Most organization develops objectives for its operations in the long run, as operations contribute to the success of an organization. Operations function is the central part to organization, it produces all the value added goods and services. Once operations functions have been understood, an organization needs to formulate principles to be guideline for them to achieve objectives. This is Operations strategy of an organization. In the long run, the operations strategy needs to be improved to maintain operations performances. This assignment is very important it tend to explain how can operations strategy been improved by risk and project management to bridge the gap between the current performance and the desired performance (Slack, Chambers and Johnston, 2001). This assignment will have three sections.
Section one will deals with operations strategy.
Section two will discuss project and risk management and their contributions to the improvement of operations strategy.
The last section will point out challenges of improving operations strategy, recommendations, conclusion and reflective research
2.0 OPERATIONS STRATEGY
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Before any explanation about operations strategy, first let's consider what is 'Strategy'?. A strategy is asset of guide line about where an organization want to be, how to positioning itself and how it will reach there so as to achieve the desirable objectives (Grant, 2010).He pointed out 4 factors for successful strategy.
An organization determines long term, simple and agreed objectives.
Understanding the environment in which organization is competing.
Objective appraisal of organization's resources by exploiting internal strategy of an organization while protecting areas of weakness.
Lastly is an affective implementation, otherwise the strategy will be of less use.
After the discussion of strategy now we account for operations strategy. (Slack et al., 2001:65) argue that
It is a part of organization's total strategy which has four content/perspectives. (See figure 1 at appendix).
Top down perspective, this reflects generally on what business wants to do or to be in and how to allocate resources in its various businesses.
Bottom up perspectives, which describe operations improvements and organization total strategy building.
Market requirement perspective is about operations strategy involving in translating customer needs into operations decisions by making sure that an organization satisfies its targeted market.
The operations resources perspective; identify the organization's resources capability in the chosen markets. This help to gain sustainable competitive advantage on the area they are doing better than competitors. Although they argue that this has significant impact in organization if operations resources will not be allocated careful, in the long term an organization will not realize its operations objectives/goals.
2.1 THE ROLE OF OPERATIONS STRATEGY.
Operations differ from one organization to another depending on which business an organization or size of an organization. Regardless of these differences the fact is that, every organization need operations strategy (Slack, et al., 2009) discusses four roles of operations strategy.
1. Operations strategy articulate a vision for the contribution of operations functions. This is the statement on how operations will add value to the business. (Hayes and Wheelwright as cited by Slack et al., 2009) argue that, this concept can be well explained in four stage models. (See figure 2 at appendix).
Stage 1: Internal neutrality where it describes that operations vision need to be internally neutral that is to say it needs to avoid big mistake and try to correct the worst problems so as to bring the organization back.
Stage 2: External neutrality. In this stage an organization compares itself with its competitors in similar business or in different market from which it operates and adopts the best practice on its operations.
Stage 3: At internal supportive, the state of operations is being supportive by providing value operations strategy and link the strategy to the operations while making sure that it will increase operations capabilities.
Stage 4: This is an externally supportive where it gives organizations advantage by trying to do its operations in different way than competitors.
2. It defines operations performance objectives for an organization; it pursues these objectives to satisfy needs of its stakeholders. An organization must consider these five performance objectives as they can affect the way to satisfy their customers which will affect organization's competitiveness. (Slack et al., 2004) pointed out these operations performance objectives as:
Always on Time
Marked to Standard
Quality-Is the ability of an organization producing their products/services in the right way with no errors while also producing according to specification.
Cost- Is the ability to produce in low cost which enables an organization to share this with customers in low price. This can be achieved when an organization build a good relationship with suppliers so that they get input in low price as well as maintaining their operations cost.
Dependability- Is about delivering goods and services on the promising time to your customers.
Speed- Is the way an organization do things quick in response to the demand where there is a short time between when the customer needs the product/service and when receiving it.
