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1. MIBS a.a. 2013-2014
Advanced topics in Strategy a.a. 2013/2014 Master in International Business for Small and Medium Enterprises
Strategy, Objectives and Design of Operations

2. MIBS a.a. 2013-2014
What is the role of the operations function?
Operations as implementer
Operations implements strategy
Strategy
Operations
Operations drives strategy
Operations as driver
Strategy
Operations
Operations supports strategy
Operations as supporter
Strategy
Operations

3. MIBS a.a. 2013-2014
The 3 key attributes
of operations
Operations Contribution
Implementing
Supporting
Driving
be Dependable
Operationalise strategy
explain Practicalities
be Appropriate
Understand strategy
Contribute to decisions
be Innovative
provide Foundation of strategy
Develop long-term Capabilities
The Strategic Role of the Operations Function

4. MIBS a.a. 2013-2014
The four-stage model of Operations contribution
Internally neutral
STAGE 1
Correct the worst problems
Holding the organization back
Externally neutral
As good as the competitors
STAGE 2
Adopt best practice
Internally supportive
Clearly the best in the industry
STAGE 3
Link strategy with operations
Externally supportive
Redefining industry expectations
STAGE 4
Give an operations advantage
Increasing strategic impact
Increasing operations capabilities

5. MIBS a.a. 2013-2014
Externally
Objective is to minimize the
negative impact of
‘operations’.
In
ternally
Neutral
Supportive
Stage 1
Stage 2
Stage 4
Stage 3
Objective is for ‘operations’
to help the business
maintain parity with its
competitors.
Objective is for ‘operations’
to provide credible support
for the business strategy.
Objective is for ‘operations’
to provide a source of
competitive advantage.
How can the contribution of the operations function be assessed

6. MIBS a.a. 2013-2014
Broad strategic objectives for an operation applied to stakeholder groups
Society
Increase employment
Enhance community well-being
Produce sustainable products
Ensure clean environment
Customers
Appropriate product or
service specification
Consistent quality
Fast delivery
Dependable delivery
Acceptable price
Suppliers
Continue business
Develop supplier
capability
Provide transparent
information
Shareholders
Economic value from
investment
Ethical value from investment
Employees
Continuous employment
Fair pay
Good working conditions
Personal development

7. MIBS a.a. 2013-2014
The operations function can
provide a competitive advantage
Quality
Being RIGHT
Speed
Being FAST
Dependability
Being ON TIME
Cost
Being PRODUCTIVE
Being ABLE TO CHANGE
Flexibility

8. MIBS a.a. 2013-2014
Which enables you to do things cheaply (cost advantage)?
Which enables you to change what you do (flexibility advantage)?
Which enables you to do things quickly (speed advantage)?
Which enables you to do things on time (dependability advantage)?
Which enables you to do things right (quality advantage)?
What do the terms quality, speed, dependability, flexibility and cost mean in the context of operations?

9. MIBS a.a. 2013-2014
Minimum cost, maximum value
Minimum price, highest value
Fast throughput
Quick delivery
Reliable operation
Dependable delivery
Error-free processes
Error-free products and services
Ability to change
Frequent new products, maximum choice
Dependability
Cost
Speed
Quality
Flexibility
The benefits of excelling

10. MIBS a.a. 2013-2014
CHANGING what you do
a FLEXIBILITY advantage
Gives
Doing things CHEAPLY
a COST advantage
Gives
Doing things ON TIME
a DEPENDABILITY advantage
Gives
Doing things FAST
a SPEED advantage
Gives
Doing things RIGHT
a QUALITY advantage
Gives
An operation contributes to business strategy by achieving five "Performance Objectives"

11. MIBS a.a. 2013-2014
Hospital
Patients receive the most appropriate treatment
Treatment is carried out in the correct manner
Patients are consulted and kept informed
Staff are courteous, friendly and helpful
Bus company
The buses are clean and tidy
The buses are quiet and fume-free
The timetable is accurate and
user-friendly
Staff are courteous, friendly and
helpful
Automobile
plant
All assembly is to specification
The product is reliable
All parts are made to specification
The product is attractive and
blemish-free
Supermarket
The store is clean and tidy
Décor is appropriate and
attractive
Goods are in good condition
Staff are courteous, friendly and
helpful
Quality means different things in different operations

12. MIBS a.a. 2013-2014
“Quality” has several meanings, the two most common are……
Quality as the specification of a product or service
Eg. Lower Hurst Farm produces organic meat raised exclusively on its own farm
Quality as the conformance with which the product or service is produced
Eg. Quick service restaurants like McDonald’s buy less expensive meat
Quality

13. MIBS a.a. 2013-2014
Irrespective of a product or service’s specification quality, producing it so it conforms to its specification consistently brings benefits to any operation
Externally -- it enhances the product or service in the market, or at least avoids customer complaints
Internally -- it brings other benefits to the operation
It prevents errors slowing down throughput speed
It prevents errors causing internal unreliability and low dependability
It prevents errors causing wasted time and effort, therefore saving cost
Quality

14. MIBS a.a. 2013-2014
Depend- ability
Flexibility
Quality
Speed
Cost
External and internal benefits
On-specification products and services
Quality

