Operations Strategy - Process of Operations Strategy Implementation

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Operations Strategy 10:

Operations Strategy 10 Process of Operations Strategy – Implementation Ch 10 Slack & Lewis

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This chapter concerns the process of implementing operations strategy The process of achieving sustainable alignment of market requirements with operations resources The process of using substitutes for strategy The process of implementing operations strategy

What is implementation?:

What is implementation? Organizing of all activities involved in making the strategy work as intended It is important to consider the broad issues that implementation involves Purpose – The strategic content The more clarity that exists around the ultimate goal, the more likely it is that the goal will be achieved Point of entry - The organizational context The support the process has from within the hierarchy of the organization is central to implementation success

What is implementation?:

What is implementation? Process – The methodological context It is important that the managers who are engaged in putting operations strategies together actively think about the methodology that is being used Project management – The delivery context Devising and implementing operations strategy is itself project and needs to be managed as such – the basic disciplines of project management has to be followed Scope, time, cost, resources Participation – The operational context Selection of staff to participate in the implementation process is critical

Purpose – The strategic context:

Purpose – The strategic context It is important to understanding the current and intended market requirements and operations resource capabilities at the strategic level It is quite likely that the balance between market requirements and operations resource capabilities may not be maintained Market may require something that operations cannot deliver Operations may have capabilities that cannot be exploited in the market

Purpose – The strategic context:

Purpose – The strategic context Implementation risk There may be failures in achieving the fit between market requirements and operations resources – understanding and coping with these risks during implementation is important Operations risk is the potential for unwanted negative consequences from an operations related event Pure and speculative risk Controlling risk : Prevention strategies : To avoid negative consequences audit and identify causes of risk Mitigating strategies : Separate an event from negative consequences Recovery strategies This can involve a wide range of activities : from addressing an individual customer’s dissatisfaction (micro) to complete product recall or abandonment of service (macro)

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Implementing an operations strategy that involves moving from A to B means understanding current and intended market requirements and operations resource capabilities so that the extent and nature of the change can be assessed Line of fit A B Current market requirements Level/nature of market requirements Current resource capability Intended market requirements Intended resource capability Level/nature of operations resource capability Extent and nature of operations resource capability change Extent and nature of market requirements change

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Implementing a strategy that moves an operation from A to B may mean deviating from the ‘line of fit’ and therefore exposing the operation to risk External operational risk (Market needs exceeding current level of capability means risk of failing to satisfy the market) Internal operational risk (excess capability for current market needs means risk of unexploited capabilities) Level of market requirements Line of fit A B Level / nature of operations resource capability

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Line of fit B Pure & Speculative Risk : Pure risk has only negative consequences (A to C). Speculative risk can have both positive (A to B) and negative (A to D, or A to E) consequences Level/nature of market requirements Level/nature of operations resource capability Pure risk has only negative consequences A Speculative risk can have both positive and negative consequences C D E

Point of entry – Organizational context:

Point of entry – Organizational context Different organization structures have different attributes when it comes to implementing operations strategy Organizational design change to respond to the dual, and often conflicting, pressures of serving markets whose requirements are continually changing while preserving and extending the capabilities that enable them to differentiate from competitors Organization types (basic): Group resources together according to functional pupose Group resources together according to characteristics of the resources Group resources together according to the markets to serve

Point of entry – Organizational context:

Point of entry – Organizational context Forms of organization U-form (unitary form) : Function wise M-form : Product wise or Market wise Matrix form : Hybrid of function and market or product N-form (network form) Each is better in some aspect of implementation

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U-form organisations give prominence to functional groupings of resources Group headquarters Marketing Operations Finance Dept.A Dept.C Dept.B Dept.A Dept.C Dept.B Dept.A Dept.C Dept.B

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The M form separates the organisation’s resources into separate divisions Division A Division B Division C Group headquarters Marketing etc. Operations Marketing etc. Operations Marketing etc. Operations

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Matrix form structures the organisation’s resources so that they have two (or more) levels of responsibility Group headquarters Division A Division B Division C Marketing Operations Human resources Finance

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N form organisations form loose networks internally between groups of resources and externally with other organisations Organisation A headquarters Group A Group F Group D Group E Group C Group B Org D Org E Org B Org C

Process – Methodological context:

Process – Methodological context Why we require methodology or stage model Provides discipline for strategic thinking Comprehensiveness, coherence, correspondence and criticality Brings the concept in the forefront How, Why and What decisions are being made Makes communication easier Methodology concerns the relationship between operations strategy and operations management Implementation methodology should account for the costs of implementation

Process – Methodological context:

Process – Methodological context Terry Hill methodology Platt Gregory procedure

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Process choice Operations strategy Corporate objectives Marketing strategy How do products or services win orders? Step 1 Step 2 Step 3 Step 4 Step 5 Prof Terry Hill framework of operations strategy formulation Price Quality Delivery speed Delivery dependability Product/service range Product/service design Brand image Technical service Product/service markets and segments Range Mix Volumes Standardisation or customisation Innovation Leader or follower Growth Profit ROI Other ‘financial’ measures Process technology Trade-offs embodied in process Role of inventory Capacity, size, timing, location Functional support Operations planning and control systems Work structuring Payment systems Organisational structure Infrastructure

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Facilities Capacity Span of process Processes Human resources Quality Control policies Suppliers New products The existing operation What do we need to do to improve the revised operations strategy? What the market wants? Features Quality Delivery Flexibility Price Opportunities and threats The Platts–Gregory procedure How the operations performs Features Quality Delivery Flexibility Price Prioritisation based upon an assessment of relative competitive performance Understanding of the market position of the organisation Identify the capabilities of the organisation Developing a new operations strategy against the backdrop of market criteria

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Actual performance Planned implementation period Operations performance (Quality levels) Time The reduction in performance during and after the implementation of a new technology reflects ‘adjustments costs’ Planned performance Start of new technology implementation New technology planned to be on-stream Forecast performance ‘Adjustments costs’ : losses that could be incurred before the new technology is functioning as intended

Project management – Delivery context:

Project management – Delivery context A set of activities with a defined start point and a defined end state, which pursues a defined goal and uses a defined set of resources Program management Scope, Cost, Quality, Time, Resource Stakeholders (who have an interest in the process and outcome) – include them in the planning process Each stakeholder will have different view on the objective, which may conflict with other stakeholders

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Small implementation Large implementation Strategy similar to previous Affects part of the organisation Scale Uncertainty Complexity Relatively difficult implementation projects Implementation project difficulty is determined by scale, complexity and uncertainty Relatively easy implementation projects Affects all of the organisation Affects more than one organisation Strategy novel and ground breaking Strategy different from previous

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Stages in the project planning process Identify the activities in the project Adjust as necessary Estimate the times and resources for activities Identify the relationships and dependencies between the activities Identify time and resource schedule constraints Fix the schedule for time and resources Work breakdown structure for implementation project Gantt chart for implementation project Network techniques – PERT and CPM

Participation – Operational context:

Participation – Operational context Include people to overcome the resistance to change Allow them to influence the changes that would take place Helps in accessing their knowledge and experience Modes of user involvement Delivery mode : when knowledge of new resource is less Consultancy mode : when more user interaction is required Co-development mode : when levels of uncertainty are high Apprenticeship mode

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