapt to changing environments, continuously
enhance core competencies and develop new strengths on an ongoing basis.
When evaluating environments, a company should monitor market trends to
take advantage of new opportunities and avoid possible threats.

Developing Core Competencies

Core competencies are the strengths and resources within a company. While
core competencies can vary by industry and business, they can include having
well-trained staff, optimal business locations and marketing and financial
expertise. By identifying core competencies, a company can develop processes
such as customer satisfaction, product development and building professional
relationships with stakeholders.

Development of Competitive Priorities

The development of competitive priorities comes from the creation of a

corporate strategy, market analysis, defining core processes and conducting a
needs analysis. To create competitive priorities, an organization evaluates
operational costs, the quality of a product or service, the time it takes to develop
and deliver a good or service and the flexibility of a good or service with regard
to variety, volume and customization. Competitive priorities should include
being able to provide a quality product or service at a fair cost that consistently
meets the needs of a customer.

Product and Service Development

Strategies behind the development of products and services should consider

design, innovation and added values. When developing new customer products,
a company can decide to be a leader in introducing a new product or service,
wait for the introduction of innovations on the market to improve upon them or
wait to see if a company’s innovation is successful before moving forward.
When developing a service, companies should consider packaging it with
immediately observable and psychological benefits and support services. When
developing a good or service, a company should consider the wants of its
customers, how its stands against the competition and how its technical
measures relate to its customers’ needs.

Relevance of operations strategy

1. Due to several factors, the competitive dynamics will change and the
expectations of customers also change on account of this.

2. Organization needs a structural approach to scan the market and distil the
changing needs at the marketplace. Moreover, they also need a mechanism to
chalk out a plan for responding to these changes in the most effective way.

3. With the changes in the marketplace the competitive priorities for an

organization must also change. Organization need to tone their operations to
match with the competitive priorities.

Steps in operations strategy

Step 1: Pick Your Area of Focus. As you begin the process of developing a
vision for your operations, you should set the scope or area of focus. Are you
developing a vision for your overall organization or a specific functional area of
your operations?

Step 2: Pick Your Timeframe. Typical timeframe for an operational vision is

two to five years. This helps the organization get beyond the immediate
problems of the day, but stay within a realm that still can be understood.

Step 3: Remember Your Past Successes. When formulating an operational

vision, it is helpful to pause and recall past successes within the organization
Step 4: Write the First Draft. While this seems like the simplest part of the
exercise, special care should be exercised. When writing the draft, it is
particularly helpful to take a future orientation. In other words, position yourself
in the future and describe what you see rather than writing about what you hope
will happen in the future.

Step 5: Solicit Feedback and Input. Using care and consideration, select
appropriate individuals to give feedback on the vision you’ve developed. You
should seek those with solid experience and insights.

Step 6: Review and Revise. After soliciting feedback and input from others, it
is time to review your work and revise as necessary.

Step 7: Share the Vision. After the vision has been fully vetted, it is time to
make sure it is well communicated within the operations organization and
outside to other functional departments that depend on the input or output
requirements of the operations department.
,

CASE STUDY (FINDINGS & SOLUTIONS)

Introduction

Operations Strategy is an extremely important and valuable tool which is

mainly used in shaping long term vision, objectives and capabilities of the
operation and its contribution to overall strategy. The main reason why it is
important to make an appropriate strategy for the firm is because many
companies who were performing well in their business operation are now facing
so many problems which lead to lay off, downsizing and sometimes failure. So,
to avoid these kinds of obstacles which many operational businesses are facing,
a firm must adapt innovative operations strategy for their company.

Dresding Wilson, originally called Dresding Medical was founded by the Dr.
Laura Dresding in 1991. The Company was mainly known for supplying
medical equipment like cardiovascular and heart monitoring devices. After few
years the company started selling their own products which was produced in
their very own laboratory. The company’s main strategy was to make and sell
innovative products in the market. The company was doing very well because
they know how to use their ideas very well. In the past few years the company
managed to establish three division are The Technology Development, Dresding
Assurance and The Medical services. These popular divisions of the company
had tend to manage their business but at a certain point.

Statement of the problem

Dresding Wilson Company had exerted extra effort in order to compete with its
rivals. So in this case the Company came up with innovative ideas and plans
which were considered best compare to its competitors products. In this way the
company was performing well but in order to achieve success the Company
expanded their business and divided themselves into three. Without having
sufficient funds and few employees, the company was suffering a lot, because
the company decided to split up into the three without having adequate
knowledge of operating and managing large scale business in a very short
period of time. Secondly, the Company expanded too fast, and hired too many
staff for the production of newly designed technology which they failed to test
some subcomponents of the system, especially in the areas that were new to
them such as diagnostic software. Thirdly, they were unable to fulfill demands
of the market in the given time which leads to bad image in the market.
Unfortunately, in some amount of time the company managed to fulfill the
demands of the market and regained its title of leading medical equipment
manufacturer.

