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Chapter 2

Chapter 2. Operations Strategy and Competitiveness. What Is Operations Strategy? Operations Competitive Dimensions Strategic Fit: Fitting Operational Activities to Strategy Productivity Measurement How Does Wall Street Evaluate Operations Performance?. OBJECTIVES.

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Chapter 2

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  1. Chapter 2 Operations Strategy and Competitiveness

  2. What Is Operations Strategy? • Operations Competitive Dimensions • Strategic Fit: Fitting Operational Activities to Strategy • Productivity Measurement • How Does Wall Street Evaluate Operations Performance? OBJECTIVES

  3. What Is Operations Strategy? • The essence of strategy is in business activities (i.e., choosing to perform activities differently than rivals). • Most managers describe strategic positioning in terms of their customers. For example, “Southwest Airlines serves price- and convenience-sensitive travelers.” • Operations strategy is concerned with setting broad policies and plans for using the resources of a firm to best support its long-term competitive strategy.

  4. Operations 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.

  5. Cost Flexibility Delivery Quality The Notion of 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.

  6. Order Winners and Qualifiers: the Marketing and Operations Link • Order winners are the criteria that differentiates the products and services of one firm from another. • Order qualifiers are the basic criteria that permit a firm’s products to be considered as candidates for purchase by customers.

  7. Strategic Fit: Fitting Operational Activities to Strategy

  8. Productivity Measurement • Productivity is a common measure on how well resources are being used. It is also useful for monitoring improvement. In the broadest sense, it can be defined as the ratio: Outputs / Inputs. • Partial measure: for example • Multifactor: for example • Total Measure: for example • See exhibit2-7.xls for examples.

  9. How Does Wall Street Evaluate Operations Performance?

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