Strategy and Operations Revision

Introduction to Strategy and Operations Management| Operations Strategy| Product Design| Process Design| Supply Networks| Layout and Flow| Scientific Management and Job Design| Introduction to Quality – A Choice Paradigm| Operationalizing Strategy| Review and Examination Preparation| Operations Strategy Strategic decisions Widespread in their effect, define the position of the organisation relative to its environment and move the organisation closer to its long term goals * A strategy has content and process Operations is not the same as operational * Operations – resources that create products and services * Operational – opposite of strategic. Day-to-day and detailed Content and Process * Content – specific decisions and actions * Process – method that is used to make the specific ‘content’ decisions 4 Perspectives Top Down – the influence of the corporate or business strategy on operations decisions * Bottom-up – the influence of operational experience on operations decisions * Market requirements – the performance objectives that reflect the market position of an operations products or service, also a perspective on operations strategy * Operations resource capabilities – the inherent ability of operations processes and resources; also a perspective on operations strategy. Products * Tangible Are used after purchase Services * Intangible * Used at the time of delivery TOP DOWN PERSPECTIVE Views strategic decisions at a number of levels Corporate strategy – the strategic positioning of a corporation and the businesses with it Business strategy – the strategic positioning of a business in relation to its customers, markets and competitors, a subset of corporate strategy Functional strategy – the overall direction and role of a function within the business; a subset of business strategy

BOTTOM UP PRESPECTIVE Sees overall strategy as emerging from day-to-day operational experience Emergent strategy – a strategy that is gradually shaped over time and based on experience rather than theoretical positioning MARKET REQUIREMENTS PERSPECTIVE -Satisfy the requirements of the market Competitive factors – the factors such as delivery time, product or service specification, price etc. hat define customers’ requirements Order-winning factors – the arrangement of resources that are devoted to the production and delivery of products and services Qualifying factors – aspects of competitiveness where the operation’s performance has to be above a particular level to be considered by the customer Less important factors – competitive factors that are neither order winning nor qualifying, performance in them does not significantly affect the competitive position of an operation Product/service life cycle – a generalized model of the behaviour of both customers and competitors during the life of a product or service; it is generally held to have four stages, introduction, growth, maturity and decline. OPERATIONS RESOURCES PERSPECTIVE Resource-based view (RBS) – the perspective on strategy that stresses the importance of capabilities (sometimes known as core competences) in determining sustainable competitive advantage.

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Intangible resources – the resources within an operation that are not immediately evident or tangible, such as relationships with suppliers and customers, process knowledge, new product and service development. PROCESS OF OPERATIONS STRATEGY Process – procedures which are, or can be, used to formulate those operations strategies which the org. should adopt. IMPLEMENTATION 5 P’s of operations strategy formulation * Purpose * Point of entry * Process * Project management * Participation TRADE-OFFS The extent to which improvements in one performance objective can be achieved by sacrificing performance in others. PROCESS OF OPERATIONS STRATEGY GUIDES THE TRADE OFFS B/W PERFORMANCE OBJECTIVES Operations strategy – Should address the relative priority of the operation’s performance objectives * Influences the trade-offs b/w an operation’s performance EFFICIENT FRONTIER Like in economics – convex line. Useful approach to articulating trade-offs and distinguishes b/w repositioning performance on the efficient frontier and improving performance by overcoming trade-offs. FOCUS AND TRADE-OFFS Operations focus – dedicating each operation to a limited, concise, manageable set of objectives, products, technologies or markets, then structuring policies and support services so they focus on one explicit task rather than on a variety of inconsistent or conflicting tasks.

Operation-within-an-operation – allows an org. to accrue the benefits of focus without the considerable expensive of setting up independent operations. Design DESIGN ACTIVITY To conceive looks, arrangement and workings of something before it is constructed. Happens before construction. PROCESS DESIGN AND PRODUCT/SERVICE DESIGN ARE INTERREALTED Treated separately but are interrelated. Process design and product/service design should be considered together PROCESS DESIGN OBJECTIVES Point of process design is to make sure that the performance of the process is appropriate for whatever it is trying to achieve. Process design should reflect process objectives Micro’ performance flow objectives are used to describe flow performance: * Throughput rate – rate which units emerge from the process * Throughput time – the time for a unit to move through a process * Work in process – number of units in the process is an average over a period of time * Utilization- the ratio of the actual output from a process or facility to its design capacity ENVIRONMENTALLY SENSITIVE DESIGN Life cycle analysis – a technique that analyses all the production inputs, life cycle use of a product and its final disposal in terms of total energy used and wastes emitted. PROCESS TYPES – THE VOLUME VARIETY EFFECT ON PROCESS DESIGN High volume = food canning factory Low volume = major project consulting engineers Low variety = electricity utility High variety = architects practice Low volume – high variety and vice versa Volume variety positions

