2023-24 Lecture 2 - MMS 7204 (Operations Strategy)

2/11/2024
MMS 7204 Manufacturing Strategy
LECTURE TWO
Operations Strategy
Course Lecturer
Dr Catherine Wandera
2/11/2024 1
2023/2024 MMS 7204 Manufacturing Strategy
Outline of Lecture Two
2. Operations Strategy
2.1 Introduction to Operations Strategy
2.2 Importance of an Operations Strategy
2.3 Elements of an Operations Strategy
2.4 Types of Operations Strategies
2.5 Benefits of an Effective Operations Strategy
2 2/11/2024
1
2/11/2024
2.1 Introduction to Operations Strategy

❑ What are Operations in a manufacturing firm?
✓ Operations are those steps (or processes) that a manufacturing firm
follows to make a product or service which the firm/company sells to
its customers.
❑ Operations Strategy of a Manufacturing Firm
✓ This is a combination of decisions taken by a manufacturing firm
regarding different operations in order to make the company
profitable and remain competitive in the market.
❑ Role of an Operations Manager
✓ The primary role of an operations manager is to ensure that the
operations (i.e. processes) in a manufacturing firm function
efficiently and work towards achieving the company’s goals.
2023/2024 MMS 7204 Manufacturing Strategy 3 2/11/2024
2.2 Importance of an Operations Strategy (1)

1. Enables the company to be competitive in the market
✓ A good operations strategy analyses a company’s supply chain,
customer needs, facilities available, competitors in order to
understand how they support or hinder the business strategy and
be able to identify what needs to be done to optimise the company’s
operations.
✓ Regular collection of information from competitors helps the

company to identify the company’s strengths and weaknesses and
be able to update the operations strategy so that the company
doesn’t lose its competitive edge.
▪ The company can update its products with new features or

create new products to remain competitive in the market.
2
2/11/2024
Importance of an Operations Strategy (2)
2. Aligns the manufacturing 3. Ensures that production

processes to the sales costs are maintained at
requirements optimal levels
✓ A good operations strategy ✓ A good plan of
enables the operations operations helps in
management function identifying the most
ensure that the cost-effective techniques
manufacturing processes to undertake the
are aligned with sales production processes.
requirements.
2.3 Elements of an Operations Strategy

3. 4.
Optimum Use of Process and
Production Facilities Technology Selection
2. 5.
Inventory Operations Resource Allocation
Elements
1. of an 6.
Operations
Designing the Strategy Supply Chain
Production System Optimization
2023/2024 MMS 7204 Manufacturing 6 2/11/2024

Strategy
3
2/11/2024
1. Designing the Production System

❑ When planning the production system, the 2. Standard Product Design:
company must decide the segment of customers to These are products that have
target and consider the facilities available for a standard design that is
meeting the customers requirements. Designing a made as per the requirement
production system includes planning the product of a large section of the
design and manufacturing method. There are market; there are no special
mainly two types of product designs, namely: features to suit individual
customers; examples are
1. Custom Product Design: These are products
fans, televisions, and air
made as per the specific requirements of
conditioners. This design is
individual customers and have special inbuilt
good for producing large
features to suit the customer needs; e.g.
quantities to meet steady
boilers, air compressors, and turbines. Sales of
demand and sales of these
these products are low and target only a
products are a very high.
particular customer segment.
2. Inventory Operations
❑ Inventory is the raw materials and finished goods that are in stock in
a manufacturing company.
✓ Stocking the optimal amount of raw materials and finished goods

is critical for ensuring customer satisfaction and profitability.
❑ When formulating the operations strategy for inventory, one must

ensure a clear system for ordering, maintaining, and processing
materials.
✓ A good operations strategy must ensure that the inventory

management helps to reduce cost and waste by maintaining the
optimal stock level and make the best use of available storage
spaces.
4
2/11/2024
3. Optimum Use of Production Facilities

❑ Optimum use of production facilities helps a ❑ Besides planning the existing
firm meet customer demands while facilities, forecasting future
improving its profits. sales is necessary to assess
the need to increase
❑ The operations strategy should focus on production facilities.
available production facilities and establish
how the company can use them to provide ✓ When formulating
benefits to its customers. the operations strategy, a
firm must consider future
✓ Production lines may be specialised to requirements.
produce items at a lower cost to cater to a
particular customer segment which ✓ Regular updates of the
enables the firm to achieve faster delivery operations strategy are
or higher quality of the products. needed to include changing
market demands.
4. Process and Technology Selection

