Production & Operations

Management
Peeyush Mehta, K-304, NAB
pmehta@iimcal.ac.in
Top 25 global firms based on
Operations and Supply chain
parameters: 2014-2018
Source: Gartner
Levels of Strategy-Making
What can Operations Do?
Responsiveness

High
Current frontier
In the industry
Competitor A

Eliminate
inefficiencies
Competitor C

Low
Competitor B

High Low Cost

What would smarter firms do?
Responsiveness

High

Redesign
process

New frontier
Current frontier
In the industry
Low

High Low Cost

Operations Management and
Operations Strategy
 OM
Targets the frontier
Operations Strategy:
Position on the frontier
 Can Operations Contribute to
Sustainability of Successful Strategy?
Source: USA Today, 12 June
Tech Wreck this Wall
week Street Journal, June 12, 2017
The curse of the top dog
Zara’s OS
 Zara
• Value proposition and Competency:
– Fast fashion
– Speed and variety (order winners), cost and quality
competitive
• Resource: Tailored Operations strategy
– High degree of vertical integration due to tight
coordination requirements of value chain
– Capacity includes: design center, manufacturing, DCs,
2 CWHs in Spain, 90% retail network
– Direct access to road and rail network, proximity to
airport
 Zara
• Process:
– Supply
• more than 50% suppliers in Spain
• Volatile and time sensitive products in-house, predictable
offshoring
– Technology
• Postponement of dyeing
• Toyota engineers have designed the production systems
• Small set up times and small batches for time sensitive products
• Centralized distribution to exploit risk pooling
• Frequent deliveries with short lead times for re-ordering
• IT enabled supply chain
– Demand
• Short campaigns, scarcity image, reduces leftovers and markdowns