Operations Strategy for Industry

The overall purpose of a corporate strategy is to provide the direction for everyone in the company on how to achieve its objectives.

Different models and frameworks can be used for this purpose. In this article, the below model will be discussed and used.

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(Source: Modified from Terry Hill (1993) in: “Manufacturing Strategy: The strategic management of the manufacturing function, and Hayes, Pisano, Upton &Wheelwright (2005)).

The purpose of this model is to analyze the current situation of the company in order to develop a future operations strategy. The benefits of the model are that it allows a systematic analysis for the current position and performance, it includes a set of tools that help to develop a complete operations strategy and finally, it helps the decision maker to apply a set of recommendations that are very specific and tailored to the company itself.

The model is used to build the corporate strategy under five stages:

1- Corporate objectives: in this stage, the company defines the ground rules that will help them to achieve their objectives. This stage includes defining the following:

  • Strategic intent
  • Corporate vision/mission
  • Objectives/Goals
  • Specific targets related to growth, survival, profit, ROI (Return on Investment)…etc.

2- Marketing strategy: in this stage, the company defines all the parameters that affect its market position such as:

  • Markets and segments
  • Product range/mix/volume
  • The decision related to product standardization vs. customization.
  • Level of innovation.
  • Being a leader vs. a follower
  • The use of BCG Matrix
  • The use of Ansoff Matrix
  • The use of Puttick Grid
  • Analyzing their PLC (Product Life Cycle)

3- How do products/win orders in the market place? This question is needed to make sure that the company positions itself in the right place. The tools that can be used here are:

  • Puttick Grid
  • PLC
  • Defining order winners/ qualifiers/ less important features
  • Conduct 4 Vs analysis which stands for volume, variety, variation in demand and customer contacts
  • Define Performance objectives

4- Structural analysis for manufacturing/production strategy: in the stage the company analyzes:

  • Vertical integration in terms of outsourcing and sourcing
  • Capacity decisions: size/ volume/ time
  • Location decisions
  • Role of Inventory
  • Process and information technology

5- Infrastructural analysis for manufacturing/production strategy: in the final stage, the company will decide on the following:

  • Production planning and control
  • Quality management system
  • Human resources
  • Product and processes development
  • Resource allocation and capital budgeting
  • Measurement and rewards

The application of this model to a selected case study is available here. The case study included two parts;

  • Firstly, the analysis for make or buy decision;
  • Secondly: a discussion related to the offshore decision.

References

WMG: OPSI Course Note, section 01 (b), p.16

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