❑ After product design, a ❑ Operations strategy must focus on what the company
company must select its aims to deliver to customers and decide the types of
manufacturing processes machinery that is used to achieve that goal.
and technologies
✓ Operations managers identify technology for
depending on the
manufacturing products that offer benefits to clients.
benefits the company
plans to offer its ✓ A company must choose machinery that costs less to
customers. purchase and maintain. There are many available
alternatives of production and packaging technology.
❑ Therefore, selection of
technology is an ✓ Technology selection must cover all production
important part of operations, including storage, material handling,
planning production delivery, etc. Faster delivery of products to
customers requires investment in technology that
process .
helps in faster movement of goods.
5
2/11/2024
5. Resource Allocation
❑ There is always shortage of resources for production therefore, there
is always a need for a proper allocation of resources which include:
cash, people, machines, materials, services, etc.
✓ There must be a clear plan for allocation of the available

resources, i.e. how and when the available resources are used.
✓ Different production teams need to access to the resources to

attain optimum production capacity.
✓ The timing of resource allocation is very important to help reduce

costs and improve efficiency.
✓ A good operations strategy facilitates the best use of available

resources and minimises waste.
6. Supply Chain Optimization

❑ A supply chain is the entire system of ❑ Supply chain optimization is a
sourcing/ movement of raw materials critical part of the manufacturing
from inputs suppliers to final delivery of business operations.
a finished product or service to the
✓ Proper planning of the supply
customer (i.e. end-users).
chain lowers the cost and
✓ The supply chain includes various improves customer experience.
elements like purchase, transport, ✓ An effective operations
storage, and documentation. strategy provides the structure
of the supply chain and
✓ Components of a supply chain
explains where the products
include: (1) Producers, (2) Vendors,
must be made and stored to
(3) Warehouses, (4) Transportation
enable fast and economical
(5) Companies, (6) Distribution
delivery to the customer.
Centers, and (7) Retailers.
6
2/11/2024
2.4 Types of Operations Strategy

3.
Competitive Strategy
2.
4.
Corporate Strategy Product Strategy
Types of
1. Operations 5.
Core Competency Strategy Customer Driven
Strategy Strategy

Strategy
Types of Operations Strategy (1)

1. Core Competency Strategy: 2. Corporate Strategy:
✓ This is where a company ✓ This is where the overall business

focuses on its existing strategy of a company is used to create
strengths with the aim of an operations strategy which adheres
leveraging the strengths of to the company’s mission and
the organisation to objectives.
maximise profitability.
✓ Companies employing the corporate
✓ The market segment and strategy will develop production
the product types will be initiatives, key performance indicators,
decided based on the and decision-making processes based
available facilities and on the goals determined by the leaders
technology. and stakeholders.
7
2/11/2024
Types of Operations Strategy (2)

3. Competitive Strategy: 4. Product Strategy:
✓ This is the operations ✓ The operations strategy is formed based on
strategy in which a company the products or services they can offer. The
uses information about their company will often change tactics when new
competitors to plan the products are developed. They depend on the
manufacturing firm’s course product managers to make their plans.
of action in order to gain an 5. Customer Driven Strategy:
edge over the competition by
✓ This operations strategy focuses on the
either offering a product
customer demand with the aim fulfilling
that is more economical or a
customer expectations and give customers a
product that can be better experience. This operations strategy
delivered faster than the is based on the information received from
competitor. the sales and marketing teams.
2.5 Benefits of an Efficient Operations Strategy
1. Enabling Better
Employee Efficiency 2. Promoting
6. Facilitates Better
Market Coordination
Penetration AN EFFECTIVE
OPERATIONS STRATEGY
FACILITATES BUSINESS
GROWTH BY: 3. Optimum
5. Improves Resource
Trust Utilization
4. Best Customer
Experience

Strategy
8
2/11/2024
Benefits of an Effective Operations Strategy (1)

1. Better Employee Efficiency:
✓ The goals of different business units and departments are well
defined by an operations strategy so that the employees in various
departments know what they are expected to do. Therefore, a good
operations strategy achieves the following:
(i) Helps employees to use their time more effectively.
(ii) Employees will be able to know how they are contributing
towards achieving the company objectives.
(iii) Managers can find out which teams are performing well and
the ones which need to improve.
(iv) Improves the efficiency of employees and helps them use their
full potential.

2. Promotes Better Coordination:
✓ Departments in a company must work together to achieve overall

business goals; therefore, a good operations strategy clearly
defines how different departments must work together.
✓ The operations strategy must enhance coordination between

business units.
▪ Enables every department to understands how they can work

together with others and contribute to the company’s growth.
▪ Makes staff members to feel that they are all part of the
same team.
9
2/11/2024

3. Optimum Resource Utilisation:
✓ Companies must use their resources intelligently to achieve

maximum profits; therefore, a good operations strategy
outlines how resources must be shared between different
departments which results in less wastage and more efficiency.
✓ Leaders in the firm can understand which departments are

using the resources effectively.
▪ A good operations strategy also helps departmental

leaders to assess the operational cost of each department
and see if they are profitable.
.

