Supply Chain Management

1 Operation Strategy

1. What is an operation strategy and how should operation reflect overall strategy?
2. What is the content of an operation strategy?
3. What are the four perspectives on operation strategy?
4. How do the market requirements influence the strategy?
5. Explain the performance objectives, and the decision areas and how they relate.
6. Explain the Operation strategy matrix and the use of it.

1. What is an operation strategy and how should operation reflect overall strategy?

• Strategy is it the path to achieve the enterprises overall goal.
  
• Operations strategy is the total pattern of decision that shape the long-term capabilities of any kind of operation and their contribution to the overall strategy. This is doing through the ongoing reconciliation of market requirements and operation resources.
  
• Operations strategy are governed by the decisions of that set the overall strategic direction of the organization.  It’s also called top-down approach. so, corporate strategy should be reflected in the strategies of each business unit, which should, in turn inform the strategy of each business function.
  

1. What is the content of an operation strategy?

The content of operations strategy is the building blocks from which any operations strategy will be formed. This includes performance objectives in prioritization. It also including an understanding of the structure and option available in the four decision areas of capacity, supply networks, process technology, and development and organization.

Performance objectives and decisions areas interact in a way that can be described by the operations strategy matrix. When devising an operation strategy, it is important to ensure that, in terms of the matrix, the strategy is comprehensive and has the critical intersection identified.

1. What are the four perspectives on operation strategy?

There is no overall agreement about what strategy means, there is no universal agreement on how operations strategy should be described.

1. Operations strategy is a top-down reflection of that the whole group or business wants to do.
2. Operations strategy is a bottom up activity where operations improvement cumulatively build strategy.
3. Operations strategy involves exploiting the capabilities of operation resources in chosen markets.
4. Operations strategy involves translating market requirements into operations decisions.

None of these four perspectives alone gives the full picture of what operations strategy is. but together they provide some idea of the pressures that go form the content of operations strategy.
tegn figure 1,5 side 11.

1. How do the market requirements influence the strategy?

Operations exist to serve markets. So, whatever the operations strategy of an organization, it must in some way reflect the requirements of the organization’s markets. Indeed, a sensible starting point for any operations strategy is to look to its markets and ask “how can operations help the organization to compete in its market place?”

The operations strategy must reflect the organisation’s markets position. And the starting point for this Is to develop an understanding of what is required from the operation in order to support the market position. Market positioning is influenced by customers and competitors. Both, in turn to the operations strategy.

Market segmentation is a common approach to understanding markets by viewing heterogeneous, markets. Usually this is done by assessing the needs of different groups of potential users in terms of the needs that will be satisfied by the product or service. Segmentation is to ensure that product or service specification, its price, the way it is promoted and how it is channeled to customers are all appropriate to customer needs. However, market segmentation is also important in shaping operations strategy. The same needs that define markets will shape the objectives for an operations attempt to satisfy those needs.

similarly, how an organization chooses position itself in its market depends on how it feels it can achieve some kind of advantage over its competitors. This will depend on how competitors have position themselves. Although one particular segment of a market may look attractive, the number of other companies sees itself as having the operations capability of servicing that market better, even in the face of the completion from other firms, it may be worth entering the market. So both customers and competitor analysis are prerequisites to developing an effective operation strategy.

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1. Explain the performance objectives, and the decision areas and how they relate.

Quality –Being right
Speed –Being fast
Dependability –being on time
Flexibility –able to chance
Cost – being productive

Decisions areas: these are the sets of decisions need to manage the resources of operation. The decisions areas we shall use are as follows.

• Capacity strategy: This concerns how capacity and facilities in general should be configured. Example: “what should be the overall level of capacity?”
• Supply network strategy including purchasing and logistics: this concerns how operations relate to its interconnected network of other operations, including customers, customers’ customers, suppliers, suppliers’ supplier and so on. Alle operations need to consider their position in the network, both understand how dynamic forces within the newwork will affect them, and to decide what role they wish to play in the network. Example: “Who much of the network do we wish to own?”
• Process technology strategy:  this concerns the choice and development of the systems, machines and processes that act directly or indirectly on transformed resources to convert them into finished products and services.
• Development and organization: This concern the set of broad- and long-term decision governing how the operation is run a continuing basis.  Example: “ how do we enhance and improves the process within the operation over time?”

The relation between the decision areas and performance objectives can be described by this figure.

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1. Explain the Operation strategy matrix and the use of it.

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The operation strategy matrix describes operations strategy as the intersection of a company’s performance objectives with its decisions areas. It emphasis the intersection between what is required form operation function (the relative priority given to each performance objective), and how the operation tries to achieve this through the set of choices mad in each decision. The matrix can be considered as a checklist of the issues that are required to be addressed. Any operation that claims to has an operations strategy presumably will be able to have some kind of story to tell for each of intersections.

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