PROCESS TYPES Process types – terms that are used to describe a particular general approach to managing processes In manufacturing these are generally held to be project, jobbing, batch, mass and continuous processes, In services they are held to be professional services, service shops and mass services PROJECT PROCESSES – processes that deal with discrete, usually highly customized, products. JOBBING PROCESSES – processes that deal with high variety and low volumes, although there may be some repetition of flow and activities. BATCH PROCESSES – processes that treat batches of products together, and where each batch has its own process route.

MASS PROCESSES – processes that produce goods in high volume and relatively low variety CONTINUOUS PROCESSES – processes that are high volume and low variety; usually products made on continuous process are produced in an endless flow, such as petrochemicals or electricity. PROFESSIONAL SERVICES – service processes that are devoted to producing knowledge-based or advice-based services, usually involving high customer contact and high customisation, examples include management consultants, lawyers, architects etc. SERVICE SHOPS – service processes that are positioned between professional services and mass services, usually with medium levels of volume and customization. MASS SERVICES – service processes that have a high number of transactions, often involving limited customization, for example mass transportation services, call centres etc. PRODUCT-PROCESS MATRIX

A model derived by Hayes and Wheelwright that demonstrates that natural fit between volume and variety of products and services produced by an operation on one hand, and the process type used to produce products and services on the other. Natural diagonal – most operations stick to this. PROCESS MAPPING Describing the processes in terms of how the activities within the process relate to each other (aka process blueprinting or process analysis) PROCESS MAPPING SYMBOLS PMS – The symbols that are used to classify different types of activity; they usually derive either from scientific management or information systems flow charting High-level process mapping – an aggregated process map that shows broad activities rather than detailed activities THROUGHOUT, CYCLE TIME AND WORK IN PROCESS

Work content – the total amount of work required to produce a unit of output, usually measured in standard times Throughput time – the time for a unit to move through a process Cycle time – average time b/w units of output emerging from a process Work-in-process – number of units within a process waiting to be process further LITTLES LAW Throughput time = work-in process x cycle time THROUGHPUT EFFICIENCY % Throughput efficiency = (work content/throughput time) x 100 PRODUCT AND SERVICE DESIGN WHY IS DESIGN IMPORTANT? -Enhances profitability WHAT IS DESIGNED? * Concept – outline specification including nature, use and value of p/s * Package – Core p/s – fundamental to the purchase and could not be removed without destroying nature of the package * Supporting p/s – Enhance the core * Process – designing a way in which the ‘ingredients’ will be created and delivered to customer DESIGN ACTIVITY IS ITSELF A PROCESS -The design activity is one of the most important operations processes -Producing designs for products is itself a process STAGES OF DESIGN 1. Concept generation – a stage in the product and service design process that formalizes the underlying idea behind a product or service 2. Screening – to see if they will be a sensible addition to its p/s portfolio 3. Evaluation and improvement – can it be served better, more cheaply, more easily? 4. Prototyping and final design

CONCEPT GENERATION IDEAS FOR CUSTOMERS -Marketing – focus groups etc. LISTENING TO CUSTOMERS -Complaints –suggestions IDEAS FROM COMPETITORS Reverse engineering – the deconstruction of a p/s in order to understand how it has been produced IDEAS FROM STAFF Know what customers like etc. IDEAS FROM RESEARCH & DEVELOPMENT R&D – the function in the org. that develops new knowledge and ideas and operationalizes the ideas to form the underlying knowledge on which p/s and process design are based. CONCEPT SCREENING Assessing the worth or value of each design option, so a choice can be made. * Design criteria – 3 broad categories of design criteria” 1.

