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Chapter 3 Operations strategy 77
policy which stresses appropriate types of customization, a supply network strategy which
develops suppliers and customers to understand the needs of high-variety customization, a
capacity strategy which deploys capacity where the customization is needed, and so on. In
other words, all the decision areas complement and reinforce each other in the promotion of
that particular performance objective.
Correspondence
Equally, an operation has to achieve a correspondence between the choices made against each
of the decision areas and the relative priority attached to each of the performance objectives.
In other words, the strategies pursued in each decision area should reflect the true priority
of each performance objective. So, for example, if cost reduction is the main organizational
objective for an operation, then its process technology investment decisions might err
towards the purchase of ‘off-the-shelf’ equipment from a third-party supplier. This would
reduce the capital cost of the technology and may also imply lower maintenance and running
costs. Remember, however, that making such a decision will also have an impact on other
performance objectives. An off-the-shelf piece of equipment may not, for example, have the
flexibility that more ‘made-to-order’ equipment has. Also, the other decision areas must
correspond with the same prioritization of objectives. If low cost is really important then
one would expect to see capacity strategies which exploit natural economies of scale, supply
network strategies which reduce purchasing costs, performance measurement systems which
stress efficiency and productivity, continuous improvement strategies which emphasize continual
cost reduction, and so on.
Criticality
In addition to the difficulties of ensuring coherence between decision areas, there is also
a need to include financial and competitive priorities. Although all decisions are important
and a comprehensive perspective should be maintained, in practical terms some resource
or requirement intersections will be more critical than others. The judgement over exactly
which intersections are particularly critical is very much a pragmatic one which must be
based on the particular circumstances of an individual firm’s operations strategy. It is therefore
difficult to generalize as to the likelihood of any particular intersections being critical.
However, in practice, one can ask revealing questions such as, ‘If flexibility is important, of
all the decisions we make in terms of our capacity, supply networks, process technology,
or development and organization, which will have the most impact on flexibility?’ This can
be done for all performance objectives, with more emphasis being placed on those having
the highest priority. Generally, when presented with a framework such as the operations
strategy matrix, executives can identify those intersections which are particularly significant
in achieving alignment.
Short case
Sometimes any plan is better
than no plan 9
There is a famous story that illustrates the importance of
having some kind of plan, even if hindsight proves it to
be the wrong plan. During manoeuvres in the Alps, a
detachment of Hungarian soldiers got lost. The weather
was severe and the snow was deep. In these freezing
conditions, after two days of wandering, the soldiers
gave up hope and became reconciled to a frozen death
on the mountains. Then, to their delight, one of the
soldiers discovered a map in his pocket. Much cheered
by this discovery, the soldiers were able to escape
from the mountains. When they were safe back at their
headquarters, they discovered that the map was not of
the Alps at all, but of the Pyrenees. The moral of the
story? A plan (or a map) may not be perfect but it gives a
sense of purpose and a sense of direction. If the soldiers
had waited for the right map they would have frozen to
death. Yet their renewed confidence motivated them
to get up and create opportunities.