The operations function is fashionable!

The consultancy services market

% of world revenues of 40 largest firms

Financial Marketing/sales
6 2

Organizational
design
11 Operations and process
management
31

Benefits/Actuarial
16

IT strategy Corporate strategy

17 17

© Nigel Slack and Michael Lewis 2003

 Strategic
Reconciliation

Operations OPERATIONS Market

Resources STRATEGY Requirements

Operations strategy reconciles the requirements of the

market with the capabilities of operations resources

© Nigel Slack and Michael Lewis 2003

 Operations strategy is …..

“… the decisions which shape the long-

term capabilities of the company’s
operations and their contribution to overall
strategy through the on-going
reconciliation of market requirements and
operations resources …”

© Nigel Slack and Michael Lewis 2003

 Operations management Operations strategy
Short-term Long-term
for example, capacity for example, capacity
decisions decisions
Time scale

Demand

Demand
1-12 months 1-10 years

Micro Macro
level of the process level of the total operation
Level of
analysis

Detailed Aggregated
Level of For example For example
“Can we give tax services to “What is our overall business
aggregation
the small business market in advice capability compared
Antwerp?” with other capabilities?”
Concrete Philosophical
Level of For example For example
abstraction “How do we improve our “Should we develop strategic
purchasing procedures?” alliances with suppliers?”

Operations strategy is different to operations

management

© Nigel Slack and Michael Lewis 2003

 Corporate strategy

Business strategy

Operations
strategy

Emergent sense of
what the strategy
should be

Operational
experience

Top-down and bottom-up perspectives of

strategy
© Nigel Slack and Michael Lewis 2003
 CUSTOMERS
Segmentation on:
•Age - youth
•Purpose - general

PERFORMANCE OBJECTIVES MARKET POSITION

•Dependability Differentiation on:
•Speed of delivery •Innovative products
•Product mix flexibility •Time to market
•Speed to market •Product range
•Coordinated launches

COMPETITORS
Traditionally weak in:
•promotion
•design innovation

The market perspective analysis of the garment

company
© Nigel Slack and Michael Lewis 2003
 Customer
Needs

Performance Market
Objectives Positioning

Competitors’
Actions

Required Understanding
performance markets

The market perspective on operations strategy

© Nigel Slack and Michael Lewis 2003

 Resources
Tangible
•Equipment
•Staff
Intangible
•Reputation
•Relationships
(internal and external)
•Experience

Operations Strategy
Capabilities
Decisions
• Application of leading- •Location
edge lighting and •Virtual reality technology
sound technology •Supplier development
• Articulation of client •Equipment tracking system
requirements •Organizational structure
•Staff meetings

Processes
• Integration of equipment
supply and client
requirements
• Design process
• Supplier liaison process
The operations resource perspective analysis of the
© Nigel Slack and Michael Lewis 2003 lighting company
 Tangible and
Intangible
Resources

Operations Operations
Capabilities Strategy
Decision Areas

Operations
Processes

Understanding Strategic
resources and decisions
processes

The operations resource perspective

on operations strategy

© Nigel Slack and Michael Lewis 2003

 Tangible and
Customer
Intangible
Needs
Resources

Operations Operations Market

Performance
Capabilities Strategy Positioning
Objectives
Decision Areas

Operations Competitors’
Processes Actions

Understanding Strategic Required Understanding

resources and decisions performance markets
processes

Operations strategy is the strategic reconciliation of market

requirements with operations resources

© Nigel Slack and Michael Lewis 2003

Operations has to cope with the clash
between the nature of external markets and
the nature of internal resources

Operations Market Requirements

Resources are…. are….
Difficult to change Dynamic
Technically Heterogeneous
constrained
Ambiguous
Complex

© Nigel Slack and Michael Lewis 2003

Operations strategy is the strategic reconciliation of
market requirements with operations resources
Strategic
Operations Resources Reconciliation Market Requirements

Operations Market
Resources Segmentation

Operations Performance Market

Operations
Strategy Objectives Positioning
Competences
Decisions

Operations Competitor
Processes Activity

Understanding Strategic Required Understanding

Resources and Decisions Performance Markets
Processes

Capacity Quality
Supply networks Speed
Process technology Dependability
Development and Flexibility
organization Cost
© Nigel Slack and Michael Lewis 2003
 Operations Market
Resources Requirements

What you What you What you What you

HAVE DO WANT NEED

to maintain from your

in terms of your operations to
operations capabilities to “compete”
help you
capabilities and satisfy “compete” In the market
markets

Strategic
Reconciliation

© Nigel Slack and Michael Lewis 2003

Operations can kick-start two virtuous cycles
Internal and External
Understanding of
the processes

Competitiveness Strong
marketing

Competencies
embedded in the World Class
operation Operations
High
margin
Capabilities enhance
innovation and
improvement Investment

Developing the resources Developing customers’

which let the operation’s competitors’ and
performance stay ahead of the stockholders; perceptions and
competition expectations
© Nigel Slack and Michael Lewis 2003
 Existing
‘effective’
capability

wide
Lafage
Cosmetics’
Variety of items per order

requirements

Existing
‘effective’
capability

Store
delivery
Catalogue
narrow

customers

small large
Number of items per order

Hagen Style – Comparison of new demands placed on the order

fulfilment processes by potential new business opportunities

© Nigel Slack and Michael Lewis 2003

 Operations Resources Market Requirements

• Cost efficiency • Traditional

• 2 x distribution centers • Fast delivery ‘representative’
• State-of-art packing and sales channels
information technology declining in
popularity
• Processes ‘fine tuned’ to
traditional ‘representative’
• As above plus •New channels
sales channels
• wider range • catalogue
• Good at what it does of requirements • Internet
• cost efficient • more demand • discount
• fast throughput fluctuations? stores

Hagen Style – Operations resources and market requirements

© Nigel Slack and Michael Lewis 2003