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OPERATIONS MANAGEMENT

OPERATIONS MANAGEMENT. Gulliver Maxi R. Roma, DBA. CONTENTS. OPERATIONS STRATEGY. OPERATIONS STRATEGY. Operations – the arrangement of resources that are devoted to the production and delivery of goods and services.

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OPERATIONS MANAGEMENT

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  1. OPERATIONS MANAGEMENT Gulliver Maxi R. Roma, DBA

  2. CONTENTS • OPERATIONS STRATEGY

  3. OPERATIONS STRATEGY Operations – the arrangement of resources that are devoted to the production and delivery of goods and services. Strategy – is the total pattern of the decisions and actions that influence the long term direction of the business.

  4. OPERATIONS STRATEGY STRATEGIC DECISIONS – those which are widespread in their effect, define the position of the organization relative to its environment and move the organization closer to its long term goals.

  5. OPERATIONS STRATEGY • OPERATIONS STRATEGY concerns the pattern of strategic decisions and actions which set the role, objectives and activities of the operation. OPERATIONS is NOT the same as OPERATIONAL OPERATIONS – are the resources that create products. OPERATIONAL – means day to day or detailed activities.

  6. OPERATIONS STRATEGY CONTENT versus PROCESS CONTENT - the “content” of operations strategy is the specific decisions and actions which set the operations role, objectives and activities. PROCESS – the “process” of operations strategy is the method that is used to make the specific content decisions.

  7. OPERATIONS STRATEGY TOP DOWN PERSPECTIVE What the business wants operations to do? OPERATIONS RESOURCES PERSPECTIVE What operations resources can do? OPERATIONS STRATEGY MARKET REQUIRMENTS PERSPECTIVE What the market position requires operations to do? BOTTOM UP PERSPECTIVE What day to day experience suggests operations to do?

  8. TOP DOWN PERSPECTIVE The influence of the corporate or business strategy on operations decisions. CORPORATE STRATEGY – the strategic positioning of a corporation and the businesses with it. BUSINESS STRATEGY – the strategic positioning of a business in relations to its customers, markets and competitors. It is subset of corporate strategy. FUNCTIONAL STRATEGY – the overall direction and role of a function within the business. It is a subset of business strategy.

  9. TOP DOWN PERSPECTIVE CORPORATE STRATEGY DECISIONS • What businesses to be in? • Allocation of cash to businesses. • How to manage the relationships between different businesses? BUSINESS STARTEGY DECISION • Defining the mission of the business (growth targets, ROI, profitability targets, cash generation) • Setting competitive objectives FUNCTIONAL STRATEGY DECISIONS The role of the function Translating business objectives into functional objectives Allocation of resources so as to achieve functional objectives Performance improvement priorities

  10. BOTTOM UP PERSPECTIVE The influence of operational experience on operations decisions. EMERGENT STRATEGY – a strategy that is gradually shaped over time and based on experience rather than theoretical positioning.

  11. BOTTOM UP PERSPECTIVE OPERATIONAL EXPERIENCE OPERATIONS STRATEGY EeEJDHshbfhbds Emergent sense of what the strategy should be

  12. THE MARKET REQUIREMENTS PERSPECTIVE The performance objectives that reflect the market position of an operation’s product or services. No operation that continually fails to serve its market adequately is likely to survive in the long run

  13. THE MARKET REQUIREMENTS PERSPECTIVE 1. CUSTOMER INFLUENCE ON PERFORMANCE OBJECTIVES – operations seeks to satisfy customers through developing their performance objectives. • COMPETITIVE FACTORS • Factors such as delivery time, product or service specifications, price, etc. that define customers requirements.

  14. THE MARKET REQUIREMENTS PERSPECTIVE COMPETITIVE FACTORS PERFORMANCE OBJECTIVES ( If the customers will value these..) (Then the operation will need to excel at these ..) • LOW PRICE COST • HIGH QUALITY QUALITY • FAST DELIVERY SPEED • RELIABLE DELIVERY DEPENDIBILITY • INNOVATIVE PRODUCTS FLEXIBILITY • WIDE RANGE OF PRODUCTS FLEXIBILITY

  15. THE MARKET REQUIREMENTS PERSPECTIVE 2. ORDER WINNING AND QUALIFYING OBJECTIVES ORDER WINNING – Aspect of competitiveness that differentiate (in a winning manner) the operation’s performance with competition. QUALIFYING FACTORS – aspect of competitiveness where the operation’s performance has to be above a particular level to be considered by the customers. LESS IMPORTANT FACTORS – competitive factors that are neither winning nor qualifying, performance in them does not significantly affect the competitive position of an operation.

  16. THE MARKET REQUIREMENTS PERSPECTIVE 3. THE PRODUCT/SERVICE LIFE CYCLE INFLUENCE ON PERFORMANCE OBJECTIVES Product life cycle – a generalized model of the behavior of both customers and competitors during the life of the product, it is generally held to have four stages: introduction, growth, maturity and decline. INTRODUCTION = flexibility and quality GROWTH = speed, dependability, quality MATURITY = cost, dependability DECLINE = cost

  17. OPERATIONS RESOURCES PERSPECTIVE • The inherent ability of operations processes and resources. RESOURCE BASED VIEW – the perspective on strategy that stresses the importance of capabilities (core competencies) in determining sustainable competitive advantage.

  18. THE PROCESS OF OPERATIONS STRATEGY THE PROCESS OF OPERATIONS STRATEGY USUALLY INCLUDES THE FOLLOWING: • A process which formally links the total organizations strategic objectives • The use of competitive factors (cost, quality, flexibility) • A step which involves judging the relative importance of the various competitive factors in terms of customers’ preference • An emphasis on operations strategy formulation as an iterative process

  19. THE PROCESS OF OPERATIONS STRATEGY

  20. THE PROCESS OF OPERATIONS STRATEGY

  21. THE FIVE Ps OF OPERATIONS STRATEGY FORMULATION • PURPOSE – the clarity that exists around the ultimate goal. • POINT OF ENTRY – the support that the process has from the hierarchy of the organization is central to implementation success. • PROCESS – any formulation must be explicit. Managers must actively think about the process in which they are part of. • PROJECT MANAGEMENT – it includes resource and time planning, controls, communication mechanism and reviews. • PARTICIPATION – the selection of staff to participate in the implementation process is critical.

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