Operations strategy and technology
Lecture 1 – introducing a multifaceted perspective of operations
strategy and technology
Example tesla with first mass-market electric car. Lot of bottlenecks,
rework and quality issues:
- Over-automation of processes: process technology should fit process
complexity and process maturity. Automation should follow process
stability, not precede it. -> robots couldn’t handle variability and
lacked human flexibility, “humans are underrated”.
- Overambitious capacity targets: build capability before capacity.
Learn and stabilize before scaling. -> scaling amplified inefficiencies
and quality issues.
- Lack of integration between product and process design: align
product and process strategy. Design for manufacturability and
involve operations early in product design. -> automation struggled
with the products complexity.
- Poor workforce and learning strategy: human expertise drives
learning. Engage the workforce as a strategic resource for problem-
solving and continuous improvement. -> human insights and
flexibility were missing when problems arose, reintroducing people
saved production but revealed lost learning opportunities.
Misalignment between technology, people, process, product and
strategic intent.
Define operations strategy and its role in enabling and sustaining
competitiveness
Important requirements when moving from one level to the next is
correspondence: a clear and logical connection between levels of
strategy.
- Business strategy: how do we compete? Cost leadership,
differentiation or focus.
- Operations strategy: directing
- Operations management: how do we execute and control daily
processes to deliver consistently? Functional strategy.
Operations management is concerned with the design, operation and
improvement of the systems (incl resources and processes) that create
and deliver the firms primary products and services.
- Short-term decisions and actions
- Implementing strategy on a practical level
, - Managing the day-to-day activities of resources, processes and
people
- Enabling the meeting of clear performance objectives
Example: how much do we order this week
Operations strategy is the about
- The long term decisions and plans
- (structure of) capabilities, processes and resources
- To implement the business strategy
- And meet the company’s competitive goals/priorities
Example: building new fabrics in other countries
Explain the four perspectives on operations strategy perspectives and
their role in strategic alignment
- Top-down perspective: what the whole group or business wants to
do. Translating business level strategy into operational choices. Eg
deciding between cost leadership (more efficient or configure the
value chain differently) and differentiation (more effective
performance or reconfigure processes).
- Bottom-up perspective: where operations improvements build
strategy. Strategy evolves naturally, reflecting the uncertainty of the
future. Eg day-to-day operational experience > learning >
knowledge building > convert knowledge into capabilities.
- Inside-out perspective: exploiting the capabilities of ‘operations
resources and capabilities’ in chosen markets. Competitive
advantage stems from a firms unique resources and capabilities:
VRIO framework, resources must be Valuable, Rare, Inimitable and
Organized to create advantage.
o Resources: tangible and intangible assets (eg technology,
relationships, knowledge, process expertise) – what the firm
has
, o Capabilities: abilities to effectively deploy resources – what the
firm can do
- Outside-in perspective: translating market requirements into
operations decisions.
o Performance objectives: how operations measure and deliver
performance to meet those demands. Cost/price, quality,
delivery speed, delivery reliability/dependability and flexibility.
o Market requirements: what the market and customers demand
for competitiveness.
o Trade-off: can’t be the best at all dimensions, balancing
competing priorities, choosing between conflicting goals.
Identify and analyze the different facets of performance that shape
operations strategy
There a five classic performance objectives (cost, quality, delivery speed,
delivery reliability and flexibility), but today new types that matter more?
Multifaceted, due to emerging global trends and pressures.
- Environmental sustainability: meeting the resources and service
needs of current and future generations without compromising the
health of the ecosystems that provide them.
- Human centricity: renewed attention to the recognition of industry
to achieve societal goals that go beyond growth and profit and
address well-being and health of workers.
- Inclusivity: design and execution of operational (and supply chain
processes) that ensure equitable participation, opportunity and
treatment of individuals, regardless of their background, identity and
status.
- Resilience: resiliency refers to the ability of operational systems
and processes to anticipate, prepare for, respond to and recover
from disruptions while maintaining continuous business.
Understand the content of operations strategy
Operations strategy: long-term decisions that shape the direction of
operations, whether deliberate of by default.
