Unit 1: Introduction to operations strategy

Operations strategy is the total pattern of decisions that shape the long-term capabilities of operations and their contribution to overall strategy (Slack and Lewis).

• Fit: operations capabilities must match what the market requires — a low-cost airline needs fast turnarounds and a single aircraft type; a luxury hotel needs flexible, personalised service.
• Perspectives: top-down (from business strategy), bottom-up (from operational experience), market-requirements and operations-resources perspectives (Slack).
• Skinner (1969): "Manufacturing — missing link in corporate strategy" — operations can be a competitive weapon, not just an efficiency function; the focused factory concentrates on a limited task.

• Order qualifiers vs order winners (Terry Hill): qualifiers get the firm considered (minimum quality, certification); winners make the customer choose it (lowest price, fastest delivery).
• Trade-offs and the sand cone model (Ferdows and De Meyer): build quality first, then dependability, speed and finally cost — capabilities can be cumulative.
• Porter's value chain: primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) and support activities (infrastructure, HRM, technology, procurement); operations strategy configures these activities to create value.

• Resource-based view: sustainable advantage comes from resources and capabilities that are valuable, rare, inimitable and organised (VRIO).
• Core capabilities in operations: process know-how, supplier networks, quality culture, rapid product development, flexible manufacturing.
• Prahalad and Hamel's core competencies: provide access to many markets, contribute to customer benefits, are difficult to imitate.

• Generic strategies (Porter): cost leadership needs scale, standardisation and lean processes; differentiation needs quality, innovation and flexibility; focus needs operations tailored to a niche.

• Location strategy: where to place facilities — near markets (services, perishables), near materials (cement, steel), near skilled labour (IT), in incentives zones (SEZs, PLI clusters); global location for cost, market access and risk diversification.
• Capacity strategy: how much, when and in what increments.

• Considerations: economies and diseconomies of scale, capacity cushion, flexibility, demand forecasts, competitors' moves.

Enterprise resource planning (ERP) is an integrated software system that links all functions — finance, operations, supply chain, sales, HR — on a common database.

• Benefits: single source of data, real-time visibility, standardised processes, better planning and inventory control, faster financial close.
• Implications and challenges: high cost, long implementation, process changes, training, resistance; success needs top management support and business process re-engineering.
• Vendors: SAP S/4HANA, Oracle, Microsoft Dynamics, Tally (small firms), Zoho, Odoo.