MBA - MASTER OF BUSINESS
ADMINISTRATION
STRM046:
Managing Operations and the Supply Chain
Operations strategy
Dr Luciano Batista BSc MSc PhD MILT
Senior Lecturer in Operations Management
Member of CELAS Centre for Excellence in Logistics and Supply Chain
Member of the Chartered Institute of Logistics and Transport UK
Editorial Member of the International Journal of Supply Chain and Operations Resilience
Key operations questions
What is strategy and 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 an operations strategy be put together?
Operations strategy at Ryanair
Source: Slack et al. (2010)
1. What do they have to be good at to compete in their
markets?
2. How do their operations help them to achieve this?
Operations strategy at Ryanair
Operations strategic
decisions
Stripped down service
One technology
Cheap airport
locations
Fast turnround
Ryanair
Market
requirements
Low prices
Reliability
Basic service
Understanding strategy
What is strategy?
Definition of the future direction and actions of a company
defined as approaches to achieve specific objectives. It is about
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
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.
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.
How is operations strategy different to
operations management?
The time
scale is
longer
Demand
Short-term
for example,
capacity decisions
1-12 months
Operations strategy
Long-term
for example, capacity
decisions
Demand
Operations management
1-10 years
How is operations strategy different to
operations management?
Operations management
Micro level of the process
The level of
analysis is
higher
Operations strategy
Macro level of the total operation
How is operations strategy different to
operations management?
Operations management
Detailed
For example.....
The level of
aggregation
is higher
Number of customer orders
on a specific day
Operations strategy
Aggregated
For example.....
Evolution of customer
orders over the last 12
months
How is operations strategy different to
operations management?
Operations management
Concrete
The level of
abstraction
is higher
For example
How do we improve our
purchasing procedures?
Operations strategy
Philosophical
For example
Should we develop
strategic alliances with
suppliers?
The 4 stage model of operations contribution
Increasing strategic impact
Redefining
industry
expectations
STAGE 4
Give an
Operations
Advantage
Clearly the
best in the
industry
STAGE 3
Link strategy
with operations
STAGE 2
Adopt best
practice
As good as
competitors
Holding the
organisation
back
STAGE 1
Correct the
worst problems
Internally
neutral
Based on Hayes &
Wheelwright
framework
Driving
strategy
Supporting
strategy
Implementing
strategy
Externally
neutral
Internally
supportive
Increasing operations capabilities
Externally
supportive
The four perspectives on operations strategy
Top - down
Perspective
What the business
wants operations to
do
Operations
resources
Perspective
What operations
resources can 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
Top-down and bottom-up perspectives of
strategy
Corporate strategy
Business strategy
Operations strategy
Emergent sense of what the
strategy should be
Operational experience
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
How to contribute to the
strategic objectives?
How to manage the
functions resources?
Skills of functions staff
Current technology
Recent performance of the
function
Functional
strategy
Sales
volume
The effects of the product / service life cycle
Time
Introduction
Growth
Maturity
Decline
Slow growth in
sales
Rapid growth in
sales volume
Sales slow and
level off
Market needs
largely met
Customers
Innovators
Early adopters
Bulk of market
Laggards
Competitors
Few/none
Increasing
numbers
Stable number
Declining
numbers
Customization
or frequent
design changes
Increasingly
standardized
Emerging
dominant types
Possible move to
commodity
standardization
Volume
Variety of
product/
service
design
Different competitive factors imply different
performance objectives
Competitive factors
If the customers value these ...
Performance objectives
Then, the operations will need to
excel at these ...
Low price
Cost
High quality
Quality
Fast delivery
Speed
Reliable delivery
Dependability
Innovative products and services
Flexibility (products/services)
Wide range of products and services
Flexibility (mix)
The ability to change the timing or
quantity of products and services
Flexibility (volume and/or delivery)
Mintzbergs concept of emergent strategy
Intended
Strategy
Unrealized Strategy
Deliberative
Strategy
Realised
Strategy
Emergent
Strategy
An implementation agenda is needed
When to start?
Where to start?
How fast to proceed?
How to co-ordinate the
implementation programme?
MBA - MASTER OF BUSINESS
ADMINISTRATION
Thank you
Dr Luciano Batista BSc MSc PhD MILT
Senior Lecturer in Operations Management
