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Operations Strategy – Production and Operations Management

In continucation of discussion on strategy, it is clear that operations/manufacturing strategy has to be an integral part of the overall organisational strategy. Without defining the mission and objectives of the organisation, checking up on the external and internal environment, performing the SWOT analysis for the organisation and then deciding on the basis for competing and/or key factors for success, no operations/manufacturing strategy can be formulated.

After having decided upon the mission, objectives and (as a part of it) the targeted market segment in which the company will compete, the company has to choose between the basic strategic competitive options of leadership in cost of product or service and differentiation of product or service.

Meaningful or relevant differentiation means being different and superior in some aspect of the business that has value to the customer. For instance, a wider product range or a functionality superior product or a superior after-sales-service. The main objective is to serving the customer better by applying various means.

Flexibility is to be present in

• Product design
• Product range or product mix
• Volumes
• Quick deliveries
• Quick introduction of new product/design
• Quick response to the any changes in the needs of the customer

Operations strategies

Thus, manufacturing/operations strategies, that one shouid complement with the fundamental organisational strategies, comprise of the customer oriented strategies of:

Improved Responsiveness should be in terms of

• minimising time to respond
• timely response
• accessibility through better locations, better geographical proximity, improved logistics, and better systems of communication
  a wider product/service choice through flexible operations/manufacturing system, reduced throughput times, reduced cycle times, reduced set-up times, flexible manpower, better trained manpower, flexible machines and improved product designs and processing capabilities
• increased proactively

Reduction in prices can be achieved through

• overall improvements in the production-delivery value chain
• better designs of products/services

Increase in qualntity to be produced, can be achieved through

• better skills, better knowledge, and better attitudinal orientation of all production-and-service providers
• improved technology
• reduced complexity and confusion
• reduced problem-generators

Hence the key success factors for a company are

• Product performance
• Technology leadership
• New product introduction
• Access to key decision-makers or key influences
• Delivery service

 

Cost Leadership

Cost leadership is another strategic competitive option available to a organization. Cost leadership focuses on giving the service or product at the minimum price in the industry. Cost leadership is obtained by relentless cost reduction at every stage of production or service delivery.

Similarly, the SWOT analysis can also be used and it indicate a ‘fit’ between the function and the strengths of the company

Five Forces Model

Another analysis that could be useful in devising an appropriate operations strategy is that of Five Forces Mode/ as presented by MichggJPorter

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