The operations function is fashionable!

1. The operations function is fashionable! The consultancy services market % of world revenues of 40 largest firms Financial 6 Marketing/sales 2 Organizational design 11 Operations and process management 31 Benefits/Actuarial 16 IT strategy 17 Corporate strategy 17

2. Strategic Reconciliation Market Requirements OPERATIONS STRATEGY Operations Resources Operations strategy reconciles the requirements of the market with the capabilities of operations resources

3. Operations strategy is ….. “… the decisions which shape the long-term capabilities of the company’s operations and their contribution to overall strategy through the on-going reconciliation of market requirements and operations resources …”

4. Micro level of the process Operations management Operations strategy Short-term Long-term for example, capacity decisions for example, capacity decisions Time scale Demand Demand 1-12 months 1-10 years Macro level of the total operation Level of analysis Detailed Aggregated For example Level of aggregation For example “Can we give tax services to the small business market in Antwerp?” “What is our overall business advice capability compared with other capabilities?” Philosophical Concrete Level of abstraction For example For example “How do we improve our purchasing procedures?” “Should we develop strategic alliances with suppliers?” Operations strategy is different to operations management

5. Corporate strategy Business strategy Operations strategy Emergent sense of what the strategy should be Operational experience Top-down and bottom-up perspectives of strategy

6. CUSTOMERS Segmentation on: • Age - youth • Purpose - general PERFORMANCE OBJECTIVES MARKET POSITION Differentiation on: • Dependability • Speed of delivery • Product mix flexibility • Speed to market • Innovative products • Time to market • Product range • Coordinated launches COMPETITORS Traditionally weak in: • promotion • design innovation The market perspective analysis of the garment company

7. Customer Needs Market Positioning Performance Objectives Competitors’ Actions Required performance Understanding markets The market perspective on operations strategy

8. Resources Tangible • Equipment • Staff Intangible • Reputation • Relationships • (internal and external) • Experience Operations Strategy Decisions Capabilities • Application of leading- edge lighting and sound technology • Articulation of client requirements • Location • Virtual reality technology • Supplier development • Equipment tracking system • Organizational structure • Staff meetings Processes • Integration of equipment supply and client requirements • Design process • Supplier liaison process The operations resource perspective analysis of the lighting company

9. Operations Capabilities Tangible and Intangible Resources Operations Strategy Decision Areas Operations Processes Understanding resources and processes Strategic decisions The operations resource perspective on operations strategy

10. Operations Capabilities Tangible and Intangible Resources Customer Needs Operations Strategy Decision Areas Market Positioning Performance Objectives Operations Processes Competitors’ Actions Required performance Understanding markets Understanding resources and processes Strategic decisions Operations strategy is the strategic reconciliation of market requirements with operations resources

11. Operations has to cope with the clash between the nature of external markets and the nature of internal resources Market Requirements are…. Operations Resources are…. Dynamic Difficult to change Heterogeneous Technically constrained Ambiguous Complex

12. Strategic Reconciliation Market Requirements Operations Resources Operations Resources Market Segmentation Operations Strategy Decisions Performance Objectives Market Positioning Operations Competences Operations Processes Competitor Activity Understanding Resources and Processes Strategic Decisions Required Performance Understanding Markets Quality Speed Dependability Flexibility Cost Capacity Supply networks Process technology Development and organization Operations strategy is the strategic reconciliation of market requirements with operations resources

13. What you HAVE What you DO What you WANT What you NEED to maintain your capabilities and satisfy markets from your operations to help you “compete” in terms of operations capabilities to “compete” In the market Strategic Reconciliation Market Requirements Operations Resources

14. Internal and External Understanding of the processes Strong marketing Competitiveness Competencies embedded in the operation High margin Capabilities enhance innovation and improvement Investment Developing the resources which let the operation’s performance stay ahead of the competition Developing customers’ competitors’ and stockholders; perceptions and expectations Operations can kick-start two virtuous cycles World Class Operations

15. Existing ‘effective’ capability Lafage Cosmetics’ requirements wide Existing ‘effective’ capability Variety of items per order Store delivery Catalogue customers narrow small large Number of items per order Hagen Style – Comparison of new demands placed on the order fulfilment processes by potential new business opportunities

16. Operations Resources Market Requirements • Cost efficiency • Fast delivery • Traditional ‘representative’ sales channels declining in popularity • 2 x distribution centers • State-of-art packing and information technology • Processes ‘fine tuned’ to traditional ‘representative’ sales channels • Good at what it does • cost efficient • fast throughput • As above plus • wider range of requirements • more demand fluctuations? • New channels • catalogue • Internet • discount stores Hagen Style – Operations resources and market requirements