An Evaluation of Operations Strategy Essay Example

An Evaluation of Operations Strategy Essay Example An Evaluation of Operations Strategy Essay An Evaluation of Operations Strategy Essay What is operations strategy? 3 Operations3 Strategy5 Operations strategy6 The content of the operations strategy8 The process of the operations strategy9 Sustainable alignment9 Substitutes for strategy11 Implementation11 Conclusion13 Bibliography14 Introduction In a world, where humans do their best to survive, a never ending need for goods and services is always in people`s mind. In order to meet with these requirements, raw materials and processes should be organised and managed. In other words, `operations` is needed so that resources can be worked on to obtain products. Operations strategy has become a basic thing for organizations. In order to survive in the business world, strategies must be designed and the objectives of each operations should be indicated. Essential thing that every operations of organizations is produce either goods or services. Sometimes both goods and services should be produced in order to satisfy customers. Every organization regardless of their type has an operation function (Slack , N. and Lewis, M. , 2008). What is operations strategy? Operations Operations` can be described as the act of management of inputs such as resources and transformation of these inputs into outputs such as goods and services. During these procedures a strategy should be followed. By doing these sequences of actions, inputs (resources) transforms into outputs (goods and services) and this is called the `input-transformation-output` model of operations (Slack N. and Lewis M. , 2008). In figure 1. 1 an illustration, which is adapted from Meredith a nd Shafer (2010), of production scheme of operations is shown. In this system, three stages must take place in order to obtain outputs from inputs. These stages are, as in the order of its use, strategy, inputs and transformation process. During these, environmental factors have effects on the whole process. Therefore, a control mechanism should be applied on the whole process. Figure 1: The Production System (Meradith, Jack R. and Shafer, Scott M. , 2010) As it can be seen on the figure 1. 1, operations produce two types of outputs at the end of the process which are facilitating goods and services. Carmona and Sieh (2004) state that: `facilitating goods is the material bought or used by the costumer for example food items. Furthermore facilitating goods can be defined the things that provided by the costumers themselves such as medical history. ` On the other hand services considered as benefits. And these benefits may be either tangible or intangible; moreover, they can be escorted with facilitating goods (Meradith, Jack R. and Shafer, Scott M. , 2010). In the figure 1. 2 a visual is shown to demonstrate the differences between products and services (Meradith, Jack R. and Shafer, Scott M. , 2010). Figure 2: The relation between products and services (Meredith, J. R. , 2010) Strategy Although, strategy has a well-known meaning in the military the situation in the business world is not the same. In the business world there are, in fact, many answers to this questions since there is no an actual statement about what it really means. Out of many ideas about the meaning of strategy, Johnson et al. (2005) proposed the widely accepted definition of strategy which is ` Considering the long-term organizations, strategy is the path and choices of organization and through its pattern strategy must have the objective to help its organization to succeed in its markets. The path of a strategy should be planned in general. A strategy must concern about long-term aims and work on the big picture rather than details. While considering and planning the route of an organization, strategy consists of three features and these features have an interaction between them. These three elements are the organization`s objectives, its internal forces and its external forces. The interaction of these elements can be seen in figure 1. 3 which is adapted from (Meradith, Jack R. and Shafer, Scott M. , 2010). Figure 3: Strategy formulation (Meredith, J. R. , 2010) In an organization a strategy may be planned at three levels. As Barnes (2008) points out these levels are corporate level strategy, business level strategy and functional level strategy. Firstly, corporate level strategy deals with the long-term route of organization and its choices. When an organization deals with more than one division within itself, corporate level strategy should be designed to determine what those divisions should be and how resources should be shared between them (Barnes, D. , 2008). Second of the three levels is business level strategy. It mostly works on to find solutions such as how a specific division should compete with its opponents and also determines division`s aims and objective (Barnes, 2008). Lastly, functional level strategy works as the lowest level of strategy. Functional level strategy deals with specific functions such as marketing, manufacturing, finance, etc. It concerns about functions strategic aims and their way of using the resources (Barnes, 2008). Operations strategy Operations strategy is and should be interested