Simon Croom Operations Strategy Matrix 1

hello today's lecture is focusing on the operation strategy matrix this was developed by Nigel slack and Michael Lewis and you'll find details of it in your textbook but I really wanted to give some insight into how we might apply this in making sense of an operation or a global supply chain in terms of strategic decision making the first thing we have to take into account is that at the best we're going to try and aim for some form of reconciliation between the marketplace and our operations resources quite simply speaking marketplace has requirements that are dynamic they're constantly changing depending on where you're marketing your products around the world you'll have very different expectations from your consumers no two consumers are the same so we have heterogeneity between requirements of individual customers this is even more important when you're looking at business-to-business markets we're dealing with one large corporation could be very different from dealing with another corporation and finally there's some degree of ambiguity consumers don't always know exactly what they want they don't always know exactly why they buy the things they do they don't always know exactly why they choose you in business-to-business markets that ambiguity may be how shall I put it a little bit more contrived in other words sometimes your buyer might not tell you the exact truth about how well you're doing so market requirements pretty messy pretty dynamic constantly changing very difficult to get to grips with now if we take a look at our operations resources on the other hand they're very difficult to change you think about an organization like Starbucks moving into a whole new world away from coffee and baked goods but maybe moving into in some more of a service provider very difficult for them to do that they don't have the resources necessary partly that's because they're technically constrained if you have a Starbucks and store it has--it's barristers it has the coffee making equipment it has refrigerators it has tables and chairs converting that into say a spa would essentially involve starting all over again and for me one of the beauties in fact of supply chains and operations is that it's very complex it may not be rocket science but there are so many steps so many things involved in delivering the good or a service to the end consumer that it can get really messy and that's what we mean by complexity so on the one side we've got this armoire first difficult to nail down market requirements and on the other side we have operation resources which are pretty complicated technically constrained a lot of money tied up so how do we go about managing that clash between the nature of requirements and our operations resources well for some companies it's not so easy let's think of American Eagle they clearly compete on a low cost focus that's why they're constantly looking at should resource in China or should be source in Mexico what's the exchange rate doing very much short term operations capability move on to a company like Flextronics and here's an example of their facility in Guadalajara it's a little bit more difficult to imitate a lot of their technology is proprietary they have dedicated millions if not hundreds of millions of dollars in the infrastructure and in the technology that they're used to manufacture their products they have a medium-term operations capability and that's indicated very much by how long it takes them to change now we take somebody like South African Breweries one of the two biggest breweries in the world and started off with a South African base spread that capability north then moved into Europe and Asia through acquisition as well as organic expansion it's almost impossible to imitate what South African Brewers have done because of their complex integrated global network but that doesn't think mean that all things are rosy we think for example what are they going to do in developed markets how are they going to compete against the major players local breweries craft breweries established breweries well that was where their acquisition came in very long-term operation strategy 20 years easily to see the growth of South African Breweries so we've seen the markets and operations have very different characteristics we also see that different organizations have different time horizons in terms of their focus on operations and I'd refer you to one of our other videos in this course where I'm talking to professor Nigel slack about the difference between operations strategy and operational and I think that will help elaborate further on this point so how do we go about developing our operation strategy well first of all most what cannon operations bring this from a strategic point of view it can give us quality quality of experience quality products quality processes in other words being right it can give a speed being quick when I think about the order I placed yesterday on Amazon Prime for a t-shirt and it arrived this morning that's less than 12 hours for delivery that's very impressive not as impressive as two hour delivery which Amazon are offering to prime customers for example in the United Kingdom dependability being on time that's not the same as being quick if I say that you know I will be there to repair your plumbing leak in four hours and I'm there in four hours I can plan around that if I say I'm going to deliver to Walmart at 10 15 to 10:30 then they can plan around it being able to do what you say you're going to do you know to repeat it the best embodiment of this is the classic example about Japan railways who have a phenomenal on-time reliability metric where a cumulative lateness of seven minutes a year for any individual driver is about them it's very impressive people expect the service to be there when they want it flexibility in up to change being able to change the products the