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Strategy
Chapter 2
INTRODUCTION to Operation Management
4e, Schroeder
McGraw-Hill/Irwin
Outline
1. Operations Strategy Model
2. Emphasis on Operations Objectives
3. Linking Strategies
4. Operations Competence
5. Global Scope of Operations
6. Supply Chain Strategy
2-2
Operations Strategy
Operations strategy consists of goals, plans
and a direction for the operations function
that are linked to the business strategy and
other functional strategies, leading to a
competitive advantage for the firm.
2-3
Operations
Strategy Model
(Figure 2.1)
Internal
analysis
Corporate strategy
Business strategy
Operations Strategy
Mission
Distinctive
Competence
External
analysis
Functional strategies in
marketing, finance,
engineering, human
resources, and
information systems
Objectives
(cost, quality, flexibility, delivery)
Policies
(process, quality systems, capacity,
and inventory)
2-4
Distinctive Competence
Something an organization
does better than any competing
organization that adds value for
the customer.
Something that operations does
better than anyone else.
2-5
Policy Area
Span of process
Automation
Process flow
Job specialization
Supervision
Make or buy
Handmade or machinemade
Flexible or specialized
Project, batch, line, or continuous
Centralized or empowered workers
Quality
Systems
Approach
Training
Suppliers
Prevention or inspection
Technical or managerial training
Selected on quality or cost
Capacity
Facility size
Location
Investment
Inventory
Amount
Distribution
Process
Control Systems
Strategic Choices
2-7
Product innovator
Operations must maintain flexibility in processes,
labor and suppliers.
Product innovator
Order winner = flexibility (rapid introduction of
new products)
Order qualifiers = cost, delivery, quality
2-9
Operations Competence
To be sustainable, a distinctive competence must
not only be unique, it must be difficult to
imitate or copy.
2-10
Innovative products
Flexible, fast supply chain
Summary
Operations Strategy Model
Emphasis on Operations Objectives
Linking Strategies
Operations Competence
Global Scope of Operations
Supply Chain Strategy
2-15
2-16