Operations strategy

564 Pages·3.322 MB·English

by  Nigel Slack, Michael Lewis.

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OPERATIONS STRATEGY
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OPERATIONS STRATEGY
Nigel Slack
Michael Lewis

An imprint ofPearson Education
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First published 2002
© Nigel Slack and Michael Lewis 2002
The rights of Nigel Slack and Michael Lewis to be identified as authors of this work
have been asserted by them in accordance with the Copyright, Designs and
Patents Act 1988.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
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or endorsement of this book by such owners.
ISBN 0 273 63781 9
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloguing-in-Publication Data
Slack, Nigel.
Operations strategy/Nigel Slack, Michael Lewis.
p. cm.
Includes bibliographical references and index.
ISBN 0–273–63781–9
1. Production management. I. Lewis, Michael. II. Title.
TS155 .S563 2001
658.5--dc21
2001033632
10 9 8 7 6 5 3
09 08 07 06 05
Typeset in 91⁄2/12pt Stone by 3
Printed by Ashford Colour Press Ltd., Gosport
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Contents
Foreword ix
Preface xi
Acknowledgements xv
PART 1 • THE NATURE OF OPERATIONS STRATEGY 1
1 Operations strategy – the two perspectives 3
Operations strategy 5
The market perspective on operations strategy – ‘outside in’ 16
The resource perspective on operations strategy – ‘inside out’ 21
Bringing the two perspectives together 32
Summary answers to key questions 33
Case exercise: Hagen Style 35
Further reading 36
Notes on the chapter 37
2 The content and process of operations strategy 39
Content – performance objectives 41
Content – operations strategy decision areas 54
The operations strategy matrix 62
The ‘process’ of operations strategy 65
Summary answers to key questions 72
Case exercise: Dresding Medical 74
Further reading 75

Notes on the chapter 76
3 Time,trade-offs and targeting 77
Operations strategy changes over time 78
Trade-offs 85
Targeting and operations focus 98
Summary answers to key questions 107
Case exercise: ‘Call-Us’ Banking Services 108
Further reading 109
Notes on the chapter 110
PART 2 • THE CONTENT OF OPERATIONS STRATEGY 111
4 Configuring operations capacity 113
The overall level of operations capacity 120
The number and size of sites 130
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vi CONTENTS
Location of capacity 133
Summary answers to key questions 142
Case exercise: Freeman Biotest Inc. 143
Further reading 145
Notes on the chapter 145
5 Capacity dynamics 147
Timing of capacity change 149
The magnitude of capacity change 163
Changing location 168
Summary answers to key questions 172
Case exercise: Delta Synthetic Fibres 174
Further reading 178
Notes on the chapter 178
6 Supply network relationships 179
Inter-operations relationships in supply networks 183
Vertical integration 187
Traditional market-based supply 194
Partnership supply 200
Summary answers to key questions 208
Case exercise: Aztec Component Supplies 210
Further reading 211
Notes on the chapter 212
7 Supply network behaviour 213
Network behaviour 214
A supply network perspective 215
Network dynamics 220
Network management 229

Summary answers to key questions 240
Case exercise: Zentrill 241
Further reading 242
Notes on the chapter 242
8 Process technology – definition and characteristics 244
What is process technology? 245
Characterising process technology [1] 250
Relating technology characteristics to market requirements 260
Characterising process technology [2] 266
Including process technology trends 270
Summary answers to key questions 273
Case exercise: Bonkers Chocolate Factory 274
Further reading 276
Notes on the chapter 276
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CONTENTS vii
9 Process technology – choice and implementation 277
Why invest in process technology? 278
Evaluating process technology 286
Implementing process technology 308
Summary answers to key questions 315
Case exercise: Ontario Facilities Equity Management (OFEM) 316
Further reading 318
Notes on the chapter 319
10 Operations organisation and role 320
Organisational structure 321
The organisational position and role of operations 333
The role of ‘central operations’ 343
Summary answers to key questions 349
Case exercise: The Thought Space Partnership 350
Further reading 352
Notes on the chapter 352
11 Operations development and improvement 353
Development and improvement 354
Setting the direction 360
Developing operations capabilities 372
Deploying capabilities in the market 381
Summary answers to key questions 384
Case exercise: Customer Service at Kaston Pyral 386
Further reading 389
Notes on the chapter 389
12 Product and service development and organisation 391
The product and s ervice development process 398
A market requirements perspective on product and service development 408
An operations resources perspective on product and service development 413
Summary answers to key questions 425
Case exercise: Project Orlando at Dreddo Dan’s 427
Further reading 427
Notes on the chapter 428
PART 3 • THE PROCESS OF OPERATIONS STRATEGY 429
13 Operations strategy and ‘fit’ 431
Operations strategy as ‘fit’ 434
Comprehensive, coherence, correspondence and criticality 447
Formulation models for fit 452
Practical challenges for achieving fit 456
Summary answers to key questions 464
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viii CONTENTS
Case exercise: The Focused Bank 465
Further reading 467
Notes on the chapter 467
14 Operations strategy and ‘sustainability’ 468
Static and dynamic sustainability 470
Learning, appropriation and path dependency 480
Practical challenges of sustainable fit 492
Summary answers to key questions 495
Case exercise: Clever Consulting 496
Further reading 498
Notes on the chapter 498
15 Operations strategy and ‘risk’ 500
Types of risk 502
Cognition, context and control 513
Practical challenges of risk 526
Summary answers to key questions 531
Case exercise: Saunders Industrial Services 533
Further reading 534
Notes on the chapter 535
Index 537
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Foreword
By Rupert Gasser,Executive Vice President,Nestlé S.A.
After the fabulous success of the outstanding book Operations Management by Nigel
Slack and his team, it is a great pleasure for me to now introduce another work of
equally high standing by Nigel Slack and Michael Lewis on Operations Strategy.
Through increasing globalisation, operations are spanning large regions. Therefore
a company’s operations are, as a consequence, ensuring supply across multiple
countries, cultures and functions and have therefore to be approached with a long-
term strategy in view. The content of this book mirrors the great tasks that many
industries are facing in the process of globalisation.
More specifically, this text reflects the challenges that the world’s largest and most
diversified food company – Nestlé – is facing every day to reconcile the performance
of its operations to the requirements of the markets.
Whilst Nestlé aims at high operational performance standards across its world-
wide factory systems, the continuous development of its network of factories to the
changing business and trade environment also ensures operational effectiveness.
This optimisation of operations performance and effectiveness became possible
through the elimination of trade barriers, changes in the relative importance of
transport costs, outsourcing and improvements in technology – and it is managed
through an Operations Strategy approach.
Nestlé’s redesign of its industrial structure aims to create the optimal industrial
platform for long term, capital efficient and profitable growth. In so doing, we are
defining the role of factories. For example, from local to regional production centres
or from multi-product to single product manufacturing sites. Such changes will aim
to optimally deploy new technologies, improve our international supply chains and
effectively manage the day to day running of our operations. In this way the design
and implementation of an appropriate Operations Strategy affects all parts of our
organisation in an essential way and is therefore a core competence.

Operations Strategy superbly illustrates those broad, principle-defining and
long-term issues which are the concern of operations strategy. As such it comp-
lements the more operational, immediate, tangible and specific issues which define
operations management.
Nigel Slack and Michael Lewis’s Operations Strategy makes highly interesting read-
ing on a subject which is of paramount importance to any corporation. I am con-
vinced that this book will contribute to a more comprehensive approach to
operations strategy by tomorrow’s management all over the world.
RUPERT GASSER
Executive Vice-President, Nestlé S.A.
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