Operations Strategy

Operations Strategy


Operations strategies and decisions should fulfill the needs of the business and add competitive advantage to the firm. Operations strategy for a business is the company’s plan for how the business will operate to achieve a set of goals.Operations strategy is a strategy for the operations function that is linked to the business strategy and other functional strategies, leading to a competitive advantage for the firm.

Operation strategy model:

Operation strategy is a functional strategy that should be guided by the business strategy and should result in a consistent pattern in decisions. The four elements inside the box: Mission, distinctive competence, objectives, and policies are the heart of operation strategy. The outcomes of the process are operation decisions in the four parts of operations (process, quality, capacity, and inventory) which are well concerned with the other functions in the business.

Corporate and business strategy:

The corporate strategy defines what business the company is pursuing. Business strategy follows from the corporate strategy and defines how a particular business will compete. Most large corporations have several different business, each competing in different market segments. Its business must its own basis for competing in its particular markets.

Treacy and wierserma (1997)  defines three generic types of business strategies, which can be selected by any particular business: customer intimacy, product leadership, and operational excellence.

Operations Mission:

Every operation should have a mission that is connected to the business strategy and in agreement with the other functional strategies. For example if the business strategy is product leadership, the operation should emphasizes new product introduction and flexibility to adapt products to changing market needs. Other business strategies would lead to other operations missions, such as low cost for fast delivery.

Distinctive Competence:

All operations should have a distinctive competence (operations capability) that differentiates it from the competitors. It is something that operations does better than anyone else. It may be based on unique resources (human or capital) that are difficult to imitate (reproduce). It can also be based on patented technology or any innovation in operations that cannot be easily copied.

The distinictive copetenceshould mass with mission of operations. When the operations mission is to excel at new product introduction. The distinctive competence must be something that is coordinated with marketing, finance, and the other functions so that it is supported across the entire business as a basis for competitive advantages.

Operations objectives:

Operations objectives are the third element of operations strategy. The four common objectives of operations are cost, quality, delivery, and flexibility. This objective should be drive from mission and they constitute a restatement of the mission in quantities and measurable term. The objective should be long range term (5 to 10 years) to strategic in nature.

Operations policies:

Operations policies constitute the fourth element of operations strategy. Policies should indicate how the operations objectives will be achieved. Operations policies should be developed for each of the major decision categories (process, equality, capacity and inventory) these policies should, of course, be well integrated with other functional decisions and policies.

Operations Strategy