Production/Operation concerns when implementing strategies Introduction In the growing global competition, the productivity is the key for the survival of any business organization. Among different functions in an organization, production/operations function is a vital function which does the job of value addition to product/service, respectively. Maximizing the value addition automatically results in productivity improvement. This can be done starting from the stage of product development and concentrating on various other intermediate tasks and finally through implementation of proper quality control system and maintenance of equipments.
This amounts to tackling the management issues in each and every sub system of production/operation function. Production/operations function is that part of an organization which is concerned with the transformation of a range of inputs into required outputs (product/services) having the required quality level. Production and Operation are major factors which are taken in consideration when implementing strategy of an organization. Strategy begins with goals, which naturally follow from an entity’s mission.
But for practical purposes goals cannot stand in isolation. They are informed by an repetitive sensing of the external environment and the organization’s internal capabilities. Implementing Business Strategies Business strategizing is much more than visioning, planning and forecasting. In this modern age of changing economies rapidly, all substantive issue of strategy have been redefined as issue of implementation. Nowadays business strategy of an organization is more focused between the internal capabilities of the company and its external environment. The modern subject of business strategy is a set of analytic techniques for understanding better, and so influencing, a company’s position in its actual and potential marketplace”. Production/Operation management is the process which combines and transforms various resources used in the Production/Operation subsystem of an organization into value added product/services in a controlled manner as per the policies of an organization. Production system is consist of input and output. Inputs are resources required for the manufacture of a product or service.
Outputs are direct outcome (actual product or service) or indirect outcome (taxes, wages, salaries) of a production system. When it comes to operations, organization concern more on cost, quality of product, reliability and atmosphere at work. Organizations do change there strategies due to current PESTEL (Political, Economical, Social, Technological, Environmental and Legal) factors. PESTEL factors effect in Production/Operation implementation in Strategy. Political Factor Political factor refers to the government policies, current government system in the country, political stability.
This is a major factor for implementing strategy in an organization. Political factor can create advantages and opportunities for an organization. Economical factor This factor refers to economical situation. All organizations are affected by current national and international economical situation. This could be current exchange and inflation rate, economical growth, current interest rate. Social factor Social factor affects our attitude, interest and opinion. This factor affect a lot when we implement strategy. It tends to increase production of a business due to some social reasons.
Like in Christmas times, people buy more gifts and decoration stuff. Organizations should follow current social factors to be on track. Change in social behaviour also affects on operations as staff’s tendency to work. Technological factor New technologies can create new products and affect on operations. As new technology comes in it helps in development of a product and all over changes to the operations of an company. Technology can reduce cost of a product and helps in improving its quality. Environmental factor This is a major issue in implementing strategies nowadays.
It involves weather and climate changing. World is going through climate changes. In recent months we have seen a lot of snow in Britain. This had a major affect on businesses. People could not come to work due to heavy snow. Production was slow. Demand of non common things were high. Legal factor Legal factor can affect how a company operates, demand of its product and its cost. This factor involve legislation in which company operates. Changes in health and safety law, consumers law and employment law has a major affect on planning strategies of an business. FactorCould include: Politicale. g.
EU enlargement, the Euro, international trade,taxation policy Economice. g. interest rates, exchange rates, national income, inflation, unemployment, Stock Market Sociale. g. ageing population, attitudes to work, income distribution Technologicale. g. innovation, new product development, rate of technological obsolescence Environmentale. g. global warming, environmental issues Legale. g. competition law, health and safety, employment law [pic] SWOT analysis also have a great impact in business strategy of an organization. It gives a brief idea of strength, weakness, opportunities and threat of an organization.
This helps them to improve their operations and quality of product. As we can take an example of Pizza Hut. Pizza Hut is a international brand and always has first mover advantage. Running a business involves planning for current era and future. Pizza Hut has adopted many different strategies to achieve its targets. People behaviour keep changing by time to time. Strategy changes time by time when launching a new product. Focusing customers as new competitors jump in the race. Operations within the store also keep changing. This result in different business strategy.
