Resources: what type of materials, information, people, technology, buildings, etc are needed
to fulfil the organization’s objectives
Processes: how resources are organized to best create the required mix of products and
services
Network is a group of two or more sets of resources linked together.
Four characteristics of
demand have a significant effect on how processes need to be managed: (P5)
1. Volume, high volume results in lower units cost than low volume
2. Variety, high variety means higher cost than low variety
3. Variation, low variation have lower cost than high variation
4. Visibility, high visibility tends to result in higher cost than low visibility
The four V’s act as a link between the strategic and operational aspects of operations
management.
Strategy:
• Setting broad objectives that direct an enterprise towards its overall goal
• Planning the path that will achieve these goals
• Stressing long-term rather than short-term objectives
• Dealing with the total picture rather than stressing individual activities
• Being detached from, and above, the confusion and distractions of day-to-day
activities
Operations management: managing the resources and processes that produce and deliver
goods and services
Operations strategy vs operations management
• Operations strategy is longer term
• Operations strategy is concerned with a higher level of analysis
, • Operations strategy involves a greater level of aggregation
• Operations strategy uses a higher level of abstraction
Four perspectives on operations strategy:
1. Operations strategy is a ‘top-down’ reflection of what the whole group or business
wants to do
2. Operations strategy involves translating ‘market requirements’ into operations
decisions
3. Operations strategy is a ‘bottom-up’ activity where operations improvements
cumulatively build strategy
4. Operations strategy involves exploiting the capabilities of ‘operations resources’ in
chosen markets
Top down perspective:
• Operations strategy must reflect the decisions taken at the top of the organization
which set the overall strategic direction of the organization
• There are three levels of strategy, corporate, business and functional
o Business strategy forming the context of functional strategies
o Corporate strategy forming the context of business strategies
Outside-in perspective (market requirements):
• Operations strategy must reflect the organization’s market position
o Customers and competitors influence market positioning
• Performance objectives:
o Quality
o Speed
o Dependability
o Flexibility
o Cost
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