in the total picture since that it the entire business. It also should be aware of what kind of changes is happening in its competitive environment. So that required actions can be planned for both present and future challenges. Moreover, there is a necessity of sustainability of operations. Therefore operations strategy must also concerned with the long-term objectives. Considering all of these, different explanations were made about what operations strategy is and what does it include. As Slack and Lewis (2008) points out, there are four important perspectives about operations strategy. These perspectives, as Slack and Lewis (2008) indicates, are; `the top-down perspective, the bottom-up perspective, the market requirements perspective and the operation resources perspective. The figure 1. 4, which is from Slack and Lewis (2008), illustrates these perspectives and their relations with each other in order to achieve a strategy. Figure 4: Four perspectives of operations strategy (Slack N. and Lewis M. , 2008) Creating operations strategy consists of decisions which were taken within the operations functions. Afterwards these decisions are taken, organization`s corporate strategy is affected from these decisions as well as its business strategy. To sum up the operations strategy, as Slack and Lewis (2008, p: 18) state, is; â€Å"Operations strategy is the total pattern of decision which shapes the long-term capabilities of any type of operation and their contribution to overall strategy, through the reconciliation of market requirements with operations resources. † (Slack N. and Lewis M. , 2008, p: 18) The content of the operations strategy Within the operations strategy, long-term objectives should be concerned and in order to design and improve its route strategic decisions should be made. These decisions are also important since they are the building blocks of an operations strategy (Slack , N. and Lewis, M. , 2008). The collection of these decisions is named `the content of operations strategy` by Slack and Lewis (2008). In addition, Barnes (2008) points out that these decisions are to be decided in specific and important areas. The mentioned areas concerned with the structure and infrastructure of operations (Barnes, 2008). The structural decisions areas, as they are indicated by Barnes (2008), are: ? Facilities: decisions about facilities should find solutions to questions like what the size of each facility will be and where these facilities should be located. The decisions also emphasise the product range of each facility and their target markets. ?Capacity: the question that how the facilities will be used is answered by the decisions which are taken in this area. Furthermore, due to these decisions, a specific facility of organization will be affected. Additionally its ability to serve in its market will be affected. ?Process technology: the equipment’s technological statuses which are used in operations processes are the main interest of these decisions. ?Supply network: decisions about supply network become important in order to decide which suppliers in which locations should be chosen. These decisions also help organizations to manage their relations with their suppliers (Barnes, 2008). The route of operations which is to last through organizations life is set by these structural decisions. Truly these decisions mostly cause large amounts of money to the organizations. Therefore they should be well thought strategically in order to avoid any unnecessary changes in the future. Issues that are concerned by infrastructure are (Barnes, 2008); ? Quality: In order to achieve quality, some decisions must be made for quality management policies. ?Performance measurement: Decisions about both financial and non-financial management. ?New product development: Decisions which are made in order to design and develop new products. Work organization: The structure and scheme of the organizations in operations. ?Human resources: The decisions about recruitment; training and management style. (Barnes, 2008) The process of the operations strategy The reconciliation which is essential between market requirements and operations resources of operations can be formulated and controlled by using the process of operations strategy. To put it another way the formulation of the process of operat ions strategy deals with the questions like in which way operations strategies should be designed and combined. Regardless of the type of organizations, reconciling operations resources with market requirements is the aim of the process of operations strategy (Slack , N. and Lewis, M. , 2008). Slack and Lewis (2008) indicates that the process of operations strategy can be formulated in three steps. First of all, the objectives of formulation should be studied and an alignment between market`s requests and operations capabilities to satisfy these requests must be achieved. Once an alignment is achieved decisions and plans should be made in order to keep it through operations life. In other words a sustainable alignment is needed. For the second part of the process, substitutes are to be used for the strategies. After achieving a sustainable alignment and improving it with substitutes the third part of the process takes place which is