After having the sense of confidence and attitude towards business the
Company again took the step to launch a new brand-building initiative which
will emphasize the quality of its products in all major market called Dresding
Assurance. Apart from the sales growth and distributing their products in the
Asian market, The Company has also the fear of losing trust from their
customers it is because they’ve changed themselves to provide wide range of
medical products than concentrating on their main line of products which might
be a big problem for the company. More than that, they’re using the same
approach that was used in their Technology Development division.

On the other hand, The Company acquired Ryder Wilson Company which has
its own medical management activity. According the Dresding, merging with
Ryder Wilson was an asset rather than a liability but after some time The
Company realized that merging with Ryder Wilson lead to some problems like,
Ryder Wilson had created lots of publicity just at the time when outsourcing,
monitoring and surveillance activities were all hot topic in hospital
management. The Company found out that they are not only designing and
installing systems, but also arranging leasing agreements and they are also
providing agency staff and training programs with little or no experience. In this
case they are not pleasing the customers by their service which was being
provided by Ryder Wilson Company. Dresding Wilson Company was unaware
of the risks behind acquiring the Ryder Wilson Company, Now they are
challenge to deliver service and they are being forced to cut their costs of their
medical equipment in order to compete with in-house and other clinical service
companies.

Recommended Solutions

The Dresding Wilson Company has to follow specific kind of operational

strategy which will completely define their long term goals. The Company has a
clear goal at the beginning but when the Company started progressing, their
goals are becoming more complex and their strategy of operating the business
was slowly facing downwards after acquisition of Ryder Wilson Company
because they were oblivious about the challenges that they are going to
encounter after the acquisition. So, in order to overcome with this problem and
to achieve their goal, the company has to improve its five long-term
performance objectives i.e. quality, speed, dependability, flexibility and cost.
Secondly, the company has to fulfill its operational resources so that they will
have the knowledge to deliver their services on time. Thirdly, the Company
should also concentrate in their performance objectives in order to attain high
level of performance in the future. Lastly, The Company has to focus on their
particular area where they know they are performing poor than the rest. In this
case, it is clearly shown that they are poor in delivering services to customers
because the staff member had little or no experience in performing that job. So,
the first step will be they have to increase the performance level by increasing
quality as the conformance with which the product or service is produced. If this
level of performance are attained the company will surely be successful
company in future and will have the ability to compete with other clinical
service companies.

Case Conclusion

There are so many ways to accomplish operations strategy but sometimes many
companies don’t know how to strategize their operating system of doing
business. To deliver tangible and intangible products, every business has to
follow different operating steps in order to produce it in an efficient and
effective manner. So, it recommended that every business must have a powerful
operation strategy to achieve long term goals. When I worked in Goodyear
Philippines Inc. which was a Manufacturing Company I found out that they are
following different operations strategy time-to-time because they want to
produce innovative products which matches their customers’ expectations and
also help them to compete with their competitors in the market. Overall, It was a
great experience studying and learning in the class, I was extremely surprised
when I came to know about the operation being performed to produce numerous
kind cuisines for Singapore Airlines flights, and also the production process of
Foxconn Company was very innovative and they are using very good operation
strategy for their business.

CONCLUSION

An operations strategy is the structure upon which an organization determines

how it arranges and uses its resources in order to maintain a competitive
advantage. It is a formulated framework consisting of two elements. The
structural element contains components like location and size of the
organization, whereas the infrastructural element focuses more on aspects like
product quality control. A successful operations strategy will align and actualize
the organization’s business strategy. The operations function is responsible for
managing the resources needed to produce the company’s goods and services.
Technically, it is coming up with a strategy and contingency plan to execute the
plan effectively. The role of operations strategy is to provide a plan for the best
usage of resources in order to reach the objectives set in the corporate strategy.
These resources include employees, machines, technology and information. In
other words, operations strategy is the plan that specifies the design and use of
resources to support the business strategy. This includes the location, size and
type of facilities available as well as worker skills and talents required, use of
technology, special processes needed, special equipment and quality control
methods. The operations strategy must be aligned with the company’s business
strategy and enable the company to achieve its long-term plan.

Reference

www.wikepidiaoperationsstrategy.com

www.study.operationsstrategy.com