Operations Strategy: 5 Key Elements of an Operations Strategy

Operations strategy is a guiding principle used to plan, analyze, and execute a company’s operations. Businesses use operations strategies to identify and implement cost-effective processes for creating and distributing products and services. An operations strategy supports a company’s overall business strategy in order to maximize profits.

Operations resources include a wide variety of company resources like equipment, people, facilities, vendors, and technology. Operations managers oversee the scope of a company’s operations resources and monitor how those resources facilitate products or services.

Market requirements refer to business goals and operational plans for how to meet market needs. Market requirements are an essential part of any operations strategy as they determine the cost, quality, and lead time of a product or service in order to meet customer expectations.

There are a few key elements that go into a company’s operations strategy.

1. 1. Production system: An organization’s production system determines the short-term and long-term planning for how resources are turned into marketable products and services. A comprehensive production system includes clear workflows, quality control benchmarks, and supply chain management strategies.
2. 2. Facilities: A company’s operational capabilities are influenced by the size and number of production facilities. To function properly, specific facilities require achievable production goals, clear safety procedures, and inventory management systems.
3. 3. Product or service: One of the most important elements of any operations strategy is the quality management of a product or service. Businesses analyze the lifecycle of their products and services in order to predict market trends, adjust their product or service, and allocate resources to new service development and product development.
4. 4. Technology: Operations strategy increasingly depends on new technological developments like machine learning, production line automation, real-time metrics, and market forecasting tools.
5. 5. Resources: A comprehensive overall strategy for operations takes into account the total operations resources available to an organization, including locational, mechanical, and human resources.

Businesses employ different types of operations strategies based on their specific market needs.

1. 1. Core competency strategies: Core competency operations strategies revolve around the main strengths of a company’s business model. By identifying the best core business processes within an organization, core competency operations strategies focus on leveraging existing strengths to maximize profitability.
2. 2. Corporate strategies: This type of operations strategy adheres to a company’s mission statement and aligns itself to a larger corporate strategy. Businesses using this type of operations strategy develop production initiatives, key performance indicators (KPIs), and decision-making processes based on an overall strategic plan determined by company leaders and stakeholders.
3. 3. Competitive strategies: Companies using this type of strategy develop their operations processes in order to distinguish their product or service from competitors. By identifying competitive priorities within a specific economy, businesses can change their operations strategy to move toward a competitive advantage, whether that’s a higher-quality product or a faster lead time during production.
4. 4. Product or service strategies: This type of operations strategy revolves around the quality control of existing products or services as well as the development of new products and services. Businesses using this model often determine their operations strategies based on the research and ideas from product managers.
5. 5. Customer-driven strategies: Organizations using customer-driven strategies make operations decisions based on the customer experience. This type of operations strategy aligns with sales and marketing strategies to manage and fulfill customer expectations.

An example of an operations strategy is a furniture retailer deciding to change its manufacturing strategy by outsourcing production to an automated facility. By using new technological resources, this hypothetical furniture company can manage its supply chain better and create products faster to improve its competitive position.

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