Slack, Chambers and Johnston, Operations Management, 6

th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.1
3.1
Chapter 3
Operations strategy
Photodisc. Cartesia
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.2
3.2
Design
Planning and
control
Operations
performance
Operations
strategy
Improvement
Operations
management
Operations
strategy
Slack et al.s model of operations management
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.3
3.3
Key operations questions
In Chapter 3 Operations strategy Slack et al.
identify the following key questions:

What is strategy and what is operations strategy?
What is the difference between a top-down and a
bottom-up view of operations strategy?
What is the difference between a market
requirements and an operations resources view
of operations strategy?
How can an operations strategy be put together?
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.4
3.4
Operations strategy at Flextronics and Ryanair
For each of these companies:

What do they have to be good at to compete in their
markets?
How do their operations help them to achieve this?
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.5
3.5
Operations strategic
decisions

Industrial parks, with
low cost but close
locations
and co-located
suppliers
Market
requirements

Low costs
Responsiveness
Flexibility
Flextronics
Operations strategy at Flextronics
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.6
3.6
Operations strategic
decisions

Stripped down service
One technology
Cheap airport
locations
Fast turnround
Market
requirements

Low prices
Reliability
Basic service
Ryanair
Operations strategy at Ryanair
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.7
3.7
Setting broad objectives that direct an enterprise
towards its overall goal.

Planning the path (in general rather than specific
terms) that will achieve these goals.

Stressing long-term rather than short-term objectives.

Dealing with the total picture rather than stressing
individual activities.

Being detached from, and above, the confusion and
distractions of day-to-day activities.
What is strategy?
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.8
3.8
Strategic decisions are those decisions which: are
widespread in their effect on the organization to
which the strategy refers, define the position of the
organization relative to its environment and move
the organization closer to its long-term goals.
Strategic decisions
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.9
3.9
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.
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.10
3.10
How is operations strategy different to operations management?
The time
scale is
longer
Short-term
for example,
capacity decisions
112 months
D
e
m
a
n
d

Long-term
for example,
capacity decisions
110 years
D
e
m
a
n
d

Operations management Operations strategy
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.11
3.11
The level of
analysis is
higher
Operations management Operations strategy
Micro-level
of the process
Macro-level
of the total operation
How is operations strategy different to operations management?
(Continued)
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.12
3.12
The level of
aggregation
is higher
Operations management Operations strategy
Detailed
For example:
Can we give tax services
to the small business
market in Antwerp?
Aggregated
For example:
What is our overall
business advice
capability compared with
other capabilities?
How is operations strategy different to operations management?
(Continued)
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.13
3.13
The level of
abstraction
is higher
Operations management Operations strategy
Concrete
For example:
How do we improve out
purchasing procedures?
Philosophical
For example:
Should we develop
strategic alliances with
suppliers?
How is operations strategy different to operations management?
(Continued)
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.14
3.14
What is the role of the operations function?
Operations as
implementer of
strategy
Operations
implements strategy

Operations
drives strategy


Operations as
driver of strategy


Operations
supports strategy
Operations as
supporter of
strategy
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.15
3.15
The 3 key attributes
of operations strategy
Operations contribution
Implementing
be Dependable
Operationalize strategy
explain Practicalities
Supporting
be Appropriate
Understand strategy
Contribute to decisions
Driving be Innovative
provide Foundation of strategy
Develop long-term Capabilities
The strategic role of the operations function
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.16
3.16
The 4 stage model of operations contribution
I
n
c
r
e
a
s
i
n
g

s
t
r
a
t
e
g
i
c

i
m
p
a
c
t

Increasing operations capabilities
Externally
supportive
Redefining
industry
expectations
STAGE 4
Give an
operations
advantage
Driving
strategy
After Hayes and
Wheelwright
Internally
supportive
Clearly the
best in the
industry
STAGE 3
Link strategy
with
operations
Supporting
strategy
Externally
neutral
As good as
competitors
STAGE 2
Adopt best
practice
Implementing
strategy
Internally
neutral
STAGE 1
Correct the
worst
problems
Holding the
organization
back
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.17
3.17
Top-down
perspective

What the
business wants
operations to do
Operations
resources
perspective

What operations
resources can
do
What day-to-day
experience
suggests operations
should do

