The process of achieving sustainable alignment of

market requirements with operations resources

The process of achieving sustainable
alignment of market requirements with
operations resources
The process of using
substitutes for strategy
The process of implementing
operations strategy
What is sustainable alignment
Fit-align resources with requirements.
Sustainability: Develop sustainable
competitive advantage.
Risk: include the impact of risk.
Alignment is both static and
dynamic

Fit means that the operations resources and processes are
aligned with the requirements of its markets.
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Operations resource capability
Fit can also mean that market requirements are moved to
exploit operations resource capabilities
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Level of operations resource capability
In operations strategy fit is the alignment between
market and operations capability
Alignment
at a high
level
X
Y
X
1
Y
1
Alignment
at a low
level
A
B
Excessively tight fit can increase the risks of misalignment
between market requirements and operations resource capability
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Level of operations resource
capability
Movement in market
requirements and operations
resources produces
misalignment
Tight fit
Excessively tight fit can increase the risks of misalignment
between market requirements and operations resource capability
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Level of operations resource
capability
Looser fit between market
requirements and operations
resources preserves
alignment
Loose fit
Fit operations resources to market
requirements
Operations
capabilities
Operations
strategy
decision
areas
Operations
performance
objectives
Market
positioning
Market
segmentation
Competitor
activity
Understand
markets
Define
competitive
position
State market
requirements
in terms of
operations
performance
objectives
Make
strategic
operations
decisions
to
enhance
core
capabilities
Fit market positioning to
operations resources capabilities
Determine
competitive
position
Define market
potential of
operations
performance
Make
appropriate
strategic
operations
decisions
Identify core
capabilities
Understand
resources and
processes
Operations
capabilities
Operations
strategy
decision
areas
Operations
Performance
Potential
market
positioning
Tangible and
intangible
resources
Operations
processes
Tight alignment v/s Loose
alignment
A truism that any successful
organization contains the seed of its
own downfall.
Phenomenon of success enabled
inertia.
Core capabilities and Core rigidities.
.
Static and dynamic sustainability
Static mechanisms defend a given position.
Dynamic mechanism encourages innovation
and change.
Dynamic or offensive approach to
sustainability
First mover adavantage.
The Red Queen effect.
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Capacity
Supply
network
Process
technology
Development
and
organisation
Resource usage
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Decision areas
Initial operations strategy matrix for CAG
Recycling Services
Speed
Dependability
Flexibility
Cost
X X X
X X X
= Critical
intersections
X
Quality
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Capacity
Supply
network
Process
technology
Development
and
organisation
Resource usage
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Decision areas
Operations strategy matrix for CAG Recycling
Services after acquiring the high-volume public
authority consortium contract
Speed
Dependability
Flexibility
Cost
X
X
X X
X X
X X
X X
X X
= Critical
intersections
X
Operations strategy matrix for CAG Recycling
Services after acquiring the high volume public
authority consortium contract
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Capacity
Supply
network
Process
technology
Development
and
organisation
Resource usage
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Decision areas
Speed
Dependability
Flexibility
Cost
X
X
X X
X X
X X
X X
X X
= Critical
intersections
X
X
X
X

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Level of operations
resource capability
y1
x1
Fit over time at CAG Recycling Systems
y2
y3
y4
y5
x2 x3
x4
C
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D
E
How can an operations strategy encourage the
learning necessary to make sure the operations
knowledge is carried forward over time?
How can an operations strategy ensure that the
organisation appropriates the competitive
benefits which are derived from any
innovations.
How can operations strategy take into account
the fact that innovation have a momentum of
their own.
Examine the
performance of
operations processes
Operations
innovation
Compare this
performance against
objectives
Develop new insights
and capabilities
Single loop learning in operations
Reduce performance
of operations
processes
Operations
innovation less easy
Performance
objectives less
appropriate
Insights and
capabilities less useful
Shifts in technology,
processes or markets, leading
to improved competitor
performance
The potential limitations of single-loop
learning
Compare this performance
Examine the
performance of
operations processes
Operations
innovation
Compare this
performance against
objectives
Develop new insights
and capabilities
Question the relevance
of objectives
Develop new (more
relevant objectives)
Double-loop learning questions the
appropriateness of operations performance
Single loop learning is required for consistency
and stability.
Double loop learning for continual reflection
upon their internal and external objectives and
context.

