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Strategies in Operations Management
Strategies in Operations Management
This article will discuss various strategies involved in operations, such as the
strategy to change to an international organization.
1. Global View
The goal of every business is to provide the best goods or services they
possibly can. Learning from businesses in other countries can provide insight
into how to do that. Taking advantage of being in their location, especially
for service industries, can open whole new markets and provide the next
level of quality in service provision. Providing new customers with quick and
adequate service creates returning customers. The same applies when a
customer is satisfied with a good and keeps buying more of the same.
There are very evident ways to reduce costs, and then some not-so-visible
ways that exist when looking at global possibilities. Moving production to
international locations can save money. Low-skill jobs shifted to countries
with lower wage costs saves money. It also frees higher skilled workers to
perform more high-skill jobs, instead of tasks that are less challenging and
make inefficient use of their time. Such savings can be used as capital
investment funds, another variable in productivity.
Understand Markets
One of the best side effects of participating in international business is the
requirement to interact with foreign customers. This can provide great
insight into current markets, trends, and customer demands that can help
your organization plot a course for the future. This helps with diversification
of product lines, add production flexibility, and can smooth out a business
cycle.
Employ Global Talent
By being global, your organization can offer more, and better, employment
opportunities. Such opportunities are in high demand by talented individuals
looking to expand and enhance their career. Their gain is also your gain as
you can access different ideas, knowledge bases, and skill sets. This also
gives your company more flexibility with your workforce, ability to transfer
and utilize top notch people all over the globe, and retain those individuals
who view international employment as a chance to see the world.
The mission of your company will be the compass by which all other
decisions are made. It is all about satisfying a customer's needs and wants.
A good mission statement will provide the boundaries and focus around
which the firm can rally. Developing a good strategy is difficult but can be
made easier if the organization has a well-defined mission.
3. Competitive Advantage
There are three ways that firms strategize to meet mission: differentiation,
cost leadership, and response. Operations managers turn these into tasks to
be completed in order to deliver goods and services cheaper, better, or more
responsively.
A key factor in any of those strategies and tasks is to establish competitive
advantage. What makes your goods or service more unique than anyone
else who may offer the same? Competitive advantage is the creation of an
exclusive advantage over competitors.
Differentiation
Cost
Cost is not all about the dollars and cents; it also includes what your
customer perceives as maximum value. It means driving down costs,
without making it low-cost or low-quality. There are ways to do this behind
the scenes, in resource allocation, turnover times, shifts and routes, just to
name a few. This can turn into a dollar-and-cents saving to the customer,
although he or she may not know why. As long as the low-cost leadership is
in line with strategy and mission, anything is possible.
Response
These three concepts come into play as operations managers make good
decisions in the seven major functional areas of operations management,
otherwise known as operations decisions.
When sound operations management decisions are made, it shows that the
strategies were effective, and the organization's mission can be met.
The three concepts of differentiation, cost, and response come into play as
operations managers make good decisions in the seven major functional
areas of operations management, otherwise known as operations decisions.
Very few products are either all goods or all service. Defining the product at
this stage plays an important part in how a decision is implemented.
Preconditions
There are many factors, internal and external, that can influence the success
of a decision. Those factors require consideration for possible outcomes.
While the list is long, at a minimum, the following should be evaluated:
Fundamentals
SWOT Analysis
The SWOT analysis is a great tool with which to start. SWOT stands for
Strengths, Weaknesses, Opportunities and Threats. This is critical to
establishing competitive advantage. The purpose of a SWOT analysis is to
maximize opportunities and minimize threats in the environment, while
maximizing advantages of the organization strengths and minimizing its
weaknesses. This should be constantly evaluated against the successes of
the firm.
Critical success factors (CSFs) are those activities that are necessary for the
firm to achieve its goals. They are so important that the very survival of the
company depends upon them.
Each functional area should be assessed for its contribution to the company's
CSFs. For instance, Marketing could have the CSFs for service, distribution,
promotion, price and product positioning. Without those things, a product
would never be seen by the consumer.
Core Competencies
Core competencies are the set of skills, talents and activities that a firm does
extremely well. These are the building blocks for competitive advantage and
set it apart. Here are some questions to help determine core competencies:
1. What tasks must be done well for the company to meet its goals?
2. What gives the company its competitive advantage?
3. What elements have the highest likelihood of failure?
4. What elements have the highest likelihood of success?
5. What requires additional commitment of resources – monetary,
personnel, IT, or managerial?
Staffing