Operations Management Strategy framework

The Role and Purpose of Operations Strategy

Operations strategy is only one part of overall business or corporate strategy, but
it’s crucial for competitiveness and success. Without a strong operations strategy,
companies fail to keep up with changing markets and lose out to more strategic
competitors. Many companies, big and small, have struggled with operations
strategy, often lacking in comparison with technologically savvy competitors. For
example, Amazon, while constantly advancing technology such as drones for
delivery, has pushed aside myriad brick-and-mortar retailers.

What does brick and mortar retailers mean?

Brick and mortar (also bricks and mortar or B&M) refers to a physical presence of
an organization or business in a building or other structure. The term brick-and-
mortar business is often used to refer to a company that possesses or leases retail
shops, factory production facilities, or warehouses for its operations

To be effective and competitive, all parts of a company must work together. All
departments should contribute to the company mission and have strategies
underlying the overall corporate/business strategy. In addition to having an
operations strategy, they should also have functional area strategies in finance, IT,
sales, marketing, human resources, and possibly other departments, depending on
the type of business.

“An operations strategy should guide the structural decisions and the evolution of
operational capabilities needed to achieve the desired competitive position of the
company as a whole,” says Tim Laseter in his article "An Essential Step for
Corporate Strategy.”

These days, however, it’s not enough to simply follow best practices. Companies
must innovate, not just play catch-up to practices already mastered by
competitors.

Authors Steven C. Wheelwright and Robert H. Hayes categorized types of

organizations based on a company’s attitude toward operations:
  Stage 1, Internally Neutral: The operations function is reactive and viewed as
a necessary evil.
 Stage 2, Externally Neutral: The operations function adopts best practices
and tries to match the competition.
 Stage 3, Internally Supportive: The operations function tries to provide
support for the overall business strategy.
 Stage 4, Externally Supportive: The operations function provides competitive
advantage for the company, and sets the industry standard.

Core Operational Strategy Areas

Different sources use different terms to describe strategy areas. Here’s one way to
categorize core strategies:

 Corporate: Overall company strategy, driving the company mission and

interconnected departments
 Customer-Driven: Operational strategies to meet the needs of a targeted
customer segment
 Core Competencies: Strategies to develop the company’s key strengths and
resources
 Competitive Priorities: Strategies that differentiate the company in the
market to better provide a desired product or service
 Product or Service Development: Strategies in product design, value, and
innovation

A company’s key success factors (KSFs) pertain to competitiveness, such as a

company’s attributes, resources, capabilities, and competencies. By identifying
these, a company can focus on the issues that matter most and measure them
with key performance indicators (KPIs).

Another way to frame strategic areas is by these “distinctive” competencies:

 Price
 Quality, such as performance, features, aesthetics, and durability
 Service
 Flexibility
  Tradeoffs, or competing on one or two distinctive competencies at the
necessary expense of others

Tips for Operations Strategies and Tactics

Specific strategies depend on your specific business. Here are strategy tips that
apply to many companies, whether they are producing goods or services.

 Take a Global View: See how others worldwide are providing better goods
and services. Learn from them, and see how you might compete and
innovate in a core competency. Also, improve your supply chain by looking
globally, and employ global talent if remote work is an option.
 Have a Strong Mission Statement: Focus your efforts with a mission
statement that truly defines your goals and guides your business approach.
Tie your overall business strategy and operations strategy into it.
 Gain Competitive Advantage with Differentiation: Develop a point of
differentiation and a unique value proposition, and consistently innovate
and build strategies around them. Don’t just use best practices. Exceed
them, and leapfrog the competition.
 Gain Insights from a SWOT Analysis: Analyze your company’s strengths,
weaknesses, opportunities, and threats as a catalyst to strategy.
 Track Progress: Develop strong analytics and KPI dashboards to measure and
optimize your operational efforts.