Operations strategy

Operations strategy concerns the pattern of strategic decisions and actions which set the role,
objectives and activities of the operation. The term operations strategy sounds at first like a
contradiction.
How can operations, a subject that is generally concerned with the day-to-day creation
and delivery of goods and services, be strategic? Strategy is usually regarded as the opposite
of those day-to-day routine activities. But operations is not the same as operational .
Operations
are the resources that create products and services. Operational is the opposite of strategic,
meaning day-to-day and detailed. So, one can examine both the operational and the strategic
aspects of operations. It is also conventional to distinguish between the
content and the process of operations strategy. The content of operations
strategy is the specific decisions and actions which set the operations
role, objectives and activities. The process of operations strategy is
the method that is used to make the specific content decisions.

From implementing to supporting to driving strategy

Most businesses expect their operations strategy to improve operations performance over

WHAT IS PROCESS DESIGN?

To design is to conceive the looks, arrangement, and workings of something before it is created
. In that sense it is a conceptual exercise. Yet it is one which must deliver a solution that
will work in practice. Design is also an activity that can be approached at different levels of
detail. One may envisage the general shape and intention of something before getting down
to defining its details. This is certainly true for process design. At the start of the process
design activity it is important to understand the design objectives, especially at first, when the
overall shape and nature of the process is being decided. The most common way of doing this
is by positioning it according to its volume and variety characteristics. Eventually the details
of the process must be analysed to ensure that it fulfils its objectives effectively. Yet, it is often
only through getting to grips with the detail of a design that the feasibility of its overall shape
can be assessed. But dont think of this as a simple sequential process. There may be aspects
concerned with the objectives, or the broad positioning of the process, that will need to be
modified following its more detailed analysis.

What is TQM?
TQM is an effective system for integrating the quality development, quality maintenance and
quality improvement efforts of the various groups in an organization so as to enable production
and service at the most economical levels which allow for full customer satisfaction. 9 However,
it was the Japanese who first made the concept work on a wide scale and subsequently
popularized
the approach and the term TQM. It was then developed further by several so-called
quality gurus. Each guru stressed a different set of issues, from which emerged the TQM
approach. It is best thought of as a philosophy of how to approach quality improvement. This
philosophy, above everything, stresses the total of TQM. It is an approach that puts quality at
the heart of everything that is done by an operation including all activities within an operation.
This totality can be summarized by the way TQM lays particular stress on the following:
_ meeting the needs and expectations of customers;
_ covering all parts of the organization;
including every person in the organization;
_ examining all costs which are related to quality, especially failure costs and getting things
right first time;
_ developing the systems and procedures which support quality and improvement;
_ developing a continuous process of improvement (this will be treated in the broader context
of improvement, in Chapter 18).

FORECASTING KNOWING THE OPTIONS

Simply knowing that demand for your goods or services is rising or falling is not enough in
itself. Knowing the rate of change is likely to be vital to business planning. A firm of lawyers
may have to decide the point at which, in their growing business, they will have to take on
another partner. Hiring a new partner could take months so they need to be able to forecast
when they expect to reach that point and then when they need to start their recruitment drive.
The same applies to a plant manager who will need to purchase new equipment to deal with
rising demand. She may not want to commit to buying an expensive piece of machinery until
absolutely necessary but she will need to allow enough time to order the machine and have it
built, delivered, installed and tested. The same is so for governments whether planning new
airports or runway capacity or deciding where and how many primary schools to build.
The first question is to know how far you need to look ahead and this will depend on the
options and decisions available to you. Take the example of a local government where the
number of primary-age children (511 year olds) is increasing in some areas and declining
in other areas within its boundaries. It is legally obliged to provide school places for all such
children. Government officials will have a number of options open to them and they may each
have different lead times associated with them. One key step in forecasting is to

WHAT IS SUPPLY CHAIN MANAGEMENT?

Supply chain management is the management of the interconnection of organizations that
relate to each other through upstream and downstream linkages between the processes that
produce value to the ultimate consumer in the form of products and services. It is a holistic
approach to managing across company boundaries. Earlier (in Chapter 6 ) we used the
term supply network to refer to all the operations that were linked together so as to provide
goods and services through to the end customers. In this chapter we deal with the ongoing
flow of goods and services through this network along individual channels or strands of
that network. In large organizations there can be many hundreds of strands of linked operations
passing through the operation. These strands are more commonly referred to as supply
chains. An analogy often used to describe supply chains is that of the pipeline. Just as liquids
flow through a pipeline, so physical goods (and services, but the metaphor is more difficult
to imagine) flow down a supply chain. Long pipelines will, of course, contain more liquid
than short ones. So, the time taken for liquid to flow all the way through a long pipeline will
be longer than if the pipeline was shorter. Stocks of inventory held in the supply chain can be
thought of as analogous to storage tanks. On its journey through the supply chain pipeline ,
products are processed by different operations in the chain and also stored at different points.

Planning and controlling capacity

Capacity planning and control is the task of setting the effective capacity of the operation so
that it can respond to the demands placed upon it. This usually means deciding how the
operation
should react to fluctuations in demand. We have faced this issue before (in Chapter_ 6 )
where we examined long-term changes in demand and the alternative capacity strategies for
dealing with the changes. These strategies were concerned with introducing (or deleting)
major increments of physical capacity. We called this task long-term capacity strategy. Here we
are treating the shorter timescale where capacity decisions are being made largely within the
constraints of the physical capacity limits set by the operations long-term capacity strategy.

WHAT IS LAYOUT?
The layout of an operation or process means how its transforming resources are positioned
relative to each other and how its various tasks are allocated to these transforming resources.
Together these two decisions will dictate the pattern of flow for transformed resources as they
progress through the operation or process (see Fig. 7.2). It is an important decision because, if
the layout proves wrong, it can lead to over-long or confused flow patterns, customer queues,
long process times, inflexible operations, unpredictable flow and high cost. Also, re-laying out
an existing operation can cause disruption, leading to customer dissatisfaction or lost operating
time. So, because the layout decision can be difficult and expensive, operations managers

are reluctant to do it too often. Therefore layout must start with a full appreciation of the
objectives that the layout should be trying to achieve. However, this is only the starting point
of what is a multi-stage process, which leads to the final physical layout of the operation.

JOB DESIGN
In the remainder of this chapter we deal with three interrelated topics; the design of individuals
and groups jobs, the allocation of work times to peoples activities, and the design of the
working environment. We look at them together because they are influenced by and use a
more or less common set of concepts and frameworks.