Operation Management

1. OPERATIONS
MANAGEMENT
STRATEGY

2. TOPICS
II. STRATEGY
A. Introduction
B. Operations and Supply
Strategy

3. II. STRATEGY
A. Introduction
The word ‘strategy’ comes from the
ancient Greek word ‘Strategos’, meaning
‘the art of the General’.
In ancient Greece, the term Strategos
was used in military science and implied
the plan to win a battle. However, in
business, strategies are more about
understanding the competition and
preparing a plan to match/surpass the
potential of the rivals.

4. STRATEGY
 Strategy is the direction and
scope of an organization over the
long-term.
 It helps achieve an advantage for
the organization through its
configuration of resources within a
challenging environment, to meet
the needs of markets and fulfill
stakeholder expectations.

5. FEATURES OF STRATEGY
1
Specialized
plan to
outperform
the
competitors.
2
Details
about how
managers
must
respond to
any change
in the
business
environment
.
3
Redefines
direction
towards
common
goals.
4
Reflects the
concern to
effectively
mobilize
resources.
5
Maximizes
the
organization’
s chances to
achieve the
set
objectives.

6. SSSSSSSISS SS DISSSSSNS LSSSLS OS SUSINSSS
 Corporate Strategies – These are also
explicitly mentioned in the organization’s
Mission Statement. They involve the overall
purpose and scope of the business to help it
meet the expectations of stakeholders. These
are important strategies due to the heavy
influence of investors. Further, corporate
strategies act as a guide for strategic
decision-making throughout the business.
6

7. SSSSSSSISS SS DISSSSSNS LSSSLS OS SUSINSSS
 Business Unit Strategies – These are more
about how a business competes successfully
in a particular market. They involve strategic
decisions about:
-Choosing products
-Meeting the needs of the consumers
-Gaining an advantage over the competitors
-Creating new opportunities, etc.
7

8. SSSSSSSISS SS DISSSSSNS LSSSLS OS SUSINSSS
 Operational Strategies – These are about
how each part of the business is organized to
deliver the corporate and business unit level
strategic direction. Therefore, these strategies
focus on the issues of resources,
people, processes, etc.
8

9. B. OPERATIONS
AND SUPPLY
STRATEGY
9

10. OBJECTIVES:
• Operations and Supply Strategy
• Competitive Dimensions
• Order Qualifiers and Winners
• Strategy Design Process
• A Framework for Manufacturing Strategy
• Service Strategy Capacity Capabilities
• Productivity Measures

11. WHAT IS OPERATIONS AND SUPPLY
STRATEGY?
Operations and supply strategy is
concerned with setting broad policies and
plan for using the resources of a firm to
best support its long-term competitive
strategy.

12. COMPETITIVE DIMENSIONS
• Cost or Price
- Make the Product or Deliver the Service Cheap
• Quality
- Make a Great Product or Deliver a Great Service
• Delivery Speed
- Make the Product or Deliver the Service Quickly
• Delivery Reliability
- Deliver It When Promised
• Coping with Changes in Demand
- Change Its Volume
• Flexibility and New Product Introduction Speed
- Change It
• Other Product-Specific Criteria
- Support It

13. DEALING WITH TRADE-OFFS
• For example, if we reduce costs by
reducing product quality
inspections, we might reduce
product quality.
• For example, if we improve
customer service problem solving
by cross-training personnel to deal
with a wider-range of problems,
they may become less efficient at
dealing with commonly occurring
problems.

14. ORDER QUALIFIERS AND
WINNERS
• Order qualifiers are the basic
criteria that permit the firms
products to be considered as
candidates for purchase by
customers.
• Order winners are the criteria
that differentiates the products
and services of one firm from
another.

15. OPERATIONS AND SUPPLY STRATEGY FRAMEWORK

16. WHAT IS PRODUCTIVITY?
Productivity is a common
measure on how well
resources are being used. In
the broadest sense, it can be
defined as the following ratio:
Outputs
Inputs

17. TOTAL MEASURE
PRODUCTIVITY
Total Measure Productivity = Outputs
Inputs
or
= Goods and services produced
All resources used

18. PARTIAL MEASURE
PRODUCTIVITY
Partial measures of productivity =
Output or Output or Output or Output
Labor Capital Materials Energy

19. MULTIFACTOR MEASURE
PRODUCTIVITY
Multifactor measures of productivity =
Output
Labor + Capital + Energy
or
Output
Labor + Capital + Materials

20. EXAMPLES OF PRODUCTIVITY
MEASUREMENT
You have just determined that your service employees
have used a total of 2400 hours of labor this week to
process 560 insurance forms. Last week the same crew
used only 2000 hours of labor to process 480 forms.
Which productivity measure should be used?
Answer: Could be classified as a Total Measure or Partial
Measure.
Is productivity increasing or decreasing?
Answer: Last week’s productivity = 480/2000 = 0.24, and
this week’s productivity is = 560/2400 = 0.23. So,
productivity is decreasing slightly.

21. Exhibit 2.7 (Productivity measures)
Input and Output Production Data($) Product Measure Examples
Output Total Measure
Multifactor measures:
Total outputs =
Input
Partial measures
Total inputs =
1. Finished units $10,000 0.89
2. Work in process $2,500
3. Dividends $1,000
4. Bonds
5. Other income 4.28
$13,500
3.17
1. Human $3,000
2. Material $153
3. Capital $10,000 25.00
4. Energy $540 18.52
5. Other expenses $1,500
$15,193

22. THANK YOU
FOR
LISTENING!!!