14 Focus Points To Align Operations Strategy To Business Strategy

Aligning operations strategy to business strategy

The operations strategy must be aligned to business strategy. If not the organizations will end up with inefficiencies and loses competitive advantage. The 14 focus points mentioned below can help to avoid such problem.

Introduction:

According to Porter three generic strategies that a firm can use to competitively distinguish itself: cost leadership, product differentiation, and focus. The cost leadership is achieved through low-cost, standardized, off-the-shelf products and standardized processes. Production differentiation is achieved through high-quality products and easily adaptable processes. Focus is achieved through cost advantage or responsive delivery and customization in response to target market segments.

During strategy formulation process senior leadership team usually performs external and internal strategic assessments and make clear choices what to do and what not to do. Based on the choices made and other market exercise, senior leadership team come up with strategic projections, which could be range from 3 to 5 years depends on type of industry.

To execute strategic plan, the functional strategies has to be developed. The marketing strategy is developed to generate demand based on strategic projections. During the strategic planning process usually the organizations perform extensive market study and come up with target market. The operational managers come up with demand fulfillment strategy in alignment with the strategic choices made during the strategic planning process. This may be called operations strategy. Other functional strategies include finance strategies and product development strategies. We talk about operations strategy in this article.

“Operations strategy — The total pattern of decisions that shape the long-term capabilities of an operation and their contribution to overall strategy. Operations strategy should be consistent with overall strategy.” — Apics Dictionary

Focus points for operations strategy alignment with business strategy:

Attention: If operations managers don’t engage in strategy development process from the beginning, it is most likely that there are alignment problems. Operations managers must be engaged right from the beginning in strategy development exercise. Especially they bring bottom up perspective in defining strategies.

Attention: Sometimes operations managers focus on non-issues and order qualifiers and try to optimize them. This non-alignment could eat up resources, cause frustrations, and business failures.

Attention: Usually operations managers don’t allocate enough budgets for people development. This may create serious strategy execution problems. Continuous technology innovations make it mandatory to identify people gaps and close them properly. Internal HR team can help in assessing the gaps else hire a consultant to help you.

Attention: Any non-alignment in facilities increases costs and affect competitive position. Usually the leadership team pays less attention to the facility plans. It is worth to spend enough time at design stage.

Attention: Usually some assumptions are made regarding supplier and customer capabilities, which prove to be wrong at later stages. By paying enough attention in be beginning, you can eliminate surprises.

Attention: Understand focus of decisions will help to design processes and configure operations systems. It is advised to make the focus formally and communicate with key stakeholders.

Attention: Product profile will help operations manager to understand strategy clearly. It will help them to design robust operations strategy.

Attention: It is advised to take help from external consultant for configuration. This will eliminate any bias towards old processes and help in managing change.

Attention: Usually this information is not available for operations managers since they are involved in the strategy formulation at the later stages. Involving operations managers from the beginning in the strategy formulation covers all aspect of operations and help in linking bottom up and top down strategies.

Attention: Don’t under estimate the level of change required if you are restructuring the organization. It is better to make few big changes during operations strategy development process; this will help in reducing resistance.

Attention: Capacity addition costs a lot. Hence making a clear choice for capacity additions may help to make wise decisions.

Attention: Selecting industry vertical or standard ERP is a complicated process. In my opinion, if you consider yours business processes are matured enough then go for standard ERP and implement through full involvement of your operations team. If you think the process maturing is not so high, then going for industry vertical is preferred decision.

Attention: Planners should be involved heavily during strategy formulation process. They are the one who understands supply chain operations better than anyone else in the organization.

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