Nigel Slack, author from the Operations Advantage, discusses several methods to gain a successful operations strategy
You will find there’s common misunderstanding about operations strategy: it serves to apply the choices passed down by whoever is formulating business strategy. Although implementing business strategy top-down is but one important role of operations strategy, it is merely certainly one of four elements that has to be present if any operations method is in order to work. These 4 elements are illustrated inside the diagram below.
Each one of these elements is really a necessary condition to formulate a totally strategic operation. These four elements (or perspectives) on operations strategy are discussed in more detail below.
Top-Down: Operations must directly reflect the business’ overall strategy
Operations is but one amongst many functions that must be aligned with business strategy and pull inside the same strategic direction. Deriving an Kogan Page Operations management Books from a business strategy are not an easy planning activity. During the translation from business to operations strategy, all the ambiguities and conflicts which might be buried within most businesses strategies will probably be exposed and can need to be resolved. Business strategies are painted in broad brushstrokes. They point the company inside a general direction, but cannot explain every detail; that maybe what functional strategies are for. Operations strategy should take the thrust of commercial strategy and translate it into exactly what it means for the operation’s resources and processes. To put it differently, is there a clear correspondence involving the business along with your operations strategy? What this means is setting up a strong, logical and explicit outcomes of all the activities of the operation and the business strategy that operates. Besides this vertical logic from business to operations strategy, operations strategy must also be coherent with itself and the strategies other functions pursue.
Outside-In: Operations must supply a position for your business in its markets
Operations could be the supplier to its markets. It must help establish and keep its desired market position by giving the degrees and services information, innovation and value that outclasses, or otherwise keeps up with, competitors. The true secret question to inquire about must be, ‘how well do our operations conserve the business compete in its markets?’ While straightforward, the hitch is the concepts, language and (somewhat) philosophy employed to help marketers understand markets are not at all times valuable in guiding operations. The result is that descriptions of market needs often need ‘translating’ before they could be necessary to operations. The partnership between markets and the operations that provide them isn’t only a matter of markets dictating how operations should behave. Customers will behave, at least partly, on what you (maybe competitors) have treated them during the past. It usually is a two-way street involving the markets along with your operations.
Bottom-Up: Operations must get strategic advantage by gaining knowledge through daily experience
Don’t assume all decisions who have long-term strategic importance come top-down from senior management. Important ideas can emerge from seemingly routine activities that happen within operations. A company can relocate a particular strategic direction since their on-going experience of serving customers with an operational level convinces them that it’s the right course of action, then a general consensus emerges, often from the operational a higher level the organisation. Letting strategic ideas emerge from the operational a higher level a small business isn’t abdicating responsibility; it’s accepting exceptional ideas can come from those who act on the sharp end. It will be a dereliction of duty if one did not try everything simple to encourage plans from daily experience. Every action, every decision, every transaction manufactured by your operation’s processes, is a chance to include in existing knowledge.
Inside-Out: Operations must provide the strategic capabilities of their resources and processes
The true secret question this is, ‘what can your operation accomplish that your competitors can’t?’ To put it differently, just how can one’s operations bring something unique towards the business’ capabilities? For way too many businesses, the answer then is it can’t. But regardless of whether one’s operation doesn’t have any unique capabilities, it should at least be striving to realize some kind of advantage by reviewing the resources and processes. Thus, two further questions are relevant: what resources and processes must be leading to building capabilities? And: how will be the decisions which might be made from the operation leading to developing and supporting these capabilities? Try asking several questions of the so-called VRIO framework[i].
Do you have valuable operations capabilities?
Do you have rare operations capabilities?
Do you have operations capabilities which might be expensive to imitate?
Have you been organized to capture value of operations capabilities?
The inside-out portion of operations strategy should try and make certain that resources and processes are valuable, rare, inimitable, understanding that the operation is organised to exploit them. Do not forget that these things are time dependent. A capability may be valuable now, but competition is improbable to be still.
[i]In, Barney, J. B. (1995). Looking Inside for Competitive Advantage. Academy of Management Executive, Vol. 9, Issue 4, pp. 49-61
About the writer: Nigel Slack is Emeritus Professor of Operations Management and Strategy at Warwick Business School and the former head of their Operations Management Group. He provides for a consultant in lots of sectors, including Financial Services, Utilities, Retail, Services, General Services, Aerospace, FMCG, and Engineering Manufacturing.
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