Operations Strategy

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Operations Strategy

• Professor Alysse Morton

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Competitive Priorities
Cost 1. Low-cost operations Quality 2. High-per
formance design 3. Consistent
quality Time 4. Fast delivery 5. On-time
delivery 6. Development speed Flexibility 7. Cu
stomization 8. Volume flexibility

• Market analysis
• segmentation
• needs assessment

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Competitive Priorities

• Corporate strategy
• goals
• core competencies
• environmental responses
• new products/services
• global strategies

• Market analysis
• segmentation
• needs assessment

• Capabilities
• current
• needed
• plans

• Competitive priorities
• Operations Marketing
• cost
• quality Finance
• time
• flexibility Others

• Functional area strategies
• finance
• marketing
• operations
• others

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Health Clinic Process
Physical exam
Flu
Physical exam
D
R
P
Broken arm
Broken arm
T
B
Flu
D Doctor (examination rooms) R Radiology
(X-ray) T Triage (assess severity of
illness) B Blood (lab test) P Pharmacy (fill
prescriptions)
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Automobile Assembly Process
A
S
H
F
A Front-end body-to-chassis assembly H Hood
attachment F Fluid filling S Start-up testing
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Strategy and Decisions
Corporate strategy
Market analysis
Competitive priorities
Capabilities
Operations strategy

• Process decisions
• Quality decisions
• Capacity, location, and layout decisions
• Operating decisions

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Lower Florida Keys Health System (LFKHS)
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Lower Florida Keys Health System
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Lower Florida Keys Health System
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Chaparral Steel
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Strategies atLFKHS and Chaparral Steel
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Processes atmanufacturingorganizations

• Project process
• Selecting location for new plant in Europe
• Installing ERP for a manufacturing firms
  business processes

• Job process
• Machining precision metal tubes
• Internal consulting team at manufacturing firm

• Batch process
• Forging process to make fittings for pressure
  vessels access
• Producing a batch of textbooks at R. R.
  Donnelleys plant

• Line process
• Auto assembly
• King Soopers bread line

• Continuous process
• Oil refining process
• Bordens pasta making process

High
Low
Volume
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Processes atservice providers

• Project process
• Real estate process for leasing and constructing
  facilities for large insurance company
• Student teams field project

• Job process
• Customer service process at financial services
  firm
• General medical practice

• Batch process
• Order fulfillment process of importer/distributor
• Placing purchase orders at public relations agency

• Line process
• Cafeteria line
• Teller line at bank

• Continuous process
• Power generation plant
• Providing telephone line access

High
Low
Volume
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The Big PictureKing Soopers Bakery
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The Big PictureKing Soopers Bakery
Figure 3.2
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Four Facets of Process Design

• Vertical integration
• Resource flexibility
• Customer involvement
• Capital intensity

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Vertical Integration
Raw materials (eggs, flour, sugar)
Backward integration
King Soopers
In-house processes
Forward integration
Customers (grocery stores)
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Resource Flexibility

• Addresses the flexibility of the production
  process in terms of product mix and product
  volume as determined by the selection of
  equipment, work force skills, and facility design
  (layout) particularly important if the life
  cycle is short.
• Automatic versus manually operated
• General purpose versus dedicated

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Customer Involvement

• How much and in what ways the customer becomes a
  part of the production process.
• Full versus self-service
• Product selection
• Timing and location

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Capital Intensity

• Dollar value associated with the portion of the
  production process to be accomplished by
  equipment versus work force.
• Degree of automation
• Timing of automation

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Volume and ProcessDecisions forManufacturing
Low volume, make-to-order process

• Project process
• Selecting location for new plant in Europe
• Installing ERP for a manufacturing firms
  business processes

• Less vertical integration
• More resource flexibility
• More customer involvement
• Less capital intensity/automation

• Job process
• Machining precision metal tubes
• Internal consulting team at manufacturing firm

Process design choices
High volume, make-to-stock process

• More vertical integration
• Less resource flexibility
• Less customer involvement
• More capital intensity/automation

• Line process
• Auto assembly
• King Soopers bread line

• Continuous process
• Oil refining process
• Bordens pasta making process

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Volume andProcess Decisionsfor Services
Low volume, customized-service process

• Less vertical integration
• More resource flexibility
• More customer involvement
• Less capital intensity/automation

• Project process
• Real estate process for leasing and constructing
  facilities for large insurance company
• Student teams field project

• Job process
• Customer service process at financial services
  firm
• General medical practice

Process design choices
High volume, standardized-service process

• Batch process
• Order fulfillment process of importer/distributor
• Placing purchase orders at public relations agency

• More vertical integration
• Less resource flexibility
• Less customer involvement
• More capital intensity/automation

• Line process
• Cafeteria line
• Teller line at bank

• Continuous process
• Power generation plant
• Providing telephone line access

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Flow Diagrams
Service visible to customer
Service not visible to customer
Repair authorized
Parts available
Discuss needed work with customer
Customer drops off car
Mechanic makes diagnosis
Check parts availability
Perform work
Parts not available
Inspect/ test and repair
Order parts
Repair not authorized
Corrective work necessary
Repair complete
Customer departs with car
Perform corrected work
Collect payment
Notify customer
Points critical to the success of the service
Points at which failure is most often
experienced