Operations Strategy 2 - Reconciliation

How should operations contribute to the business

• • By reducing costs
  • By increasing customer satisfaction by improving quality, responsive to needs, flexible regarding customization, dependable supply,
  • Should reduce the amount of investment (capital employed)
  • It should provide the capabilities for future innovation

!! The Content and Process of Operations Strategy Contect is the the decisions or elements of op strategy. priority of performance objectives, decide on plansnand policies which determine the overall approach. The QDFCS. Note of Flexibility this can range flexibility and response flexibility. Content deciosn areas -

• • Capacity -
  • Supply
  • Process Technology
  • Development and Org

Process is the way the strategy is formulated. How it persues its reconcilaition. Like frameworks, implementation methodologies.

• • Fit (alignment)
  • Sustaniability (Fit over time)
  • Risk

There is a significant overlpa between the process and content

!!Operation Strategy matrix This reconciles the performance objectives Speed Flexibility, Cost, Dependability and Quality with the org's capabilities Capacity, Supply Network, Process Technology and Development and Organization to determine its Operations Strategy. The Performance objectives aid Market Competitiveness and the Capabilities predicate the Resources Usage. (Note that the Q,S,D,C,F performance objectives could be replaced with actual market requirements i.e. Food Quality New Product Intro

• • Market requirements are changing all the time and its unlikely that a business is going to achieve perfect reconciliation

[img[Matrix|http://www.warwick.ac.uk/~bsscr/images/mod9_matrix.gif]]

The Strategy Matrix does not provide answers. It is a descriptive device that allows understanding and debate about how strategy might change

The process of formulating strategies one must align the strategies within operations with in the context of Fit (alignment), Sustainability(competences) and Risk(uncertainty)

!!Trade-offs

Market requirements and resources change over time as well as how orgs attempts to do the reconcilaition process

e.g. VW Market changed over time

• Economic prosperity
• Competitive pressures changed
• Global mkt

Ops Changed over time

• Trying to obtain resources after the war\
• OPs became more systemized, larger. complex, inconnected network of locations

How strategy changed

• Minor changes - changing mrk positon - upwards from peoples car
• Then segmenting markets
• reducing cost base - Ops driving strategy
• buying skoda and seat

Emergent and Planned stratgies

Planned - Intended - deliberate - realised Emergent - Intended - unrealized - emergent - realized

Paradox Two things that should be divergent or add odd but both are true of false - have to live with it Dilemma Choosing between two good or bad alternatives - Close to buyers or customers, quality or low cost Trade-off The extent to which you choose between two requirements

The issue of trade-offs has been one of the most closely fought debates in operations strategy.

Broadly speaking, there are three schools of thought regarding trade-offs. The original school of thought derives from Skinner who was the first to point out that trade-offs were an important issue in operations strategy. He emphasized the point that trade-offs should be managed to reflect the company's overall strategy. In other words, achieving the right balance or positioning between various performance objectives is fundamental to operations strategy. The second school of thought was very much opposed to this idea. It emerged in the early 1980s under the influence Japanese manufacturing principles and the concept of continuous improvement. Put simply, it claimed that trade-offs were largely imagined, that the main objective of operations management was to be good at everything. Merely accepting that one aspect of performance must deteriorate if another is to be improved was, they claimed, at best unimaginative and at worst irresponsible. The final (and now largely accepted) school of thought is that yes, trade-offs do exist, but over time they can be overcome. This is the approach articulated by Hayes and Pisano and taken in the chapter. The illustration below indicates these three schools of thought using the kind of trade-off diagrams explained in the chapter.

[img[Matrix|http://www.warwick.ac.uk/~bsscr/images/mod3_graphs.gif]]

Trade Off Curves can be concave also - If the operation is configured to do one thing wll moving away from that would bring an immediate penalty without much of an improvment in the other performance objective.

There can be mutliple trade-offs i.e. Service V Cost V Cap Ex

Bibliography Skinner - Focused factory