4. Best Customer Experience:
✓ The ultimate aim of all manufacturing companies is to give the

customers the best experience possible with the product;
therefore, a strong operations strategy of a manufacturing
company gives the best customer experience by:
(i) Channelling all resources towards developing provides

that give the customers what they need.
(ii) Ensuring that customers know what to expect from the

company’s product(s) which keeps customers satisfied
resulting in more sales and better growth for the
company.
2023/2024 MMS.7204 Manufacturing Strategy 20 2/11/2024
10
2/11/2024

5. Improves Trust
✓ A strong operations strategy provides the following:
(i) Standards for every production process which enhances

consistency of the outputs of a production process,
consistency of the product quality and improves
reliability of the product.
(ii) Testing methods which results in stable products and

services; consequently, customers will trust the
company’s brands as they know what to expect.
6. Facilitates Market Penetration
✓ A strong operations strategy enables companies to remain

competitive in the market by providing the following aspects:
(i) Clear plans on how it must be achieved with a focus on

capturing market segments.
(ii) Guidelines about different resources for marketing

campaigns needed to get better market penetration and
higher sales.
11
2/11/2024
References
1. Edureka, Why Do Businesses Need An Operations Strategy?,

https://www.edureka.co/blog/why-do-businesses-need-an-operations-
strategy/xxx. Accessed 24th March 2023, Last updated on Nov
18,2022
2. Adam Hayes, The Supply Chain: From Raw Materials to Order

Fulfillment, https://www.investopedia.com/terms/s/supplychain.asp,
Accessed 24th March 2023, Last updated on July 30, 2022
3. Nigel Slack, 2017 https://www.koganpage.com/article/what-you-need-

for-an-effective-operations-strategy, accessed 24th March 2023
23 2/11/2024
12

2023-24 Lecture 2 - MMS 7204 (Operations Strategy)

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2023-24 Lecture 2 - MMS 7204 (Operations Strategy)

Uploaded by

Copyright:

Available Formats

2/11/2024

MMS 7204 Manufacturing Strategy

Outline of Lecture Two

2.1 Introduction to Operations Strategy

2.2 Importance of an Operations Strategy

2.3 Elements of an Operations Strategy

2.4 Types of Operations Strategies

2.5 Benefits of an Effective Operations Strategy

2.1 Introduction to Operations Strategy

2.2 Importance of an Operations Strategy (1)

✓ Regular collection of information from competitors helps the

▪ The company can update its products with new features or

Importance of an Operations Strategy (2)

2. Aligns the manufacturing 3. Ensures that production

2023/2024 MMS 7204 Manufacturing Strategy 5 2/11/2024

2.3 Elements of an Operations Strategy

2023/2024 MMS 7204 Manufacturing 6 2/11/2024

1. Designing the Production System

2023/2024 MMS 7204 Manufacturing Strategy 7 2/11/2024

✓ Stocking the optimal amount of raw materials and finished goods

❑ When formulating the operations strategy for inventory, one must

✓ A good operations strategy must ensure that the inventory

3. Optimum Use of Production Facilities

4. Process and Technology Selection

✓ There must be a clear plan for allocation of the available

✓ Different production teams need to access to the resources to

✓ The timing of resource allocation is very important to help reduce

✓ A good operations strategy facilitates the best use of available

6. Supply Chain Optimization

2.4 Types of Operations Strategy

2023/2024 MMS 7204 Manufacturing 13 2/11/2024

Types of Operations Strategy (1)

✓ This is where a company ✓ This is where the overall business

Types of Operations Strategy (2)

2023/2024 MMS 7204 Manufacturing Strategy 15 2/11/2024

2.5 Benefits of an Efficient Operations Strategy

2023/2024 MMS 7204 Manufacturing 16 2/11/2024

Benefits of an Effective Operations Strategy (1)

Benefits of an Effective Operations Strategy (2)

✓ Departments in a company must work together to achieve overall

✓ The operations strategy must enhance coordination between

▪ Enables every department to understands how they can work

Benefits of an Effective Operations Strategy (3)

✓ Companies must use their resources intelligently to achieve

✓ Leaders in the firm can understand which departments are

▪ A good operations strategy also helps departmental

Benefits of an Effective Operations Strategy (4)

✓ The ultimate aim of all manufacturing companies is to give the

(i) Channelling all resources towards developing provides

(ii) Ensuring that customers know what to expect from the

Benefits of an Effective Operations Strategy (5)

✓ A strong operations strategy provides the following:

(i) Standards for every production process which enhances

(ii) Testing methods which results in stable products and

2023/2024 MMS 7204 Manufacturing Strategy 21 2/11/2024

Benefits of an Effective Operations Strategy (6)

6. Facilitates Market Penetration

✓ A strong operations strategy enables companies to remain

(i) Clear plans on how it must be achieved with a focus on

(ii) Guidelines about different resources for marketing

2023/2024 MMS 7204 Manufacturing Strategy 22 2/11/2024

1. Edureka, Why Do Businesses Need An Operations Strategy?,

2. Adam Hayes, The Supply Chain: From Raw Materials to Order