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