Operations strategy


Operations strategy comprises six components :

1. Positioning the production system.
2. Focus on factories and service facilities,
3. Product/Service design and development.
4. Technology selection and process development.
5. Allocation of resources to strategic alternatives.
6. Facility planning

Positioning the Production System

Positioning the production system in manufacturing , means , selecting the type of product design, type of production processing system and the type of finished goods inventory policy for each major product line the business plan.

Two basic types of product design are custom and standardized, Custom products are designed according to the needs of individual customers, where as, standardized products are produce models, either continuously or in very large batches to meet the stable demand for longer period..

Focus of Factories and Service Facilities

An important element of operations strategy is a plan for each production facility to be specialized in some way .Specialization of a production facility allows it to excel at achieving a particular set of objectives .According to Wickham Skinner , “ A factory that focuses on a narrow product mix for a particular market niche will outperform the conventional plant, which attempts a broader mission�. This is because its equipment , supporting systems and procedures can concentrate on a limited task for one set of customers, its costs and especially its overheads are likely to be lower than those of the conventional plant .The key point is that, it is generally desirable for factories and service facilities to be specialized in some way , so that , they will not be vulnerable to smaller or more specialized competitors , that can provide customers with a better set of lower costs , faster product or service delivery, on-time delivery, high product and service quality , and flexibility .

Product/Service Design and Development

After the product is designed and developed it goes through various stages such as introduction, growth, maturity and decline .During the development of new products such activities like operations, marketing, and engineering functions are considered .
The product design has a tremendous impact on product quality, production cost, numbers of suppliers and levels of inventories.

Technology Selection and Process Development

An essential part of operations strategy is the determination of how products will be produced. This involves deciding and planning every detail of production processes and facilities. Combining high-technology equipments like robots, automated warehouse, with conventional equipments and devising overall production schemes are the challenges faced by operations manager today.

Allocation of Resources to Strategic Alternatives

Most companies have limited resources available for the production. Cash and Capital funds, capacity, workers, engineering talent, machines, materials, and other resources are available in varying degrees to each firm .These resources must be allocated in ways that maximize the achievement of the objectives of operations.

Facility Planning , Capacity, Location and Layout

The long range capacity to produce the products /services for a firm is a part of setting operations strategy .Capital is required for production capacity.The decisions involved
Regarding the acquisition of land and and production equipments, specialized production technologies to be develop, and location of new factories have long –lasting effects and are subject to heavy risk.