Page 335 - Operations Strategy

310 CHAPTER 9 • THE PRoCEss of oPERATions sTRATEgy – foRmulATion And imPlEmEnTATion

Formulating operations strategy

Formulation of operations strategy is the practical process of articulating the various
objectives and decisions that make up the strategy. Unlike day-to-day operations
management, formulating an operations strategy is likely to be only an occasional
activity. Some firms will have a regular (e.g. annual) planning cycle, and operations
strategy consideration may form part of this, but the extent of any changes made
in each annual cycle is likely to be limited. In other words, the ‘complete’ process
of formulating an entirely new operations strategy will be a relatively infrequent
event. This often results in firms looking to consultancies for guidance with the pro-
cess and as a consequence many detailed ‘how to formulate’ procedures – typically
multi-stage models involving some type of performance ‘gap’ analysis – have been
developed. Some of these models often share a number of common elements, for
example:

● A process that formally aligns the total organisation strategic objectives (usually a
business strategy) to resource-level objectives.
● Using operations performance objectives as a translation device for alignment
between market positioning objectives and operations strategy.
● Judging alignment via assessment of the relative importance of operations perfor-
mance objectives (in terms of customer preference) and achieved performance (usu-
ally compared against competitor performance levels).
In other words, formulating an operations strategy is essentially about different ways
of aligning plans, activities and objectives.

What is the role of alignment?

In the opening chapters of the book we discussed the process of reconciling operational
resources with market requirements so that there is an approximate degree of ‘fit’ or
alignment between them. When alignment is achieved, the firms’ customers do not
need, or expect, levels of operations performance that it is unable to supply. Nor does
the firm have operations strengths that are either inappropriate for market needs or
remain unexploited in the market. Figure 9.2 provides a diagrammatic illustration. Note
that this diagram is not intended as a practical tool, but it does illustrate the nature of
what is meant by alignment.
The position on the vertical dimension of Figure 9.2 (e.g. position Y) represents the
nature and level of market requirements: reflecting both intrinsic customer needs and/
or expectations that have been shaped by the firm’s marketing activity. Movement up
this axis is meant to indicate a broadly enhanced level of market performance or market
capabilities, reflecting factors such as strength of brand/reputation, degree of differen-
tiation, extent of plausible market promises and so on. The horizontal scale represents
the level and nature of the firm’s capabilities. The position on this axis (e.g. position X)
will be determined by factors such as resource efficiency, process control, innovation
and so on. Here, again, movement along the axis indicates a broadly enhanced level of
operations capabilities and performance.

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