Flexibility- Is ability to change, it may be changing the operations to cope with immediate circumstances or changing according to the need of customer as well as introducing new products or services . Flexibility in organization has four aspects:
Ability to change quantity of your production
Ability to change production time.
Ability to change the variety of your products and services which you are producing.
Ability to learn, innovate by producing new products and services.
Organizations succeed in any or all of these five performance objectives can be able to achieve its business strategy which will be equivalent to achieve its competitive factors.
In other hand literature review argue that it is impossible for an organization to succeed in all these performances objectives in the same time and at all aspects of its operations, it must choose which performance objective it want to deal with and foregone others; this result to the concept of "trade-offs" where by an organization need to give up the performance in one aspect of operation so as to do well in another operation. This concept was brought first by Skinner in 1969. He argues that an organization needs to identify the single goal and deal with it to succeed, as operation strategy can succeed if and only if it based in one clear goal. This concept of trade -offs was rejected by some of operations management scholars as (McGraw-hill online, 2007) reported that these scholars argue that some of organizations are capable of satisfying their competitors in multiple ways, they have better quality, lower cost, greater dependability as well as being flexible in their operations. (See example one at appendix for companies achieved its operations strategy).
3. Another role of operations strategy is to identify the broad decisions that will help the operations achieve its objectives. This is identifying which best or on how operations will achieve its operations objectives by being specifically for instance on how it will achieve speed, quality, cost, dependability and flexibility in organization.
4. Lastly it reconciles strategic decisions to objectives by linking the objectives performance and every operations decision made in an organization while trying to articulate the association between operations objectives and the way of achieving those objectives.
2.3 PROJECT MANAGEMENT
Most organizations aim in satisfying customer's needs and the major goal of a project is to satisfy customer needs. A project as defined by (Gray and Larson, 2007)
It has the following characteristics.
Well defined objectives
Estimate time with a start and an end
Doing something new
Usually need participation of several departments in and professionals
Clearly defined time, cost and performance requirement
It can also be explained through project life cycle. It passes through four stages. Defining stage where specific project is defined, planning stage which determine what the project will entail and when will be scheduled, execution stage where the major job of the project is done, finally is project delivering to customers and redeploying it.
Project management involves all the managerial activities which are required to supervise a project to a successful end. These activities include defining, planning and controlling projects (Shenhar and Divr, 2007).
Project managers are responsible to make sure that it is well defined and its environment has been understood to reach desired end. Literature review indicate that understanding project environment such as national culture, local laws, geography, politics and users is important as these factors may affect a project in its life time. (Slack et al., 2001).
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(Gray and Larson, 2007) argue that most organizations use projects in its operations, although a project size depends on the size of an organization. If a project is proper managed it contributes to the improvement of operations strategy of an organization in the following grounds:
Compression of the product life cycle, this is most important in organization as it shortens the time of new product development which increases dependability of an organization. Time to market for new product in organization is very important, when improved increase organization's performance. Example NIKE a shoe manufacturing company has managed well their project which reduced new shoe development time from nine to six months.
A good project management can lead to better quality products/ services which will lead an organization to global competition. Now a days customers do not only demand for cheap products/services but also quality. Quality management and improvement depend on project. .
If a project is managed within its time and estimated cost will improve the performance and low cost operations which can make an organization to offer its goods and services in low prices, which improve operations strategy of organization.
It improves organizations flexibility by increasing customer focus. It is critical both to develop customized products as customers want those products/services that cater to their needs, as well as building relationship with customers which improve operations strategy. For instance BMW a car manufacturing company build cars to specific customer orders through project management as well as speed delivery where delivery date is just done in five minutes, this increase their profit.
It can also improve the speed of delivering product and services. It is planned within a time and if will not overrun the time it can be able to deliver speed to customer hence improvement of operations strategy of an organization.
Project management can expand knowledge of organization which improves innovation; new project is about doing new things every time. It can increase the integration of technologies in an organization which improves performances.
Furthermore project management improves capacity of an organization by making sure that the capacity is in general base level where demand and supply match. If the capacity is high than demand, project can downsize it while if is low project management can improve it to reflect the important of operations performance objectives. (See figure 3 at appendix).
