Operations and Strategy With Nigel Slack

I'm summon crewman the executive director of the supply chain management Institute here at the University of San Diego and I have me professor Nigel slack from the University of Warwick Nigel is professor of operations management and strategy Nigel that's a interesting title the notion of operations management and strategy tell me a little about how operations can be strategic yeah that's a good question a lot of people think operations and strategy are very different things they're not at all operations and operational are different words operational is the opposite of strategic it means day to day it means routine it means detailed but operations that is the resources that create service and create products well you can look at that both from a strategic and an operational perspective in fact I think it goes further than that because if you believe as I do that an important part of strategy is the way we build capabilities over the long term well where do you build capabilities you build them through the experience of running operations based processes and where do you store capabilities you go into an office there isn't a pile of capabilities just sitting there waiting to be examined and sifted there isn't a pile of capabilities that are waiting to be examined and sifted capabilities actually exist within the operations processes that's where they are there they are embedded there for all time that's an interesting point about capabilities being embedded in operations and there's a lot of interesting capabilities a lot of literature that talks about capabilities but what is the capability how do you start by saying this is a capability and this is just an activity or resource what distinguishes a strategic capability from something that's not a capability well if you want a very rough and ready answer a capability is something that you are particularly good at doing furthermore a strategic capability is something that you're particularly good at doing that other people can't copy or can't imitate in some other way or can't find a substitute for or can't buy off you in other words it's difficult for competitors to get hold of that certain something that you've developed over time that's a capability okay so that that implies that you're doing something better than anybody else and it's difficult for them to copy you but if its strategic where does the advantage come from that capability how do you say well this is giving us an advantage I don't know with the customer or with the marketplace sometimes you just can't tell sometimes you have to build capabilities in in the vague hope almost that it will prove valuable depending on what the markets going to be in the future but that's the same with any kind of investment every time you invest in a machine a facility anytime you make any long-term action including the idea of building capabilities over the long term you're still taking a risk of some sort because you did this things take time you don't know what the circumstances the environment is going to be like in the future now the great advantage of what we conventionally call capabilities something that's underlying what we do is that they can be leveraged in different ways you buy a machine that can do certain amount of things if you don't need to do those things in the future well you've partially at least wasted the investment in that machine but if you invest in a capability that is somehow more fundamental than that like for example I don't know the ability to decode customers real requirements the deconstruction of customers really requires that diagnostic capability well that's universal it can be leveraged in any direction that you want it to be depending on what hands over so capability is something more basic something more fundamental at the very heart of of the activities that you do in order to earn money in the marketplace so leveraging that capability with it with the customers is that something that operations get involved with in isolation or is that something that you need to involve other functions like marketing or supply in you know how do you deal with that process of this is what we're good at in our operations and this is what the market needs of course it isn't just about operations it's about all function and the reason why that is is that all functions manage processes in fact let's broaden this whole debate away from operations through to process management everybody manages processes therefore in that sense everybody is an operations manager at least in my terms one of the things that here at business schools we sometimes forget is that when we teach things like marketing we're teaching the technical aspects of marketing we're not teaching people to run marketing processes very often the same with accounting we're teaching the technical aspects of finance and accounting but whether you're marketing or accounting or HR or whatever you will be running the processes that deliver some kind of usually internal surface and therefore it's important that you know something about the management of those processes and the basic skills of building competences and capabilities within those processes so in that sense yes everybody is concerned with building capabilities and they do it because everybody is concerned with managing processes so everybody should be involved in training about processes process design and process improvement and initiatives that are targeted towards building up that that capability I assume process management is a capability everybody should be involved in building up that capabilities it's not just like the shop floor or a factory or the call center that's going to be involved in developing process capabilities I think that's right but I'd kind of phrase it slightly differently if you put yourself in the position of say a functional vice president vice president marketing vice president human resources whatever it is any any chief officer or vice president person has three types of knowledge that he or she is usually dealing with there's the technical knowledge that is part of their function you know they have to know about marketing and sales they have to know about about finance and accountancy or whatever it is there's that technical knowledge that's the equivalent to when I studied engineering before I was a factory manager time ago then the second type of knowledge that they have that they need is that broad strategic leadership knowledge because they are the representatives of their part of the organization on the main board of the company they have to be a trusted partner to the CEO and their colleagues the rest of the vice presidency in terms of contributing to those strategic decisions so they must understand the nature of strategy and the nature of leadership the third type of knowledge and this is the one that they're traditionally very bad at is delivering service internally managing the processes that create accounting services marketing services human resources resources services and delivering them effectively and efficiently now in order to do that you have to understand about processes you have to understand about bottlenecks about capacity about loading about flexibility about service quality all the things that within a say a factory environment we're very used to dealing with but I talk to a lot of people like this and it's surprising how little they know about managing and developing the processes that deliver their services okay I mean that makes a lot of sense that you know somebody who's a senior VP for HR or senior VP for marketing is is going to be driving forward the strategy but now you're saying that they're not really in touch with what's happening in their processes they don't understand the management of the resources so this seems to be a disconnect well you there is a disconnect and I don't want to be considered too harsh it's that no one's ever pointed out to them that there are some fundamental and basic laws of behavior of processes now anybody who manages say a manufacturing processes process knows this they understand that they know that there's such a thing as a bottleneck and that unless they take that button like a way out provide extra capacity at that bottleneck then the whole process is limited by that you ask the typical HR manager about whether they have information on capacity and loading in there to identify those bottlenecks many don't have or take another example the idea of variability in processes now you know and I know that the greater the degree of variability then the less effective and efficient the process will be which is why standardization such a powerful thing but you talk to say a typical finance vice-president about why they're wanting to standardize throughout their network their internal network and they'll come out with some very good reasons but they're very often miss out the key one which is standardization means less variability and less variability means far more effective processes so you can deliver control processes budgeting processes whatever they are to a greater degree of service satisfaction to your clients and a lot more efficiently as well so it's a double whammy that one because you you're getting efficiency benefits and quality benefits and the VP is probably focusing on the fact that it's more cost effective hey process managers give you the best of all possible worlds we all know the Sun great

Channel: USDSCMI

Views: 57,222

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Keywords: supply chain education

Id: ZRcDVm6G50Y

Length: 10min 12sec (612 seconds)

Published: Tue Feb 02 2010