Page 43 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Production and Operations Management

Notes First you define the sub-goal, then install business processes capable of achieving these goals,
and lastly you measure how well each business process contributes to achieving the business
unit’s objectives.
But at high clock-speeds, a top down approach to strategy implementation often fails because it
can’t respond quickly to unforeseen opportunities and threats. In such cases, the organization
design must provide the firm’s units broad strategic guidelines and then empower the units to
do that which is necessary to contribute to achieving its goals. In the faster lane, people become
more important than policy. This reality is true for each of the firm’s functional areas, but it is
especially true for its operations management function.

Once the strategy is finalized, it has to be implemented through the functional areas. The operations
managers must translate the strategy by working out the details of how it can or should be
executed. Implementing business strategy is often problematic. The firm’s expectations provide
the basis for evaluating the effectiveness of management.
Implementing strategy is normally considered through a systems perspective that views
management as a three-stage process. In business environments where the change of pace is not
very fast, this approach to strategy implementation works well. The three stages are described
below:
1. The Organization Level: This reflects the competitive strategy of the organization. It uses
the corporate strategy as an input and then converts it into a broad description of how
senior management wants the firm and its units to be run. Outputs of this level include:
(i) Organizational Objectives: The objectives define how the firm intends to achieve and
maintain its desired competitive advantage as well as how the firm intends to
benefit from said advantage, i.e., how much sales, market share, and earnings are
expected. Organizational goals also include qualitative objectives, involving things
such as repeat sales, service levels, awards, prestige, etc.

(ii) Organization Design: This defines the arrangement of the units to implement the
strategy. It involves both physical entities such as plant and equipment, the
organization structure, and how it expects to treat/reward its people for performance.
(iii) Organizational Management: The specific objectives for each group are translated into
measures to evaluate their performance, formulate a resource management plan,
and develop an understanding of how the groups will interact with each other.
2. The Process Level: This is the level at which units actually do the work. From the
organizational level, the strategy has to be translated for each individual process. Processes
include such activities as order entry, product innovation, and the actual making of the
product. The process level can again be broken down to specific sub-systems:
(i) Process Objectives: These are measurable objectives for each of the processes.

Example: Manufacturing might be expected to translate customer orders into products
within six working days of being communicated to them.
Process objectives can be multi-dimensional, i.e., a production process might be
evaluated on the basis of cost, product quality, and on-time delivery reliability.
(ii) Process Design: In order to achieve the process objectives, it may be necessary to
design or redesign processes. The objective is to provide each person with a work
situation that can be done effectively when given proper guidance and adequate
resources.

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