2.4 RISK MANAGEMENT.
A concept of risk management in an organization is important to be understood not only by managers but also by employees. The possibility of unwanted event happening with negative impacts is known as risk. Risk management is a general management function which identifies, analyze and control risk which affects an organization performance. This process should be continuous within organization to address all risks and need to be developed (Dickson cited by Khan and Burnes, 2007). It is associated with processes which differ depending on risk management system of an organization. (White, 1995) puts forward three stages of risk management in an organization. (See figure 4 at appendix).
First is to identify risk. The aim is to determine general risk factors which are probably to happen in operations. It includes identifying potential causes of failure example supply, human, organization, technology, customer and environmental disruption.
Second is to analyze the risk, where an organization understands the probability and extent of the most significant risks.
Lastly is risk evaluation, which is done to decide on the suitable management answer for each risk/combination of risks, and which side most appropriate to manage for all the identified risks.
Literature review argue that if an organization manage well its operational risk there is an evidence of positive impacts while failure to manage bring negative effects (Hendricks and Singhal ,2005).The positive consequences of proper risk management is the improvement of organizations operations strategy as discussed below:
It improve quality of goods/services as it reduce failure and errors in operations where by products are produced without damage, this improve operations strategy
If risks are managed properly within a project the time estimated for the product to the market will be as promised which increase dependability hence improve operations strategy.
Speed of delivery will also be improved as there will be no delays or failure in operations which increase organization performance.
Risk management increase the reputation of the organization in eyes of their customer as everything is done according to customer's needs, which improve competitive advantage.
It decrease operational cost as failures are managed, therefore the project will run in expected time and estimated cost for instance in new product development if risk is managed well the cost of production will be low as well as the price of the end products.
Moreover managing risk can lead to greater organization's flexibility as it will be easy to produce within time and variety products/services.
In other side if risk management is not done properly can bring failure and sometime collapse of an organization .For instance Daiwa case study (see appendix 3) the process of managing risk was not proper done. Risk-taking functions were not separated from record-keeping and risk assessment functions which bring operations failure. The company did not identify its risks as the case study point out that many warning signals about the way risk management was organized at the New York branch but chose to believe that local management has learned its lesson. Moreover Daiwa's risk management did not involve all its employees which its failure in risk management threat the company generally.
2.5 CHALLENGES OF IMPROVING OPERATIONS STRATEGY
There are challenges associate with improving operations strategy through project and risk management, this can be listed as follows;
In some time the project estimated time can not be achieved which may affect dependability as well as flexibility.
The cost estimated overrun which in turn lead to high cost of operations where organization pass this to their customers through high price of goods/services (Flyvbjerg et al., 2004).
It is also difficult for an organization to avoid risks in its operations no matter how much attention has been kept in operations, as human being cannot 100 percent reliable in detecting failures and errors. Strongly this shows that risk management is a complicated issue and sometimes cannot help in improving quality in an organization.
Company should make sure that it builds strong operations strategy because operations are the source of competitive advantage.
Managers and employees should be responsible for risk management in organization
An organization to focus on other ways of improving operations strategy and making their operations better than their competitors to be able to satisfy their customers in better ways than others.
In light of the above arguments one can conclude that the aspect of operations strategy is important to an organization, it determines the survive of an organization in this competitive environment as well as long term success .Organizations need to develop sound operations performance objectives which will be guideline to them while developing operations strategy which will be their plan to achieve those objectives. Furthermore they need to improve their operations strategy which will improve the performance of individual processes, operations and the whole supply networks. Project and risk management can help an organization to improve its operation strategy although there are challenges associated through the process of improvement, it is the job of an organization to make sure that they stick to the improvement made and by every day being innovative and proceed with improvement to increase performance of its operations.
Further research will be needed in the topic as available research did not link on how project and risk can be able to improve operations strategy within an organization. These researches were discussing each topic separately