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19 Cards in this Set
- Front
- Back
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What is Operations Strategy ?
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Operations Strategy is concerned with setting broad policies and plans for using firm resources to best support long-term competitive strategy.
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Operations strategy needs to support ...
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overall corporate strategy.
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Competitive Dimensions
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Cost
Quality (product & process) Delivery Speed Delivery Reliability Demand Management Variety Innovation |
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All of the competitive dimensions are important…
why not try to excel along every one? |
Trade-offs
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Trade-offs:
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Decisions that arise because of the inability of processes to excel simultaneously across all competitive dimensions.
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Order winners:
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Criterion that differentiates one firm from another.
Examples: Cost (Southwest Airlines), service quality (Ritz-Carlton Hotels), Flexibility (Dell) |
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Order qualifier:
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Criterion that permits the firm’s products to even be considered for purchase.
Example: basic quality necessary to be considered a good car (consumer reports). |
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Southwest Airlines’ overall corporate strategy is to
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“serve price- and convenience-sensitive customers.”
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Southwest Operations –
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low cost
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Walmart –
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low cost
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Dell –
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mass customization
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Ikea –
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affordable but sustainable
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Developing an Operations Strategy
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Segment the market according to the product group. Example: High-end vs. low-end consumers
Identify (a) product requirements, (b) demand patterns, (c) profit margins. Example: many components, seasonal, low demand, high profit margin. Determine the order winners and order qualifiers. Example: delivery speed (winner), cost (qualifier) Convert order winners into specific performance requirements. Example: Must deliver within 3 days |
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The next step is to analyze the process level…
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Define the complexity and volume of your product/service.
Define whether you offer few specific products/services or highly customized products/services. Determine product design, process design, supply chain design, supplier relations, capacity management plan & technology choice |
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Measuring whether the strategy is working
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Productivity is a common measure for how well a company is utilizing its resources
= outputs / inputs |
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Productivity measurement shows
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how well the company performs for a given level of inputs.
Partial measures may give more specific details about performance. output/labor output/capital output/material |
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The productivity index is a
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relative measure.
It has to be compared with something else: Benchmarking. Changes over time. The important thing is to be consistent in measurement! |
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Firms must trade-off _________ when defining operations strategy.
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competitive dimensions
This can be done by defining order winners and order qualifiers. |
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A Productivity Index can measure the ..
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relative performance between firms or products
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