Pizza Hut follow a product development strategy. This involve substantial modification of or additions to its present product range, which in turn might require extensive research and development. Pizza Hut keep widen their product range by introducing new product to its menu. They lead market segment, they have money to indulge in research and development. Operation strategy concerns the prototype of strategic decisions and actions which set the role, objective and activities of the operation. The term ‘operations strategy’ sounds at first like a contradiction. [pic]
Choice of strategy, Analysis of strategy and Implementation of strategy are related to each other. This has been shown in above diagram. First we perform the Analysis of an organization, what are its needs and key points and then we make choice of what strategy to adopt and then we implement strategy. Production /operations limits, competence, and course of actions can greatly improve or inhibit the ability of objectives. Production processes is normally consist of more than 70 percent of a firms total assets. (Fred David 2005) An important part of the strategy implementations process takes place at the production site.
Production related decisions on plant size, , plant location, product design, , kind of tooling, size of inventory, inventory control, quality control, cost control, choice of equipment , use of standards, job specialization, employee training, equipment and recourse utilization shipping and packaging, and technological innovation can have a major impact on the success or failure of strategy implementation efforts. Example of adjustment in production systems that could be required to implement various strategies are required for both profit and non profit organizations.
As an example, note that when a bank formulates and selects a strategy to add ten new branches, a production related implementation concern is site location. The largest bicycle company in the united state, Huffy , recently ended its own production of bikes and now contacts out those services to Asian and Mexican manufacturers. Huffy focuses instead on the design, marketing, and distribution of bikes, but it no longer produces bikes itself. The Dayton, Ohio, company closed its plants in Ohio, Missouri, and Mississippi. Just-in-time (JIT) production approaches have withstood the test of time.
With JIT, parts and materials are delivered to a production site just as they are needed, rather than being stockpiled as a hedge against later deliveries. Harley-Davidson reports that at one plant alone, JIT freed $22 million previously tied up in inventory and greatly reduced reorder lead time. Factors that should be a looked carefully before locating production facilities include the prevailing wage rates in the area, the availability of major resources, transportation costs related to shipping and receiving, the location of major markets, the availability of trainable employees and political risks in the area or country.
For high technology companies, production costs may not be as important as production flexibility because major products changes can be needed often. Industries such as biogenetics and plastics rely on production system that must be flexible enough to allow frequent changes and the rapid introduction of new products. An article in Harvard Business Review explained why some organizations get in to trouble; “They too slowly realize that a change in product strategy alerts the tasks of a production system.
These tasks, which can be stated in terms of requirements for costs, product flexibility, volume flexibility, product performance, and product consistency, determine which manufacturing policies are appropriate. As strategies shift over time, so must production policies covering the location and scale of manufacturing facilities, the choice of manufacturing process, the degree of vertical integration of each manufacturing facility, the use of R&D units, the control of the production system, and the licensing of technology’’.
A common management practice, cross training of employees, can facilitate strategy implementation and can yield many benefits. Employees gain a better understanding of the whole business and can contribute better ideas in planning sessions. Production managers need to realize, how ever, that cross training employees can create problems related to the following issues; • It can push managers in to roles that emphasize counselling and coaching over directing and enforcing. • It can necessitate considerable investment in training and incentives. It can be very time consuming. • Skilled workers may resent unskilled workers who learn their jobs. • Older employees may not want to learn new skills. Conclusion In the face of current average economic prospects resulting from one of the largest economic downturns since the Great Depression, companies are striving to streamline and become profitable. Operations account for 60-80% of the direct expenses that burden a firm’s profit and production is almost 70% asset of an organization.
So it is very important to place production/operation at the right place when implementing strategies. This can be helpful to achieve the goals of an organization. The company has an fundamental goal of delivering goods to a client, but the processes of manufacturing, designing, analysing and then finally being delivered are the driving forces for the company’s success. References: • David, F R. (2005) Strategic Management: concepts and cases. 10th Ed. Prentice hall: Pearson education. • Chary, S N. 2009) Production & Operation management: 4th Ed. New Delhi: Tata McGraw-Hill. • Oxford university press. (2007) Gillespie: Foundations of Economics – Additional chapter on Business Strategy. [Online] http://www. oup. com/uk/orc/bin/9780199296378/01student/additional/page_12. htm. Last accessed on 10/04/2010. • Griffiths, M. SWOT analysis of Pizza Hut. [Online]. Available: http://www. ypant. co. uk/dept/Business_Studies/Library/A2_work/SWOT%20analysis%20of%20pizza%20hut. pdf. Last accessed on 10/04/2010. Mc00509