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Operations strategy

An operations strategy is the structure upon which an organization determines how it arranges and uses its resources in order to maintain a competitive advantage. It is a formulated framework consisting of two elements. The structural element contains components like location and size of the organization, whereas the infrastructural element focuses more on aspects like product quality control. A successful operations strategy will align and actualize the organization’s business strategy.

The operations function is responsible for managing the resources needed to produce the company’s goods and services. Technically, it is coming up with a strategy and contingency plan to execute the plan effectively. The role of operations strategy is to provide a plan for the best usage of resources in order to reach the objectives set in the corporate strategy. These resources include employees, machines, technology and information.

In other words, operations strategy is the plan that specifies the design and use of resources to support the business strategy. This includes the location, size and type of facilities available as well as worker skills and talents required, use of technology, special processes needed, special equipment and quality control methods. The operations strategy must be aligned with the company’s business strategy and enable the company to achieve its long-term plan. For example, the business strategy of FedEx, the world’s largest provider of expedited delivery services is to compete on time and dependability of deliveries. The operations strategy of FedEx developed a plan for resources to support its business strategy. To provide speed of delivery, FedEx acquired its own fleet of airplanes. To provide dependability of deliveries, FedEx invested in a sophisticated bar-code technology to track all packages.

Basically, after collectively considering the products and services demanded by customers, strengths and weaknesses of competitors, the environment, and the firm’s own strengths, weaknesses, cultures, and resources, proficient firms can formulate their vision as expressed through the mission statement. This statement expresses the organization’s values and aspirations, basically its reason or purpose for existence. Based on this mission statement the firm will formulate its business strategy. This business strategy is a long-term plan for accomplishing the mission set forth in the mission statement. Each function within the business can then derive its own strategy in support of the firm’s overall business strategy (financial strategy, marketing strategy, and operations strategy).

Moving along, operations strategy is the collective concrete actions chosen, mandated or stimulated by corporate strategy. It is, of course, implemented within the operations function. This operations strategy binds the various operations decisions and actions into a cohesive consistent response to competitive forces by linking firm policies, programs, systems and actions into a systematic response to the competitive priorities chosen and communicated by the corporate or business strategy. In simpler terms, the operations strategy specifies how the firm will employ its operations capabilities to support the business strategy.

Other than that, operations strategy has a long-term concern for how to best determine and develop the firm’s major operations resources so that there is a high degree of compatibility between these resources and the business strategy. Very broad questions are addressed regarding how major resources should be configured in order to achieve the firm’s corporate objectives. Some of the issues of relevance include long-term decisions regarding capacity, location, processes, technology and timing. The achievement of world-class status through operations requires that operations be integrated with the other functions at the corporate level. In broad terms, an operation has two important roles it can play in strengthening the firm’s overall strategy. One option is to provide processes that give the firm a distinct advantage in the marketplace. Operations will provide a marketing edge through distinct, unique technology developments in processes that competitors cannot match.

The second role that operations can play is to provide coordinated support for the essential ways in which the firm’s products win orders over their competitors, also known as distinctive competencies. The firm’s operations strategy must be conducive to developing a set of policies in both process choice and infrastructure design (controls, procedures and systems) that are consistent with the firm’s distinctive competency. Most firms share access to the same processes and technology, so they usually differ little in these areas. What is different is the degree to which operations matches its processes and infrastructure to its distinctive competencies.

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