Operations: Policy and Strategy

Introduction

It is very important for an organization to have well defined objective. A well-defined objective facilitates development of strategies and policy thereby creating value for customers.

Operation Strategy

Operational strategy is essential to achieve operational goals set by organization in alignment with overall objective of the company. Operational strategy is design to achieve business effectiveness or competitive advantage.

Operational strategy is planning process which aligns the following:

Operational Strategy

In this global competitive age organization goal tend to change from time to time therefore operations strategy as a consequence has also be dynamic in nature. A regular SWOT analysis ensures that the organization is able to maintain competitive advantage and business leadership.

Strategic Management Process for Production and Operation

For success of organizational strategic objective, strategic planning has to trickle down to various function areas of the business. In order to build strategy management process a sequential process as below is followed

Competition Analysis: In this step company evaluates and studies current competition in the market and practices that are followed in the industry for operations and production vis--vis company policies

Goal Setting: Next step involves narrowing down the objective towards which the organization wants to move towards.

Strategy Formulation: The next step is breaking down of organizational goals into operations and production strategies.

Implementation: The final step is to convert operations and production strategies into day to day activities like production schedule, product design, quality management etc.

As organizations are always customer-centric, production and operation strategy for organization are built around them

Productivity

Measurement of formulated operations and production strategy is important to maintain alignment with the organization objectives. In simple terms productivity is defined as sum of total output per employee or per day. Productivity of company is dependent on industry and environmental conditions in which it is operating.

Two essential part of productivity are labor and capital. In scenario of limited resources, optimum and efficient utilization of labor and capital will generate favorable productivity. Productivity measurement also enables company to identify areas which require improvement or special focus. Also productivity provides ready report card to measure status against company’s production objective.

Productivity measurement can be classified in three categories based on the inputs used for calculation. Partial productivity ration of output is compared to one of resource used for example, labor productivity where output is compared to the labor wages.

Total productivity measure takes into consideration sum of all input factors which are used for the output.

In the modern age technology plays an important part in productivity.

Wastivity

Another important factor is the case of production is wastivity. Not 100% of input would be converted to output, there is going to waste during production. Wastivity is reciprocal of productivity. Classic examples of wastivity are defective products and services which either have to be re-cycle or disposed of completely. Other example is idle capacity of material, man-power equipment etc.


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