15. MIBS a.a. 2013-2014
Hospital
The time between requiring treatment and receiving treatment kept to a minimum
The time for test results, X-rays, etc. to be returned kept to a minimum
Bus company
The time between customer setting out on the journey and reaching his or her destination kept to a minimum
Automobile
plant
Minimizing the time between dealers requesting a vehicle of a particular specification and receiving it
Minimizing the time to deliver spares to service centres
Supermarket
Minimizing the time for the total transaction of going to the supermarket, making the purchases and returning
The immediate availability of goods
Speed means different things in different operations

16. MIBS a.a. 2013-2014
Speed again has different interpretations, externally and internally
Externally – it means the elapsed time between a customer asking for a product or service and getting it (in a satisfactory condition)
It often enhances the value of the product or service to customers
Internally – it brings other benefits to the operation:
It helps to overcome internal problems by maintaining dependability
It reduces the need to manage transformed resources as they pass through the operation, therefore saving cost
Speed

17. MIBS a.a. 2013-2014
Depend- ability
Flexibility
Quality
Speed
Cost
External and internal benefits
On-specification products and services
Short delivery lead-time
Speed

18. MIBS a.a. 2013-2014
Hospital
Proportion of appointments which are cancelled kept to a minimum
Keeping appointment times
Test results, X-rays, etc. returned as promised
Bus company
Keeping to the published timetable at all points on the route
Constant availability of seats for passengers
Automobile
plant
On-time delivery of vehicles to dealers
On-time delivery of spares to service centres
Supermarket
Predictability of opening hours
Proportion of goods out of stock kept to a minimum
Keeping to reasonable queuing times
Constant availability of parking
Dependability means different things in different operations

19. MIBS a.a. 2013-2014
Externally -- it enhances the product or service in the market, or at least avoids customer complaints
Internally -- it brings other benefits to the operation
It prevents late delivery slowing down throughput speed
It prevents lateness causing disruption and wasted time and effort, therefore saving cost
Dependability

20. MIBS a.a. 2013-2014
Depend- ability
Flexibility
Quality
Speed
Cost
External and internal benefits
On-specification products and services
Short delivery lead-time
Reliable delivery
Dependability

21. MIBS a.a. 2013-2014
Flexibility has several distinct meanings but is always associated with an operation’s ability to change
Change what ?
The products and services it brings to the market – Product/service flexibility
The mix of products and services it produces at any one time – Mix flexibility
The volume of products and services it produces – Volume flexibility
The delivery time of its products and services – Delivery flexibility
Flexibility

22. MIBS a.a. 2013-2014
Hospital
Introducing new treatments
A wide range of treatments
The ability to adjust the number of patients treated
The ability to reschedule appointments
Bus company
The introduction of new routes and excursions
A large number of locations served
The ability to adjust the frequency of services
The ability to reschedule trips
Automobile
plant
The introduction of new models
A wide range of options
The ability to adjust the number of vehicles manufactured
The ability to reschedule manufacturing priorities
Supermarket
The introduction of new goods
A wide range of goods stocked
The ability to adjust the number of customers served
The ability to get out-of-stock items
Flexibility means different things in different operations

23. MIBS a.a. 2013-2014
Flexibility
Depend- ability
Flexibility
Quality
Cost
External and internal benefits
On-specification products and services
Short delivery lead-time
Reliable delivery
Speed
Frequent new products/services
Wide range
Volume and delivery changes

24. MIBS a.a. 2013-2014
Hospital
Bus company
Automobile
plant
Supermarket
Staff costs
Technology and facilities costs
Bought-in materials and services
Technology and facilities costs
Staff costs
Staff costs
Staff costs
Technology and facilities costs
Technology and facilities costs
Bought-in materials and services
Bought-in materials and services
Bought-in materials and services
Cost means different things in different operations

25. MIBS a.a. 2013-2014
The cost of producing products and services is obviously influenced by many factors such as input costs, but two important sets are…..
The 4 V’s volume
variety
variation
visibility
The internal performance of the operation at
quality
speed
dependability
flexibility
Cost

26. MIBS a.a. 2013-2014
External and internal benefits
Depend- ability
Flexibility
Quality
Cost
On-specification products and services
Short delivery lead-time
Reliable delivery
Speed
Frequent new products/services
Wide range
Volume and delivery changes
Low price, high margin, or both
Cost

27. MIBS a.a. 2013-2014
Polar diagrams are used to indicate the relative importance of each performance objective to an operation or process
They can also be used to indicate the difference between different products and services produced by an operation or process
Polar diagrams

28. MIBS a.a. 2013-2014
Cost
Quality
Flexibility
Dependability
Speed
Taxi
service
Bus
service
Polar diagrams for a taxi service versus a bus service

29. MIBS a.a. 2013-2014
Key Terms Test
Quality
There are many different approaches to defining this. We define it as consistent conformance to customers’ expectations.
Speed
The elapsed time between customers requesting products or services and receiving them.
Dependability
Delivering, or making available, products or services when they were promised to the customer.
Flexibility
The degree to which an operation’s process can change what it does, how it is doing it, or when it is doing it.
Product/service flexibility
The operation’s ability to introduce new or modified products and services.

30. MIBS a.a. 2013-2014
Key Terms Test
Mass customization
The ability to produce products or services in high volume, yet vary their specification to the needs of individual customers or types of customer.
Productivity
The ratio of what is produced by an operation or process to what is required to produce it, that is, the output from the operation divided by the input to the operation.