implementation (Slack , N. and Lewis, M. , 2008). Sustainable alignment Providing a sustainable alignment in operations strategy plays an important role to obtain a settlement between market requirements and operations resources. To make the word `alignment` clear, a figure is shown which is adapted from (Slack , N. nd Lewis, M. , 2008). Figure 5: Alignment of strategy (Slack , N. and Lewis, M. , 2008) On this figure, the vertical side of the axis system is to symbolize market requirements. A rise occurring on the scale means market capabilities is also rising along with it. On the other side, the horizontal scale of the system symbolizes operations resources and the processes capabilities. A few points, which are stated below (Slack and Lewis, 2008), can be considered within this factor: ? The consideration of operations success regarding its skills for the achievement of objectives. Operations skills to use its resources effectively. ?The firm’s resources power to support its business processes. With analysing this figure Slack and Lewis (2008) points out that `in order to obtain alignment, a well-designed balance is needed between required market performance and actual operation performance. As a visual proof for this balance, a diagonal line on the axis systems is shown. To sum up, it is stated that an alignment is the point where market requirements and operations resources unites. In order to create an alignment some organizations follow the path which is fitting resources to the requirements of the markets. Alongside this, some other organizations may do vice versa. They can evaluate their capabilities and then apply these into markets. Substitutes for strategy New approaches to operations have been made up and they have become more popular recently. Organizations may think well about these new approaches and there are few common reasons for that. Firstly, as it is pointed out by Slack and Lewis (2008), the new approaches are quite easy to understand and to apply which helps to avoid the complexity of modern operations. Secondly, most operations have tried one of the new approaches and they are likely to work. Furthermore, managers, who learned about these new methods either from a consultant or from a book, think that it might worth a shot since nothing else have helped them to achieve what they ask for. It is indicated by Slack and Lewis (2008) these approaches are: ? Total Quality Management ?Lean Operations ?Business Process Reengineering ?Enterprise Resource Planning ?Six Sigma It must be well-known that these approaches are not strategies and they are general within themselves. However, they are strategic decisions as it is stated by Slack and Nigel (2008). These methods can be part of a strategy and since all of them have different aims and path they should be fully understood before they are being used. Implementation In order to finish the process of operations strategy, a final step must be completed. This final step is the implementation of strategy and it is a quite important part of the process of operations strategy. After planning all the activities in order to create a strategy, the steps have to be organised so that everything goes as smooth as they are planned. This is called implementation. In a general way there are few key points to the formulation of strategy process. (Slack , N. and Lewis, M. , 2008) points out these key points and they are called five Ps. These are as follows: ? Purpose ?Point of entry ?Process ?Project management ?Participation Conclusion In conclusion, operations strategy is an essential thing for every organization. It focuses on the objectives of the operations. While concerning these long-term objectives strategies works on the total picture of the business and its competitive environment rather than details. A process which is called transformation process allows operations to produce goods and services. In order to decide the range of these products different perspectives are studied such as market requirements and operations resources. Through these perspectives a direction can be drawn for operations long-term objectives. Every detail of organizations such as their facilities, locations, capacities, suppliers, the quality of their products and services etc. comprise the content of the operations strategy. Once important decisions are taken strategies must be processed and in order to do this an alignment between operations market requirements and operations resources should be obtain. Afterwards different methods can be used to improve the strategy so that a sustainable alignment is achieved. However, for strategies to become real an implementation must take place otherwise all the decisions would not matter. Bibliography Barnes, D. (2008). Operations Management: An International Perspective. Royal Holloway University of London: Cengage Learning EMEA. Carmona, M. and Sieh, L. (2004). Measuring Quality in Planning: Managing the Performance Process. TaylorFrancis. Johnson, G. , Scholes, K. and Whittington, R. (2005). Exploring Corporate Strategy (7th ed. ). Harlow: Prentice Hall. Meradith, Jack R. and Shafer, Scott M. (2010). Operations Management for MBAs (4th ed. ). John Wiley Sons. Slack , N. and Lewis, M. (2008). Operations Strategy. Harlow: Financial Time Prentice Hall.