Operations

Management 1

REPORT BY: Bea Concepcion

Learning Outcomes
 To identify the ten decisions of operations management
 To identify the Direct and Indirect Responsibilities of Operations
Management
 To explain the significance of Operations in Global
Competitiveness
 To define operational strategy
 To explain specific approaches used by operations
management to achieve strategic concepts and differentiation
 To describe strategy formulation and implementation in terms of
operations management
 To Explain the function of operations management in the Supply
chain
Ten Critical Decisions of Operations
Management
1. Goods and Service Design
2. Managing Quality
3. Process and Capacity Design
4. Location Selection
5. Layout Design
6. Human Resources and Job Design
7. Supply chain management
8. Inventory Management
9. Scheduling
10.Maintenance
Responsibilities of Operations Manager
DIRECT RESPONSIBILITIES

 Understanding the operations strategic objectives

 Developing an operations strategy for the organization
 Designing the operations products, services and processes
 Planning and controlling the operation
 Improving the performance of the operation

INDIRECT RESPONSIBILITIES

 Working together with the other parts of the organization

Operations and Global
Competitiveness

 Competitiveness – is an important factor in determining whether

a company prospers, barely gets by or fails

 Relates to the effectiveness of an organization in the

marketplace relative to the other organizations that offer similar
products or services
Ways to be competitive

 1. Technological Innovation
 2. Product and service innovation
 3. Identify new market trends
 4. Intensify Marketing strategies
 5. Go Global
Influences of operations on
competitiveness
 Product and service design – special characteristics of a product or
service can be a key factor in consumer buying decisions.
 Cost – directly affects pricing decisions and profits. Organizations with
higher productivity rates than competitors is an advantage
 Location – is important in terms of cost and convenience for customers.
Location near markets can result in lower transportation cost and
quicker delivery times
 Quality – refers to materials, workmanship, design and service.
Customers are willing to pay more for a product or service if they
perceive that it has a higher quality than the competitor
 Quick response – Quick delivery and quick response to improvement
and customer complaints are an advantage
Influences of operations on competitiveness

 Flexibility – ability to respond to changes

 Inventory management – effectively matching up supplies of goods

with demand

 Supply chain management – coordinating internal and external

operations to achieve timely and cost effective delivery of goods
throughout the system

 Service – meets the customers needs in terms of delivery, warranty ,

technical support etc.

 Managers and workers – Competent and motivated employees create

new ideas and produce a positive image for the company
Strategy

Strategy is the direction and scope of an organization over a long

term, ideally, which matches its resources to its changing environment
and in particular its markets, customers or clients so as to meet
stakeholder expectations. (Johnson. Scholes and Whittington, 2008)

An organizations Action Plan to achieve the mission. These strategies

exploit opportunities and strengths, neutralize threats and avoids
weaknesses.

Relates to the plans that determine how an organization pursue its

goals.
Levels of strategy

STRATEGY LEVEL FOCUS

Corporate What Business are we in?
Business Hoe do we compete?
Functional Determining functional strategies to
(Operational) meet business strategy
Levels of Strategy

 Corporate
 Provides long-range guidance for the whole organization, often expressed
as a statement of its mission.

 Business
 Concerned with the products and services that should be offered in the
market defined at the corporate level

 Functional (Operational)
 Functions of the business make long-range plans that support the
competitive advantage being pursued by the business strategy
Strategic management process

 1. Environment Scanning – refers to a process of collecting,

scrutinizing and providing information for strategic purposes

 2. Strategy Formulation – Process of deciding best course of action

for accomplishing organizational purpose

 3. Strategy Implementation – making strategy work as intended or

putting the organizations chosen strategy into action

 4. Evaluation – Makes sure that the organizational strategy as well as

implementation meets the organizational objectives
Strategy Formulation

 Refers to the process of choosing the most appropriate course of action for
the realization of organizational goals and objectives and thereby
achieving the organizational vision,
Steps in strategy formulation
 1. Setting organizations objectives – What do you want to achieve
 2. Evaluating the organizational environment – evaluate the general
economic and industrial environment in which the organization operates,
make sure that the factors important for competitive success in the market
can be discovered so that the management can identify their own and
competitors strengths and weaknesses
 3. Setting quantitative targets – compare with long term customers, so as to
evaluate the contribution that might be made by various product zones or
operating departments
 4. Aiming context with the divisional plans- contributions mad by each
departments or division or product category within the organization is
identified and accordingly strategic planning is done for each unit.
 5. Performance analysis – discovering and analysing the gap between the
planned or desired performance
 6. Choice of strategy – the best course of action is chosen
Operations strategy Formulation

 Steps
 1. Define corporate objectives
 2. Determine marketing strategies to meet these objectives
 3. Assess how different products win order against
competitors
 4. Establish the most appropriate mode to deliver these sets of
products
 5. Provide the infrastructure required to support operations
Strategy Implementation

It is the translation of chosen strategy into organizational action

so as to achieve strategic goals and objectives.
The manner in which an organization should develop, utilize and
amalgamate organizational structure, control systems and
culture to follow strategies that lead to competitive advantage
and a better performance.
Steps in strategy implementation

 1. Developing an organization having potential of carrying out strategy

successfully

 2. Disbursement of abundant resources to strategy-essential activities

 3. Creating strategy-encouraging policies

 4. Employing best policies and programs for constant improvement

 5. Linking reward structure to accomplishment of results

 6. Making use of strategic leadership

Operations Strategy Approaches

 Market-Based Approach
 Based on decisions regarding markets and the customers within those
markets that the organization intends to target.
 Along with meeting customer needs within the market the position the
organization takes in that market will in part depend on the actions of its
competitors. Thus the organization’s market position is one in which its
performance enables it to attract customers to its products or services in a
more successful manner than its competitors.
Operations Strategy Approaches

 Resource-Based Approach
 Based on an assessment of the operation’s resources and processes.
 Works inside-out of the firm
 Transforming resources are the facilities and staff that do the work on the
transformed resources that deliver the goods or services to the customer.
Operations strategy Formulation

 Steps
 1. Define corporate objectives
 2. Determine marketing strategies to meet these objectives
 3. Assess how different products win order against competitors
 4. Establish the most appropriate mode to deliver these sets of products
 5. Provide the infrastructure required to support operations
 Corporate objectives – provides directions for the organization, and
performance indicators, which allow progress in achieving those objectives
to be measured.
 Marketing Strategy - Identifying target markets and deciding how to
compete in these markets
 How do you qualify and win orders in the marketplace? – This step provides
a link between corporate marketing proposals and the operations
processes and infrastructure necessary to support them. Translating the
marketing strategy into range of competitive factors on which the product
or service wins orders.
 Delivery System Choice and Infrastructure – Involves putting the processes
and resources in place that provide the required performance as defined
by the performance objectives.
 Delivery system choice concerns aspects of the organization’s physical
resources such as service delivery systems and capacity provision. This
includes the choice of process type implemented in manufacturing
(project, jobbing, batch, line or continuous) or services (Professional, shop,
mass)
 infrastructural decisions- describe the systems, policies and practices that
determine how structural elements covered in step 4 are managed.
Strategy Implementation

 Techniques
 1. Balanced scorecards
 Aggregate Project Plan
Supply Chain Management

 Concerns the process of trying to manage this entire chain from initial
receipt of the ultimate consumer’s order all the way back to the consumer.
Supply Chain

 Generally refers to all activities involved in supplying an end user with a

product or service
 The network of manufacturing and service operations that supply one
another from raw materials through production to the ultimate customer
 It consists of the physical flow of materials, money, and information along
the entire chain of sourcing production and distribution.
 For example, the food supply chain reaches from the farm to the food
processor to the wholesaler and then the retailer. The supply chain links
together the work and output of many different organizations.
Sample
 REFERENCES

 Operations Management for MBAs, 3rd Edition (2007).

Jack R. Meredith and Scott M. Shafer
 Operations Management , 4th edition (2004).
Nigel Slack, Stuart Chambers and Robert Johnston
 Operations Management, 2nd edition (2009().
Andrew Greasley