product mix the speed the markets flexibility is a whole bag of capabilities and then finally cost cost is never unimportant but it's not always the reason we get the business but if we do competing on cost means we've got to be productive and this is really how we define our competitiveness first and foremost how do operations give competitive advantage secondly what do our marketplace is require in terms of these configuration at these five criteria again I'd refer you to the presentation on order winning criteria that you'll find in the course that will help you surface a little bit more how we define the specific order or priorities that each of these criteria may have now when it comes down to how do we deliver those capabilities we have to take decisions firstly about capacity structure how big nigel stock often contends that capacity is the most fundamental strategic question how big do we want to be where what are we going to do at each facility secondly surround supply network who does what where do we do it do we outsource it do we have closed collaborative relationship how do we manage the flow of goods services and information through our supply chain thirdly it's around our process technology to what extent are we using automated technology what is our rate of change of technology you for example are studying this course using an online platform do we want to make sure that a hundred percent of all of our students experiences are online 70% 50% how do we expand that across all of our programs that's a key question that illustrates the process technology issue in operation strategy and then finally what has been called a touchy-feely side of things the development and organization there's a line in one of our case videos where and the presenter that I call CID joints and says you know I often ask how often do these robots come up with improvement suggestions and the answer is none and that's really at the heart of this which is that we can automate to our heart's delight but people are the innovators that creators people are how we're going to drive forward we've also got to think about aligning how we manage people with the needs of our marketplace so performance management is pretty key here and this is these four elements these four building blocks are what constitute the core decision areas in operations strategy and therefore that's where our competencies and also our constraints may lie so how do we build or how do we analyze an operation strategy this is where the operations strategy matrix comes into play clearly we need to understand how we compete in our marketplace what are the quality speed dependability flexibility and cost dimensions what do they mean secondly think about the decision areas of capacity supply network process technology and development and organization when you're reviewing or developing operation strategy the first question you have to ask yourself is is it comprehensive have we addressed all of these for decision areas and do we fully understand how we compete what are the priorities what are the order winners in each of our market segments secondly what are the parts of this matrix that tell us this is critical for example here the size and location of our facilities is absolutely critical to supporting our cost competitiveness do we understand that and does it make sense so if we think about Starbucks for Starbucks they're there coffee shops are roughly the same size as each other they're located in neighborhoods they're near roads there near busy footfall so it's quite clear that the choice of location has been central it's also helped them to keep their cost down some of their shops slightly smaller are in shopping malls some of them are airports higher rental cost they bring the size down lower rental cost slightly larger if you think about supply network Walmart's have very strict requirements that a they don't want to hold inventory in their stores B if you're a supplier you've got 15 minutes of 20 minute windows to deliver if you don't deliver in those time windows to say between 10:15 and 10:30 you've gotta wait till the back of the queue so we want suppliers who can deliver on a just-in-time basis 7-eleven Japan if you read through that case study that's even more profound how much they depend on just-in-time reliable deliveries if we think about process technology giving us flexibility back to what we're doing using blackboard using an online platform means that if for example you can't attend campus because you're on business travel as long as you've got internet access you can still be a student and then finally the development in organization dimensions in terms of helping to improve productivity being quick being skilled or in the case of Taylor guitars thinking about how their employees are passionate about the product that they build they give a lot of care and attention they intervene if they see things going wrong that's very important for telega tars thirdly we have to think about coherence given how we compete for example on quality do our decisions support that do the investment decisions we take do the performance management systems we use do our sourcing decisions do they make sense do they feed in do they support quality and then the final dimension is this issue of Correspondence in other words the decisions we take about capacity strategy should reflect how we compete in our markets so in a nutshell when you're doing your final project analysis I want you to use the operation strategy matrix I want you to be thinking about how well your chosen organization meets these criteria of comprehensiveness correspondent's coherence and criticality also at you to use the matrix to help propose areas where it could be potential improvement I look forward to seeing your work

Channel: Professor Simon Croom

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Length: 14min 6sec (846 seconds)

Published: Sun Sep 24 2017