MB0044 Slides Unit 03

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MB0044-Production and Operations Management

Unit-3 Operations Strategy

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Program : MBA

Semester : II

Subject Code : MB0044

Subject Name : Production and Operations Management

Unit number : 3

Unit Title : Operations Strategy

Lecture Number : 3

Lecture Title : Operations Strategy

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MB0044-Production and Operations Management

Unit-3 Operations Strategy

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Production & Operations Management

Objectives:

After studying this unit, you should be able to:

• Define operations strategy

• Outline the role of operations strategy as a competitive weapon

• Explain the development of operations strategy

• List the elements of operations strategy

• Explain competitive priorities and manufacturing strategies

• Describe global strategies

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MB0044-Production and Operations Management

Unit-3 Operations Strategy

Lecture Outline

• Introduction

• Operations Strategy(OS)

• OS as a Competitive Weapon

• Developing OS

• Elements of OS

• Product Life Cycle

• Competitive Priorities

• Production Systems

• Manufacturing Strategies

• Global Strategies

• Summary

• Check Your Learning

• Activity

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Unit-3 Operations Strategy

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Introduction

Operations strategy (OS) is a set of decisions taken across the organisation that help the organisation in the implementation of its competitive business strategies. OS links an organisation’s long-term and short-term operational decisions to its corporate strategy. OS are normally developed at three levels of operations namely: • Corporate level • Business level • Functional level

In this session, you will learn the importance of OS, how OS acts as a

competitive weapon, the development and elements of OS and the stages of

a product life cycle. You will also become familiar with the basic competitive

priorities, the different production systems and strategies adopted by

manufacturing companies, and the global strategies of organisations.

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Unit-3 Operations Strategy

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Operations Strategy(OS)

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Operations strategy is a long-range business plan for the company’s

products and will provide a road map for the operational functions to be

pursued.

The strategic decisions include:

The capacity to be built into the production system

The type of processes and manufacturing technology to be adopted

The nature of products to be produced

The type of material flow

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Unit-3 Operations Strategy

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Competitiveness is how effectively an organisation meets the needs of its consumers as compared to its immediate competitors. The competitive weapons used by an organisation are:

OS as a Competitive Weapon

Competitive weapons

Product expertise

Quick delivery

Flexibility in production

Low cost production and process

Product variety and product mix

Quality

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Unit-3 Operations Strategy

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Operations strategy is developed under the umbrella of the corporate strategy. The below figure shows the factors that go into the operations strategy and shows the link between the corporate, business, and the competitive priorities under the operations strategy.

Developing OS

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Unit-3 Operations Strategy

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Elements of OS

The six elements of operations strategy are:

Designing of the production system

Facilities for production and services

Product or service design and development

Technology selection, development, and process development

Allocation of resources

Focus on facilities planning

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Unit-3 Operations Strategy

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Any product designed and introduced into the market has its own life

cycle. The various stages of life cycle are:

Product Life Cycle

Decline stage

Maturity stage

Growth stage

Introduction stage

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Unit-3 Operations Strategy

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Competitive Priorities

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Operations strategy reflects the long-term goals of an organisation in its corporate strategy. To achieve good results, a clear understanding of the operating advantages and a good cross functional coordination between functional areas of marketing, production, finance, and human resources departments are required. Operating advantages depend on its processes and competitive priorities considered while establishing the capabilities. The basic competitive priorities are:

Cost

Quality

Time

Flexibility

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MB0044-Production and Operations Management

Unit-3 Operations Strategy

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Production Systems

There are many types of competitive priorities for processes used in

the manufacturing of products. The manufacturing industry adopts

systems based on demand.

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The production systems practised are

Batch production

Mass production

Customised production

Assemble products, test them, and supply

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Unit-3 Operations Strategy

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Manufacturing Strategies

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Manufacturing strategies adopted are decided by the operations manager. The manufacturing strategies differ from industry to industry and the applicable situation’s demand and supply. The following are the three dominant manufacturing strategies:

• Ensures immediate delivery of the products, thereby minimising the delivery times

Make-to-stock

• Involves assembly processes, fabrication processes, painting, cleaning, etc

Assemble-to-order

• Gives a higher degree of customisation, one of the major competitive priority Make-to–order

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Unit-3 Operations Strategy

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Global Strategies

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A global strategy pursued by organisations at the corporate level may

include buying foreign parts or services and combat traditional

domestic competitions.

Strategic alliance is an agreement between the two parties as joint

partners to promote the products. This alliance may be in any form,

but the widely accepted are:

Collaboration

Joint venture

Technology transfer and Licensing

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Summary

• Operations strategy (OS) is a set of decisions taken across the organisation that help the organisation in the implementation of its competitive business strategies.

• Operations strategy is developed under the umbrella of the corporate strategy.

• The six elements of operations strategy are: Designing of the production system, Facilities for production and services, Product or service design and development, Technology selection, development, and process development, Allocation of resources and Focus on facilities planning.

• The basic competitive priorities are: cost, quality, time and flexibility.

• The three dominant manufacturing strategies are: Make-to-stock, assemble-to-order and make-to-order.

• Strategic alliance is an agreement between the two parties as joint partners to promote the products.

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Unit-3 Operations Strategy

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Check Your Learning

1. What are the three levels of operations to develop organisational strategies?

Ans: The three levels of operations to develop organisational strategies are:

a. Corporate level

b. Business level

c. Functional level

2. List the various competitive weapons.

Ans: The various competitive weapons are:

a. Product/services expertise

b. Quick delivery

c. Flexibility in production

d. Low cost production and processes

e. Product variety and product mix

f. Quality

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Unit-3 Operations Strategy

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Assume that you own a chair production company which produces certain number of chairs every month. The demand for chairs increases and the company needs to produce more number of chairs. Which strategic alliance would you follow to fulfil the needs of the customer?

Activity

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