Decision areas refer to the collection of decisions needed to manage
operational resources and capabilities. Help organizations achieve their
target performance objectives. Located at the inside-out perspective
(resources and capabilities) 4 main decisions areas:
Lecture 1 – introducing a multifaceted perspective of operations
strategy and technology
Example tesla with first mass-market electric car. Lot of bottlenecks,
rework and quality issues:
- Over-automation of processes: process technology should fit process
complexity and process maturity. Automation should follow process
stability, not precede it. -> robots couldn’t handle variability and
lacked human flexibility, “humans are underrated”.
- Overambitious capacity targets: build capability before capacity.
Learn and stabilize before scaling. -> scaling amplified inefficiencies
and quality issues.
- Lack of integration between product and process design: align
product and process strategy. Design for manufacturability and
involve operations early in product design. -> automation struggled
with the products complexity.
- Poor workforce and learning strategy: human expertise drives
learning. Engage the workforce as a strategic resource for problem-
solving and continuous improvement. -> human insights and
flexibility were missing when problems arose, reintroducing people
saved production but revealed lost learning opportunities.
Misalignment between technology, people, process, product and
strategic intent.
Define operations strategy and its role in enabling and sustaining
competitiveness
Important requirements when moving from one level to the next is
correspondence: a clear and logical connection between levels of
strategy.
- Business strategy: how do we compete? Cost leadership,
differentiation or focus.
- Operations strategy: directing
- Operations management: how do we execute and control daily
processes to deliver consistently? Functional strategy.
Operations management is concerned with the design, operation and
improvement of the systems (incl resources and processes) that create
and deliver the firms primary products and services.
- Short-term decisions and actions
- Implementing strategy on a practical level
, - Managing the day-to-day activities of resources, processes and
people
- Enabling the meeting of clear performance objectives
Example: how much do we order this week
Operations strategy is the about
- The long term decisions and plans
- (structure of) capabilities, processes and resources
- To implement the business strategy
- And meet the company’s competitive goals/priorities
Example: building new fabrics in other countries
Explain the four perspectives on operations strategy perspectives and
their role in strategic alignment
- Top-down perspective: what the whole group or business wants to
do. Translating business level strategy into operational choices. Eg
deciding between cost leadership (more efficient or configure the
value chain differently) and differentiation (more effective
performance or reconfigure processes).
- Bottom-up perspective: where operations improvements build
strategy. Strategy evolves naturally, reflecting the uncertainty of the
future. Eg day-to-day operational experience > learning >
knowledge building > convert knowledge into capabilities.
- Inside-out perspective: exploiting the capabilities of ‘operations
resources and capabilities’ in chosen markets. Competitive
advantage stems from a firms unique resources and capabilities:
VRIO framework, resources must be Valuable, Rare, Inimitable and
Organized to create advantage.
o Resources: tangible and intangible assets (eg technology,
relationships, knowledge, process expertise) – what the firm
has
, o Capabilities: abilities to effectively deploy resources – what the
firm can do
- Outside-in perspective: translating market requirements into
operations decisions.
o Performance objectives: how operations measure and deliver
performance to meet those demands. Cost/price, quality,
delivery speed, delivery reliability/dependability and flexibility.
o Market requirements: what the market and customers demand
for competitiveness.
o Trade-off: can’t be the best at all dimensions, balancing
competing priorities, choosing between conflicting goals.
Identify and analyze the different facets of performance that shape
operations strategy
There a five classic performance objectives (cost, quality, delivery speed,
delivery reliability and flexibility), but today new types that matter more?
Multifaceted, due to emerging global trends and pressures.
- Environmental sustainability: meeting the resources and service
needs of current and future generations without compromising the
health of the ecosystems that provide them.
- Human centricity: renewed attention to the recognition of industry
to achieve societal goals that go beyond growth and profit and
address well-being and health of workers.
- Inclusivity: design and execution of operational (and supply chain
processes) that ensure equitable participation, opportunity and
treatment of individuals, regardless of their background, identity and
status.
- Resilience: resiliency refers to the ability of operational systems
and processes to anticipate, prepare for, respond to and recover
from disruptions while maintaining continuous business.
Understand the content of operations strategy
Operations strategy: long-term decisions that shape the direction of
operations, whether deliberate of by default.
Decision areas refer to the collection of decisions needed to manage
operational resources and capabilities. Help organizations achieve their
target performance objectives. Located at the inside-out perspective
(resources and capabilities) 4 main decisions areas:
