OPERATIONS STRATEGY

PART 1

INTRODUCTION
 INTRODUCTION
What is Operations?
“It is the activity of managing resources and processes that produce and
deliver goods and services”
All operations transform resource inputs into outputs of products & services.
This is called the ‘input-transformation-output’ model of operations

What objectives does the ‘input-transformation-output’ model seek to

achieve?
– Reduce the cost of producing by being efficient in the way it transforms inputs into
outputs
– Increase revenue by promoting outstanding customer satisfaction through
exceptional quality, responsiveness, reliability & flexibility
– Reduce amount of investment(Capex) by utilising existing capacity effectively
– Provide basis for future innovation by building capabilities, skills & knowledge
within the business
 INTRODUCTION- Cont’d
What is Strategy?
• Greek word strategos, meaning ‘leading an army’. It includes
the following:
– Setting broad objectives that direct an enterprise towards its overall goal;
– Planning the path(in general rather than specific terms) that will achieve these
goals;
– Stressing long term rather than short term objectives;
– Dealing with total picture rather than stressing individual activities;
– Being detached from, and above, the confusion and distractions of day-to-day
activities
• Operations strategy is concerned less with individual processes and more
with total transformation process that is the whole business. It deals more
with changing competitive environment & what operations needs to do in
order to meet current & future challenges.
 PERSPECTIVE OF OPERATIONS STRATEGY

Top down
Operations strategy
should interpret higher
level strategy

Operations Market
resources Operations Requirements
Operations strategy Strategy Operations strategy
should build should satisfy the
operations organisation’s
capabilities markets

Bottom Up
Operations strategy
should learn from day-
to-day experience
What is Operations Strategy?

It is the total pattern of decisions which shape the long

term capabilities of any type of operation & their
contribution to overall strategy, through the
reconciliation of market requirements with
operations resources