29-11-2022
Operations Strategy
Prof.dr. Jan de Vries
Department of Operations
29-11-2022
Programme
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Introduction
Overview lectures
Characterizing Processes - complexity
Some final remarks
Methodology of Operations Management
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Horizontal structure
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Vertical structure
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location of stockpoints
design (physical) processes
the way products and services are made
....
levels of planning
decisions that have to be made
trade-off’s between different performance objectives
.....
Organizational structure
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nr. 3
what organizational entities can be distinguished
allocation of tasks/responsibilities and competences
how is co-ordination achieved
.....
Horizontal structure
Focus of Operations Management
Transformation
processes
performance
Organisational
embedding
nr. 4
Planningand
Control
systems
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Operations Strategy
Operations strategy is
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the total pattern of decisions
that shape the long term capabilities
of any type of operation
and their contribution to overall strategy
through the ongoing reconciliation
of market requirements and operations resources.
Operations strategy is the strategic reconciliation of
market requirements with operations resources
Tangible and
Intangible
Resources
Operations
Capabilities
Customer
Needs
Decision
Areas
Performance
Objectives
Operations
Processes
Understanding
resources and
processes
Market
Positioning
Competitors’
Actions
Strategic
decisions
Required
performance
Understanding
markets
|6
Methodology of Operations Management

Horizontal structure
–
–
–
–

Vertical structure
–
–
–
–

location of stockpoints
design (physical) processes
the way products and services are made
....
levels of planning
decisions that have to be made
trade-off’s between different performance objectives
.....
Organizational structure
–
–
–
–
nr. 7
what organizational entities can be distinguished
allocation of tasks/responsibilities and competences
how is co-ordination achieved
.....
Horizontal structure
Describing/Analysing the horizontal structure
High
Level of detail
Low
nr. 8
Horizontal structure
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Layout of the process
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Process schemes
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Basic form (grondvorm)
Example of a Basic Form
Basic Form:
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nr. 9
sequence of the flow of materials
location of stock points
dominant transformation processes (subprocesses)
Horizontal structure
Some important questions regarding
the horizontal structure
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Do the (sub) processes support the strategic intentions of the
operation?
Do the sub processes add value
Is each subprocess in control?
Are the stockpoints necessary? Why are there stockpoints?
Who ‘owns’ and has responsibility for the (sub)process
What are potential problems within each subprocess
How contributes each subprocess to the necessary performance
requirement(s)?
nr. 10
Horizontal structure
Example basic form Patient flows
Poliprocess
Nurseryprocess
X-ray
process
nr. 11
Horizontal structure
Surgeryprocess
Understanding the horizontal structure
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character of the overall process and subprocesses
 sequence of materials flow
 location of stock points
 character of the technology being used
 scale/the capacity of each unit (are there any bottlenecks??)
 How are specific performance objectives met
– quality
– speed
– dependability
– flexibility
– Cost
 degree of complexity of the horizontal structure
 . . . . . . . ..
nr. 12
Characterizing processes
Characterizing complexity
Some important characteristics
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nr. 13
Product-variety
Material structure
Manufacturing structure
Specific character of resources
Commonality of raw material
Capacity cohesion
Uncertainty
Characterizing Processes
Can be applied for both
production and service
settings
Characterizing the horizontal structure
Why are these characteristics so important?
In one way or the other
the planning and control structure
is influenced by these
characteristics
nr. 14
Characterizing Processes
Characterizing transformation
processes
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Product variety
– number of different products that can be manufactured
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Material structure
– is related to the complexity of the product itself. Relates for
instance to the different types of materials the products are
made of (including the materials being used)
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Manufacturing structure
– is related to the complexity of the manufacturing process
itself (number of operations, complexity of operations,
necessity of using special equipment. . . .).
nr. 15
Characterizing Processes
Characterizing the transformation
process
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Specific character of the resources being used
– flexibility of machines, multi purpose of machines. Flexibility of
employees, etc.
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Commonality of raw material
– can raw material/parts be applied for different products (specific
versus generic)
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Capacity cohesion
– physical relations between capacities (coupled versus decoupled equipment)
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Uncertainty
– the degree of lacking information in order to make decisions (for
example demand, performance within the production process,
the supply of materials, …..)
nr. 16
Characterizing Processes
And again ...
companies in one way or the other
have to deal with complexity
and in many cases
complexity heavily affects the
planning and control structure of
the company
nr. 17
Characterizing Processes