Bottom-up
perspective
Market
requirement
perspective

What the market
position requires
operations to do
Operations
strategy
The four perspectives on operations strategy
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.18
3.18
Corporate strategy
Business strategy
Emergent sense of what the
strategy should be
Operational experience
Top-down and bottom-up perspectives of strategy
Operations strategy
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.19
3.19
The strategy hierarchy
Key strategic
decisions

Influences on
decision-making
Business
strategy
What is the mission?
What are the strategic
objectives of the firm?
How to compete?
Customer/market dynamics
Competitor activity
Core technology dynamics
Financial constraints
Corporate
strategy
What business to be in?
What to acquire?
What to divest?
How to allocate cash?
Economic environment
Social environment
Political environment
Company values and ethics
Functional
strategy
How to contribute to the
strategic objectives?
How to manage the
functions resources?
Skills of functions staff
Current technology
Recent performance of the
function
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.20
3.20
Introduction
Growth Maturity Decline
S
a
l
e
s

v
o
l
u
m
e

Volume
Customers
Competitors
Variety of
product/
service
design
Slow growth
in sales
Innovators
Few/none
Customization
or frequent
design
changes
Rapid growth in
sales volume
Early adopters
Increasing
numbers
Increasingly
standardized
Sales slow and
level off
Bulk of market
Stable number
Emerging
dominant types
Market needs
largely met
Laggards
Declining
numbers
Possible move
to commodity
standardization
The effects of the product / service life cycle
Time
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.21
3.21
Introduction
Growth Maturity Decline
S
a
l
e
s

v
o
l
u
m
e

The effects of the product / service life cycle (Continued)
Time
Likely order
winners
Likely
qualifiers
Dominant
performance
objectives
Product/
service
characteristics
Quality
range
Flexibility
quality
Availability
quality
Price
range
Speed
dependability
quality
Low price
dependable
supply
Quality
range
Cost
dependability
Low price
Dependable
supply
Cost
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.22
3.22
Different competitive factors imply different performance
objectives
Competitive factors
If the customers value these
Performance objectives
Then, the operations will need to
excel at these
Low price Cost
High quality Quality
Fast delivery Speed
Reliable delivery Dependability
Innovative products and services
Flexibility (products/services)
Wide range of products and
services
Flexibility (mix)
The ability to change the timing
or quantity of products and
services
Flexibility (volume and/or delivery)
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.23
3.23 Order-winning, qualifying and less important
competitive factors
Neutral
+ve
ve
Performance
Competitive
benefit
Order-winning factors
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.24
3.24 Order-winning, qualifying and less important
competitive factors (Continued)
Neutral
+ve
ve
Performance
Competitive
benefit
Qualifying factors
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.25
3.25
Neutral
+ve
ve
Performance
Competitive
benefit
Less important factors
Order-winning, qualifying and less important
competitive factors (Continued)
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.26
3.26
Intended
strategy
Realized
strategy
Deliberative
strategy
Mintzbergs concept of emergent strategy
Unrealized
strategy
Emergent
strategy
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.27
3.27
What you
HAVE
in terms of
operations
capabilities
What you
NEED
to compete
in the
market
Operations
resources
Market
requirements
What you
WANT
from your
operations to
help you
compete
What you
DO
to maintain
your
capabilities
and satisfy
markets
Strategic
reconciliation
Reconciling market requirements and operations resources
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.28
3.28
The challenge of operations strategy formulation
An operations strategy should be:
Appropriate
Comprehensive
Coherent
Consistent over time
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.29
3.29
An implementation agenda is needed
When to start?
Where to start?
How fast to proceed?
How to co-ordinate the implementation
programme?
Slack, Chambers and Johnston, Operations Management, 6
th
Edition,
Nigel Slack, Stuart Chambers, and Robert Johnston 2010
3.30
3.30
The five Ps of operations strategy implementation
Purpose a shared understanding of the motivation,
boundaries and context for developing the operations
strategy.
Point of Entry the point in the organization where the
process of implementation starts.
Process How the operations strategy formulation
process is made explicit.
Project Management The management of the
implementation.
Participation Who is involved in the implementation.