Tension between preservation and change.
Appropriating Competitive benefits

Products and services are developed jointly.
Issue of long-term intellectual property right
can become very difficult to manage.
Path dependencies and
development trajectories
Current resources and requirement positions
act to constraint the future development .

New: no guarantee, no pre-existing
capabilities.

There is a momentum based on the trajectory
of the previous decision.
Strong market-based trajectories
can both lead to market
vulnerability when challenged by
radically new products and
services.
Christensens Innovators dilemma
When faced by radical shifts in the
technological or operating model of a product
or a service, meeting long established
customer needs can become an obstacle rather
than an enabler of change.
As technology can progress faster than the
requirements of the markets, disruptive
technologies will eventually enter the zone of
performance which is acceptable to the
markets.

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Capacity
Supply
network
Process
technology
Development
and
organisation
Resource usage
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Decision areas
Speed
Dependability
Flexibility
Cost Critical
Critical
Critical
Critical
Critical
Comprehensive?
Coherence
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Fit is concerned with ensuring comprehensiveness,
correspondence, coherence, and criticality
Comprehensive
Coherence
When choices made in one area do not pull the
operations in another area.
Correspondence
An operation has to achieve a correspondence
between the choices made against each of the
decsision areas and the relative priority
attached to each of the performance objectives.
Strategies pursued in each decision area should
reflect the true priority of each performance
objectives.
Criticality
Need to include the financial and competitive
priorities
Some strengths for operations
related factors in SWOT analysis
Economies of scale
Ability to adjust
capacity
Reserve capacity
Appropriate locations.
Long term suppliers
relationships.
Supply market
knowledge
Supply chain control.
Advanced process
technology knowledge.
In-house process
technology development
capability
Flexible organisational
structure.
In-house operations
expertise
Some weakness for operations
related factors in SWOT analysis
Uneconomic volume
Under-utilisation of
capacity
Insufficient capacity
In appropriate location
Lack of power in supply
market.
No long term supply
relationships.
Old process technology
Rigid organsiation
Rigid performance
No in house operations
expertise
Poor product
development.
Core capabilities.
Ideal or green field operations.
Gaps
Not static /iterative

Process choice
Operations strategy
Corporate
objectives
Marketing
strategy
How do products
or services win
orders?
Step 1 Step 2 Step 3 Step 4 Step 5
The Hill framework of operations strategy formulation
Price
Quality
Delivery speed
Delivery
dependability
Product/service
range
Product/service
design
Brand image
Technical
service
Product/service
markets and
segments
Range
Mix
Volumes
Standardisation
or
customisation
Innovation
Leader or
follower
Growth
Profit
ROI
Other financial
measures
Process
technology

Trade-offs
embodied in
process
Role of
inventory
Capacity, size,
timing, location
Functional
support
Operations
planning
and control
systems
Work
structuring
Payment
systems
Organisational
structure
Infrastructure
Platts-Gregory Procedure
Stage 1 involves developing an understanding
of the market positions of the organisation.
Stage 2 seeks to identify the capabilities of the
operation.
Stage 3 is the least structured of the elements,
encouraging managers to review the different
options they have for improvement.
Facilities
Capacity
Span of process
Processes
Human resources
Quality
Control policies
Suppliers
New products
The existing operation
What do we need to
do to improve the
revised operations
strategy?
What the market
wants?
Features
Quality
Delivery
Flexibility
Price
Opportunities and
threats
The PlattsGregory procedure
How the
operations
performs
Features
Quality
Delivery
Flexibility
Price
Product
family
Reliability
Into stock point
Variable
Critical: Project
delay Good
Features
Fit for purpose
Few features
Many features/ High
absolute level
Many features
Total reliability essential
High
Flexibility
design
Standard range only
Standard only
Quality
Acceptable at price
Acceptable
All designs customer specified
All products customised
Stable market
Little variation required
Volume variations low
Highly cyclic variable market
Volume variations high
Delivery
lead-time
Ex-stock
Short
Not significant
Long
Volume
Price cost
Price competition
dominant
Low
Non-price competition
dominant
High
Achieved performance
Market requirements
Uses of profiling in the PlattsGregory procedure