Components or Elements of Operations Strategy
Components of Operations Strategy include below main six components:
1. Designing and Positioning the Production System
This element includes choosing the type of processing system, production design, and finished goods inventory plan, etc. for each main line of product in the business plan.
The two main types of Product design are
Custom Product Design- The custom design is the one when there is a low volume and special features are already present or inbuilt. These types of products are designed as per the requirements of individual customers. For example, different products such as boilers, turbines, air compressors, etc. come under this category.
Standard product Design- This is related to a universal design that is used to provide a wide acceptance of the product among its customers. Both quantity and demand are high in such a design. This is useful in quite large batches as it helps in meeting the stable demand for the long-term. Fans, televisions, air conditioners, etc. are a few examples of standard product design.
Production systems are of two types i.e.
Systems focused on products- This type of production system is used in mass production through a group of machines such as computers, automobiles, beverages, etc.
Systems focused on processes- This includes product designing on a single activity or task such as packaging, painting, etc.
2. Focusing Production/ Manufacturing and Service Facilities
One of the important elements of operations strategy is to plan for different production facilities to achieve some sort of specialization in each of them. This allows the production facility to gain a command over achieving specific objectives because the equipment, procedures, and supporting systems can focus on certain limited tasks for a particular set of customers.
So, we can say that some specialization in production facilitates an organization to offer different benefits to its customers on products such as reduce cost, quicker delivery, flexibility, timely delivery, high quality of the product. Also, there will be a few overheads and the organization is able to perform better than its competitors.
An organization should consider continuous demand patterns and economies of scale at the time of making a plan of specialized product lines.
3. Design and Development of Product/ Service
Different stages or phases that are involved in designing and developing a product or service include
- Idea generation
- Making the feasibility reports
- Prototype designing and testing
- Preparation of a production model
- Evaluation of production-related economies of scale
- Market-based testing of the product
- Taking feedback
- Developing final design and initiating the production
In new product development, activities such as marketing, operations, engineering, etc. are considered. The product designing process creates a great impact on the inventory level, quality of the product, production cost, and the total number of suppliers.
Different products that are designed and launched in the market consist of their own life cycle. Different phases of such life cycle include the following
- Introduction phase
- Growth phase
- Maturity phase
- Decline phase
The introduction phase is the one in which sales have dependability on efforts related to promotion and marketing. If a product is successful at this level, then it will come under the next phase i.e. growth. In the growth phase, decisions are taken by the organization on future investments and the capacity to be enhanced. In the maturity phase, the main focus of an organization is to improve the efficiency related to processes, cost minimization, etc. The declining phase is the phase where products may become obsolete in terms of technology and the requirements of customers. This indicates the warning sign to stop production. Different products such as floppy drives, typewriters, recording tapes, etc. have lost their market as they have gone through the above phases.
4. Selection of Technology and Process Development
To determine the way of producing products is considered one of the essential aspects of operations strategy. This includes making decisions and plans on every detail of processes and facilities in production.
To achieve the optimum level of production, the analysis of the selected product for production is conducted for the process and appropriate technology. Operations managers face various challenges in taking such decisions due to the availability of lots of options or alternatives.
Each alternative can be analyzed through techno-economic analysis for making decisions related to the required technology. Combination of production equipment of high-quality and conventional machines; and, use of flexible manufacturing systems, robotics, automated devices for the purpose of movement of materials, etc. have provided an advantage to the production units to gain expertise in flexibility, quality, production at reasonable costs. This enables the organization to compete in the market.
5. Resource Allocation
Usually, organization resources are limited for production purposes and so, the continuous problems are faced by production units in the allocation of limited resources such as cash, capital, workforce, machines, materials, capacity, equipment, services, etc. The allocation of these resources must be in a way that helps in achieving the goals of operations up to a maximum extent.
Also, allocating these resources at the right time and place of production shows the efficiency level of production managers. Economical production can be achieved by utilizing resources in an optimal way. A sound operations strategy is required to obtain superior quality products, minimize wastage and optimum utilization of available resources.
6. Planning of Capacity, Facility, and Layout
The key decision areas of an operations manager are to create layout, facilities, and location for the production as these are considered critical areas to achieve competitive advantage. The expansion of the manufacturing unit in the future also depends on this decision.
Decisions include in this are related to the land and equipment acquisition for production, location of new manufacturing units.
At the time of evaluation of different alternatives, the operations manager also considers market access, and availability of materials, etc. Huge capital is needed for production capacity.