Production and Operation Management

To what extent is operations management a strategic activity? Be sure to

give examples and views from the theoretical literature.

Operations management is an area of management concerned with

overseeing, designing, controlling the process of production and redesigning
business operations in the production of goods and/or services. It involves
the responsibility of ensuring that business operations are efficient in terms
of using as few resources as needed, and effective in terms of meeting
customer requirements. It is concerned with managing the process that
converts inputs such as raw materials, labour and energy into outputs in the
form of goods and services. As for strategy, according to Stacey (1998), it
can be seen as the matching of the resources and activities of an
organisation to the environment in which it operates.
Strategic decisions are normally about trying to achieve advantage for the
organisation over competition. Corporate goals such as economic efficiency,
sustainable growth, increased productivity and most importantly, profit
maximization are the end result of what all companies strive to achieve.
However, these goals are not obtained so easily because at some point, all
firms come across obstacles that may be in the form of internal and
externals factors that may be hinder them from achieving them.
Operations management, it is not in itself a strategic activity but it
contributes to it. For operations to run smoothly, there must be a plan, this is
where strategic planning comes in. In strategy, corporate level strategy is
the highest level and it sets the long term direction and scope for the
organization, where its in the form of mission statement. From this, there is
operations strategy which is the companys plan for how the business will
operate to achieve a set of goals.
For example a machine will be used to achieve a certain purpose but all
the components of a machine must operate properly and together the
process will be successful. For a retail business such Wal-Mart, their
operations strategy is to use low inventory levels and prices to generate
faster sales based on low prices and value. With low inventory and low
prices, once the items are sold out, it can be replaced with new items and
that an also increase demand. With high demand and low prices, this could
mean increased sales for Wal-Mart.

Operations strategy is important in achieving business goals and also in

gaining competitive advantages in ways such as it can be central to the
implementation of an already devised business strategy which means how
well the organizations can match its resources with the opportunities in the
external environment. Also according to Hamel and Prahalad (1994),
operational capabilities would be viewed as part of the core competencies.
This would create new opportunities for the organization.
To ensure competitiveness which then helps a firm become profitable,
the operational efficiency and effectiveness of the process has to be up to
standard. For different companies that manufacture homogenous product,
their operational activities will be the similar process and they all will want to
make the process to be effective and efficient. This is where strategy plays is
big part when the companies can be differentiated. According to Porter
(1996), strategy can be about being different which means deliberately
choosing a different set of activities to deliver a unique mix of value.
Operational activity is the driving force of a business and it is
categorized in four stages that represent a different level of contribution
where the operational engine makes in support of the business strategy. The
first stage, operations does minimum to support the business at the basic
level. It is not aware of the overall strategy and also the source of problems
according to senior management which prevents the organization from
achieving their goals. At the second stage, the operational engine has to be
become more aware and know the limitations of its performance to move
from stage one. In order to do this, it has to acquire an external perspective
to compare and contrast to other units that exist in the same market. Senior
management will see this stage that it has improved slightly but operations
can be able to implement the strategy of the company.
As for the third stage, the operation has achieved a level of excellence
in terms of the activities that it carries out. It is now efficient and reliable;
operations will begin to generate its own strategy to perform the activities.
Senior management is confident in the ability of the operations to support
the direction that the business takes. As for the fourth and final stage, the
operations are innovative and driving forward toward future markets and
creating products that is a step ahead of the competition. Senior
management can now make future strategies based on the current one.
(Paton et. al 2011)

Effective operations function is what all firms want and strive for but
really in order for the firms to be different from their rivals, they need to
have distinctive strategies that are unique which they will gain competitive
advantage. Also without the efficient and effective operations there will be
no competition, so basically without strategy, the operations will not run
smoothly, it can be said operations is the heart while strategy is the mind
and without them the firm will be considered brain dead.