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Session1-3 Top Down Fit Structure Infrastructure

The document outlines the concept of Operations Strategy, which serves as a framework for aligning operational activities with corporate strategy through long-term objectives, strategies, and initiatives. It emphasizes the importance of consistency in operations structures to maintain competitive advantages and discusses the Fit & Focus framework, which involves excelling in order winners while meeting qualifiers. Additionally, it highlights reasons for inconsistent operations structures and the stages in the role of operations within an organization.

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sakshi maheshwari
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9 views18 pages

Session1-3 Top Down Fit Structure Infrastructure

The document outlines the concept of Operations Strategy, which serves as a framework for aligning operational activities with corporate strategy through long-term objectives, strategies, and initiatives. It emphasizes the importance of consistency in operations structures to maintain competitive advantages and discusses the Fit & Focus framework, which involves excelling in order winners while meeting qualifiers. Additionally, it highlights reasons for inconsistent operations structures and the stages in the role of operations within an organization.

Uploaded by

sakshi maheshwari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Operations Strategy:

Fit & Focus Framework


Structure & Infrastructure
What is Operations Strategy?
A “game plan” for the Operations organization to
keep itself aligned with the Corporate strategy
It consists of :
· Long term objectives
· Strategies
· Programs
· Initiatives

To
To help
help the
the business
business build
build and
and maintain
maintain aa
competitive
competitive advantage
advantage for
for future
future success
success
Concept of Fit & Focus
· Excelling on the order winners;
Meeting the qualifiers

· Externally consistent
– Fit with the way you want to compete

· Internally consistent
– All the pieces fit together
– e.g., Quality and workforce
Scale/ capacity and process technology
Inconsistent Operations Structures
Example: Company A
· Products: Five different groups of consumer and
industrial electronics products
· Market Priorities
– Market 1: Reliability
– Market 2: Product Introduction
– Market 3: Low Cost
– Market 4: Reliability, Fast Delivery
– Market 5: Low Cost, On-time Delivery
· Manufacturing System
– Centralized facilities, “economies of scale”, automation,
“total system, fully computerized”
Inconsistent Operations Structures
Example: Company B
· Products: Plastic moldings
· Market characteristics
– Standardized products, high volumes, low margins,
price competition
– Customized products, low volumes, high margins,
delivery competition

· Manufacturing planning
– Long runs (large lot sizes)
– “Efficiencies and Cost” mentality
Consistent Operations Structures
Example: Two furniture manufacturers
Broad distribution of High price; High
Strategy limited low-price line; style; Exclusive
Wide advertising distribution
• Decentralized FG • Variety; style change
Opn. tasks
• Ready availability • Mfg to order
• Low costs • High reliability

• Large lot sizes • Small lot sizes


Opn.
• Specialized facilities • Flexible facilities
strategy
• Large-scale plants • PPC coordination
• Low-med skilled • Technically skilled
workforce workforce
Reasons For Inconsistent
Operations Structures (1)
· Operations’ strategic mission never made
explicit
· Experts may aim to achieve goals which are:
– Not congruent with the firm’s competitive strategy
– Based on professional allegiance and pride
» Engineers/IT, cost accountants
Reasons For Inconsistent
Operations Structures (2)

· Successful operations attract work


– More and more products and processes are piled in
– Often results in (futile) attempts to meet operating
requirements of a variety of markets, technologies and
competitive strategies

“Success breeds Failure”


Reasons For Inconsistent
Operations Structures (3)
· Successful companies build systems to
support their “one right way”
– Structure (hardware)
– Infrastructure (software)

· Then the environment changes


– And they have a juggernaut headed in the wrong
direction …..

“Success breeds Failure”


FIT and The Strategy Hierarchy
Example Questions
Corporate Strategy
What Businesses
should we be in?
Business Business
Strategy Strategy How should we
compete?

Where and how


Functional Functional Functional
big should our
Strategy Strategy Strategy
operating units
be?
Operations Strategy
Corporate/ Business
Strategy

Finance tasks Operations tasks Marketing tasks


or priorities

Capacity & Tech.& Opns planning


facilities strategy development & control
strategy strategy

OPERATIONS PRACTICES
What Competitive Advantage Are
You Seeking?
· Lowest price/cost

· Highest quality
– Product/service performance, tolerances, purity
– Customer service

· Most dependable
– Product or service
– Delivery or availability
– Field service/repair
What Competitive Advantage Are
You Seeking? (Contd.)
· Most flexible and responsive
– Broad product line
– Customized products
– Fast response/delivery times

· Most innovative
– New products
– Latest technologies
Order “Winners” versus
“Qualifiers”
· Some more important than others
· Qualifier - an entry ticket:
– the basic criteria that permit the firm’s products to be
considered as candidates for purchase by
customers
· Winner - single most important attribute to the
customer:
– the criteria that differentiates the products and
services of one firm from another
More Examples of FIT & FOCUS
· Capacity, standardization, automation, KPIs in an
Integrated Steel Plant
· Capacity of Clinkering vs. Grinding-Packaging in a
Cement company
· Transportation and inventory stocking/ordering systems
in a FMCG firm – for high-vol & fast-moving SKUs with
steady demand vs. low-vol SKUs with fluctuating
demand
· Process design and HR skills & training systems for
Common Services in a Large Bank
· Process design and HR skills for Premium Tourism &
Hotel Service
More Examples of FIT & FOCUS

Case: ACC vs. DJC


Operations Choices

Structural Infrastructural
Capacity Workforce
Facilities Quality
Technology Work Control
Sourcing Organization
Stages in Operation’s role
1. Internally neutral
- operations planning & maintenance; prevent
defects, breakdowns
2. Externally neutral
- industry practice; capital investments emphasised;
eco-of-scale
3. Internally supportive
- fit with corporate strategy; new technologies
acquired as means to add capacity and improve
4. Externally supportive
- production, maintenance, quality, logistics, R&D
play a proactive role in strategy formulation; ‘learning’ for
improvement is emphasised; HR plays a constructive role

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