Operations and Supply Chain

Strategy
 Framework
Operations is one function within the larger organization of
the firm. As such, operations strategy should be part of the
larger corporate strategy. The corporate strategy points
toward what business the company is pursuing. The
following was found at Proctor and Gambles web site
www.pg.com as an example of corporate strategy.

We will provide branded products and services of superior quality and value
that improve the lives of the world's consumers. As a result, consumers will
reward us with leadership sales, profit, and value creation, allowing our
people, our shareholders, and the communities in which we live and work to
prosper.
 Framework
So, P&G will provide superior quality and value in its
branded consumer products. Its operations strategy better
deliver, or it will be toast!
Closely related to the corporate strategy is the business
strategy and this strategy is a statement about how the
company will compete. The author of the text cites some
work that defines generic types of business strategy as:
1) Customer intimacy,
2) Product leadership, or
3) Operational excellence.
 Elements of Operations Strategy
The operations strategy should include the following parts:
1) A mission statement,
2) A distinctive competence,
3) Operations objectives, and
4) Operations policies.
The following is the mission of WSC (found on web):
Wayne State College is a comprehensive institution of higher education
dedicated to freedom of inquiry, excellence in teaching and learning, and regional
service and development. Offering affordable undergraduate and graduate
programs, the College prepares students for careers, advanced study, and civic
involvement. The College is committed to faculty-staff-student interaction, public
service, and diversity within a friendly and collegial campus community.
 Mission Statement
When you think about Wayne State College and you look at
the mission it is obvious we are about learning. But what
type of learning? Here it is student learning (hinted at by
the idea of teaching and learning)! Other colleges and
universities may be interested in learning, but the focus may
be on learning in the sense of developing new knowledge
as at a major research university.
At WSC we will be happy if new knowledge is developed
here, but the mission of student learning guides us in what
types of tools we provide faculty, what types of books we
purchase for the library, and so on.
So, the mission statement provides a guide for the actions
of the organization.
 Distinctive Competence
The author suggests that successful organizations will have
a distinctive competence that distinguishes the org from
others. The competence is a capability that the org has and
the successful org will do it better than others.
At WSC our competence is affordable undergraduate and graduate
programs!

The author points out that Wal-Mart has competencies in

shipping and inventory control.
 More on Competence
You may recall from economics that firms may be in a
competitive or monopoly environment. The monopoly
environment was seen as giving the firm greater leverage to
generate profit because at the very least it did not have to
compete with other firms for customers.
While this view may be idealistic in that sense that
whenever profits exist many may attempt to capture that
profit, the section on competencies reinforces the monopoly
idea.
The author notes that for distinctive competencies to be
sustainable (and thus fend off competitors) they must be
difficult to imitate of copy. On page 27 there is a list of
these competencies.
 Competencies
Why did Gateway as a computer company not make it while
Dell has prospered?
The author suggests Dell has several competencies that are
difficult for others to overcome. Perhaps Gateway
developed differently as a company than did Dell and
Gateway couldnt make the transition. For many reasons it
can be difficult to change.
 Operations Objectives
These objectives make the mission quantifiable and
measureable. In other words they provide benchmarks or
guideposts for performance. Common objectives deal with:
1) cost,
2) quality,
3) delivery,
4) flexibility.
Page 23 has many examples of objectives.
 Operations Policies
Policies are statements about how the objectives will be
achieved.
As you may know WSC is part of the Nebraska State
College System. As such, the system has policies. To be
able to offer education at an affordable price there is a policy
about how many classes a faculty member must teach each
term. If we didnt follow this policy and faculty taught only 1
class then we would need more faculty to meet our
offerings, or we would not be able to offer as many classes.
Neither of the these would be good for student enrollment.
 An idea the chew on
Can on organization offer products at an affordable price
while at the same time having high costs?
Affordable and high are somewhat subjective. So, these
terms need to be given context and more specific meaning
to be useful.
 Global Perspective
I want to reproduce a couple of lines from the book that I find
especially interesting:
A basic product or service is designed, whenever possible, to fit global
tastes. When a local variation is needed, it is handled as an option
rather than a separate product.

The point being made here is that even more now than ever
before we are in a global economy. This is vastly different
for the majority of human history when most production was
very local.
 Supply Chain Strategy
A supply chain is defined by the author as a sequence of
business processes and information that provides a product
or service from suppliers through manufacturing and
distribution to the ultimate consumer.
There has been a lot of press and media attention with how
Wal-Mart has an influence on the folks who supply it. Other
supply chains exist (Affiliated Foods in Norfolk, for example
is part of a broadly defined chain), but Wal-Mart has been
especially noted for how it manages the chain.
Proctor and Gamble as a company that makes consumer
products often has been a controlling agent in its supply
chain. But now with Wal-Mart it seems retail establishments
have had some ability to dictate to producers.
 Summary
So, this chapter is still about getting warmed up to the ideas
in production and operations management. Please take
note of the definitions introduced here!