Operation management is the systematic design, direction & control of the process that transform inputs into services.

Plants – Factory & location where all activities take place. People – Direct & Indirect workforce. Parts – The components, sub assemblies, or even products. Processes – Methodologies, technology, tooling & fixtures for establishing maintaining, and improving productivity. Planning & control – MIS which initiates, direct, monitors & collect feedback.

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Corporate Strategy• Environment Scanning

• Core Competencies.

• Core Process

• Global Strategies

Functional Strategy• Finance• Marketing• Operations

Market Analysis• Market Segmentation

• Needs Assessment

Competitive Priorities• Cost• Quality • Time • Flexibility

Competitive Capabilities

• Current

• Needed • Planned

New Service/ Product Design• Design

• Analysis• Development• Full launch

OPERATION MANAGEMENT AND STRATEGYOperation function should be guided by strategies which are consistent with the organisation strategies

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OPERATION STRATEGYThe set of decision that are warranted in the operational processes to support the competitive of the business. To develop organizational strategies at three level of operation: • Corporate Level• Business Level• Functional Level

CORPORATE STRATEGY

BUSINESS STRATEGY

PRODUCT OR SERVICES

COMPETITIVE PRIORITIES( COST, TIME QUALITY, FLEXIBILITY)

GLOBALBUSINESS

ENVIROMENT

COMPETENCIES

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OPERATION STRATEGY

Production Systems ( Make to stock/ Order, Assemble to order) Product Plans Outsourcing Process Decisions Quality Decisions Capacity Decisions ( Facility planning, location, layout) Operating Decisions. Technology Decisions. Resource Planning.

LINKAGE BETWEEN CORPORATE, BUSINESS & OPERATION STRATEGY

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The six elements of operation strategy are:

1) Designing of the production system – The product design has two varieties - Customised product design – The design is customised when the volume is low

and special features are inbuilt. Eg: Turbines, boiler, air compressors etc. Standard product design – The designer adopt a universal design so that the

product will have wide acceptance across the customer. Eg: Air conditioners, TV.

There are two types of production systems: Product focussed – system is adopted where mass production is using a group

of machines. Eg: Automobiles, computer. Process focussed – system is based on a single task like painting, packing, heat.

2) Facilities for the production and services – Production allows the firm toprovide the customer with products of low cost, faster delivery, on-time delivery.

ELEMENTS OR COMPONENTS OF OPERATION STRATEGY

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3) Product & service design and development –

Generating the idea. Creating the feasibility reports. Designing the prototype Preparing a production model. Evaluating the economies of scale for production. Testing the product in the market. Obtaining feedback. Creating the final design and starting the production.

Product life cycle introduced in the market has its own life cycle.1) Introduction stage.2) Growth stage.3) Maturity stage.4) Decline stage.

ELEMENTS OR COMPONENTS OF OPERATION STRATEGY

QUALITY

FLEXIBILITY

OPERATION STRATEGY

TIME

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OPERATION MANAGEMENT AND STRATEGY Phases of Operations Strategy

Quality is the driving factor for any organisation. Quality includes Just-In-Time, Lean Manufacturing, Total Quality Management, Total Productive Maintenance.

Flexibility enables a firm to meet the changing demands of the customers to develop new processes and materials and to make the organisation more agile in its manufacturing

Planning

Design Time

Processing Time

Changeover Time

Delivery Time

Response Time

Factor To Be Reduced During Operation

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OPERATION MANAGEMENT AND STRATEGY Strategic Decision Making- is most crucial management function.Decisions commit the organisation and its members to activities which havefinancial repercussions and effect the functioning of others departments ordivision. Strategic Decision making consist of :-

• Data Gathering• Analysis• Predicting outcomes• Environmental Scanning• Core competencies

Environmental Scanning • Competitors may be gaining an edge by diversification, making forays into firm niche market by making new and better products.• Suppliers could be forming cartels and preparing to drive hard bargains.• Government could be passing laws and issuing order which could affect the supply of materials. Now it is used to be SWOT analysis and PESTLE analysis.

Customer Relationship

New Product Services

Development

Supplier Relationship

Order Fulfillments.

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OPERATION MANAGEMENT AND STRATEGY Strategic Decision Making• Core competencies – The objective to use unique strengths to create and developan organisation. Core processes of an organisation are determined by the corecompetencies. Four main core processes are mentioned:

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OPERATION MANAGEMENT AND STRATEGY Differentiation Strategic – is referred to the long term priorities or goal achieve.“Companies have different potential in terms of maneuverability along with target marketplace (channels), promotion and price. These are affected by the company’s position in themarket, and the industry structure”. The BCG growth-share matrix displays the variousbusiness units on a graph of the market growth rate vs. market share relative to competitors:

A business unit thathas a large marketshare in a fastgrowing industry.Stars may generatecash, but because themarket is growingrapidly they requireinvestment tomaintain their lead.If successful, a starwill become a cashcow when itsindustry matures

a business unit that has a large market share in a mature, slow growing industry. Cash cows require little investment and generate cash that can be used to invest in other business units

A business unit that has a small market share in a high growth market. These business units require resources to grow market share, but whether they will succeed and become stars is unknown.

A business unit that has a small market share in amature industry. A dog may not requiresubstantial cash, but it ties up capital that couldbetter be deployed elsewhere. Unless a dog hassome other strategic purpose, it should beliquidated if there is little prospect for it to gainmarket share.

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INDUSTRY BEST PRACTICESPragmatic Benchmarking – is a method of measuring a company’s processes,methods and procedures in a way that all functions in great details.Benchmarking - A process of comparison with a superior performer anywhere inthe world to improve quality . The following are types of benchmarking:-

Process benchmarking – Business process. Financial benchmarking.Performance benchmarking. Product benchmarking. Strategic benchmarking. Functional benchmarking.

Benchmarking is classified into two groups : Internal Benchmarking – refers to comparison within the organisation or industry. External Benchmarking – refers to comparison with outsiders.

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INDUSTRY BEST PRACTICESSteps in Benchmarking –Planning, analysis, integration, and action are the four steps recognized in theprocess of benchmarking. Targets are set and activities are conducted to reachthem.

Planning – determines the process, service, or the product to be benchmarkedon which metrics are assigned for collection of data. Analysis – Analysed data gives inputs for comparison with the target company’sperformance on the parameter benchmark on which data was collected. Integration – Resources are required across all functions to achieve the targetneeds. Integration involves putting together resources like people, equipments andcommunication, so that progress is unhindered. Action – When changes are needed, actions have to be planned according to thesteps earlier stated. The teams are provided with necessary leadership, authorityand supporting facilities to enable them to complete all activities within the timeframe set for the purpose.

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MANUFACTURING STRATEGIESThere are many types of competitive priorities for process used in themanufacturing of products. The production systems are: Batch production. Mass production. Customised production. Assemble products.

The following are three dominant strategies: Make to stock – Manufacturing firms adopt this strategy to ensure immediatedelivery of the products, minimizing delivery times. Eg: chemical, soft drink. Assemble to order – This strategy serves as a competitive priority ofcustomization and ensures fast delivery. Eg: Paints to colors, furniture. Make to order – The firms set of processes that suits the manufacture based onthe customer requirements. This strategy gives a higher degree of customization,one of the major competitive priority.