Feasibility – the ability of an operation to produce a process, product or service 2. Acceptability – the attractiveness to the operation of a p/s 3. Vulnerability – the risks taken by the operation in adopting a process, p or s THE DESIGN ‘FUNNEL’ A model that depicts the design process as the progressive reduction of design options from many alternatives down to the final design. PRELIMINARY DESIGN SPECIFYING THE COMPONENTS OF THE PACKAGE Component structure – diagram that shows the constituent component parts of a product or service package and the order in which the component parts are brought together (aka components structure) REDUCING DESIGN COMPLEXITY Simplicity is a virtue

STANDARDIZATION The degree to which processes, products or services are prevented from varying over time COMMONALITY The degree to which a range of p/s incorporate identical components (aka parts commonality) If multiple p/s are based on common components, the less complex it is to produce them MODULARIZATION The use of standardized sub-components of a p/s that can be put together in different ways to create a high degree of variety. I. e. Art attack. Many languages, 60% scenes the same DEFINING THE PROCESS TO CREATE THE PACKAGE Examine how a process could put together the various components to create the final p/s. DESIGN EVALUATION AND IMPROVEMENT

See if preliminary design can be improved before the p/s is tested in the market. Many techniques (3 main ones): 1. QUALITY FUNCTION DEPLOYMENT A technique used to ensure that the eventual design of a p/s actually meets the needs of its customers. QFD matrix – how company sees relationship b/w requirements of customer and the design characteristics of p/s 2. VALUE ENGINEERING An approach to cost reduction in product design that examines the purpose of a p/s, its basic functions and its secondary functions. 3. TAGUCHI METHODS A design technique that uses design combinations to test the robustness of a design I. e. Telephone – should still work when has been knocked over. Pizza shop – cope with rush of customers

PROTOTYPING AND FINAL DESIGN Prototype can be clay model, simulations etc. Virtual prototype –a computer based model of a p/p/s that can be tested for its characteristics before the actual p/p/s is produced Computer-aided design (CAD) – a system that provides the computer ability to create and modify p/p/s drawings BENEFITS OF INTERACTIVE DESIGN Interactive design – the idea that the design of p/s on one hand, and the processes that create them on the other, should be integrated Can shorten time to market SIMULTANEOUS DEVELOPMENT Sequential approach to design – one stage completed before another is started * Easy to manage and control * Time consuming and costly

Simultaneous/concurrent approach to design – overlapping these stages in the design process so that one stage in the design activity can start before the preceding stage is finished, the intention being to shorten time to market and save design cost PROJECT-BASED ORGANIZATION STRUCTURES Functional design organization Product design organization Range of org. structures = Pure functional to pure project forms. Task force Matrix organization LAYOUT AND FLOW WHAT IS LAYOUT? -How its transforming resources are positioned relative to each other and how its various tasks are allocated to these transforming resources. – Layout decision is relatively infrequent but important What makes a good layout? – Inherent safety – Length of flow – Clarity of flow – Staff conditions – Management coordination – Accessibility – Use of space – Long-term flexibility – Layout is influenced by process types BASIC LAYOUT TYPES 4 basic layout types: FIXED-POSITION LAYOUT -Locating the position of a product or service such that it remains largely stationary, while transforming resources are moved to and from it I. e. Motorway construction, open-heart surgery (patients too delicate to be moved). FUNCTIONAL LAYOUT * Conforms to the needs and convenience of the functions performed by the transforming resources which constitute the processes. Similar resources or processes are located together * I. e. Hospitals, supermarket CELL LAYOUT * Transformed resources entering the operation are pre-selected to move to one part of the operation in which all the transforming resources, to meet their immediate processing needs, are located. * I. e. Maternity unit in a hospital, lunch products in a supermarket * Shop-within-a-shop – display area selling specific thing. I. e. sports shop – sports books, sports shoes, etc. PRODUCT LAYOUT Line layout – a more descriptive term for what is technically product layout Involves locating the transforming resources entirely for the convenience of the transformed resources. I. e. Automobile assembly

Self-service cafeteria – sequence of customer requirements (starter, main, dessert, drink) is common to all customers, but layout also helps control flow of customers. MIXED LAYOUTS Combination of layouts I. e. 1 kitchen serving 3 restaurants (cafeteria, buffet and sit down) VOLUME-VARIETY AND LAYOUT TYPE -The volume and variety characteristics of an operation will influence its layout – When volume is low and variety high, flow is not a problem SELECTING A LAYOUT TYPE -Volume-variety characteristics narrow down choice -Influenced by understanding advantages and disadvantages (see p198) – Cost implications DETAILED DESIGN OF THE LAYOUT DETAILED DESIGN IN FIXED POSITION LAYOUT Location of resources based on the convenience of transforming resources themselves. DETAILED DESIGN IN FUNCTIONAL LAYOUT Combinatorial complexity – the idea that many different ways of processing products and services at many different locations or points in time combine to result in an exceptionally large number of feasible options; the term is often used in facilities layout and scheduling to justify non-optimal solutions Flow record chart – a diagram used in layout to record the flow of products or services between facilities Relationship chart – a diagram used in layout to summarize the relative desirability of facilities to be close to each other.

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