Operation Strategy Lesson 8 Exercise
Nowadays a continuous struggle between Corporate Operation Strategy and the Local (Italian) one occurs. The Corporate require as much operations’ commonality as possible in order to reduce cost creating centre (operating in low cost country – Picture 2) that support several Countries. Through commonality all Countries perform the same request to CF centre.
The Italian Operation function “fights” to make Corporate understand the peculiarity and uniqueness of some customers (the Public Sector ones for instance) that do not accept common process.
Sometimes these requests are accepted by headquarters, sometimes we’ve to change our way of facing customers.
The “moving to centres” strategy is common, clearly defined and followed by the entire Countries. It’s providing a strong cost saving but it still has to improve in terms of internal support and customer requirements satisfaction.
In a contest of competition growing this strategy needs to be remodelled and adjusted by local Operation Managers.
In my opinion the attention on creating fit, sustainability and the attention on risk is present both at Corporate and Local level.
The Corporate tries to align operations resources with the market while the Local Managers (especially in the protectionist Italian labour market) try to align the market (customers/internal stakeholders) with operations resources.
Cost leadership is the ‘generic’ type of competitive strategy that describes how CF presents itself. It’s seen now as a strategy to earn a higher profit margin and in the long term to reduce IBM selling prices.
As highlighted by Slack and Lewis (but not enough considered by IBM in my opinion) it would be:
- Important to develop a dynamic sustainability
- Helpful to create a double-loop learning system
Within the CF a planned strategy, more then and emerging one, exists. Actually this is true if we focus on the strategy decided at Corporate level, while if we deal with Local decisions they seems to me more emerging.
Analyzing the Hayes and Wheelwright ‘four-stage’ model and trying to understand where the CF is now, in my opinion, the stage is 3 in fact the following occur:
- Frequent discussion with internal and external customers
- Improvement of relationship
- Explicit link between strategy and operations practice
- Continuous improvement of operations practice
I’ve to affirm that it’s hard to recognize the ‘lower status’ associated with operations in the CF. Both corporate and local operations managers actually seems to have a strategic role even if sometimes the lack of strategy formulation experience is present. What is surely missing is the senior executives’ awareness about CF capabilities. We’ve seen that it’s difficult, in this condition, to direct an organization towards fitting within key business objectives.
- Slack, Nigel and Lewis, Michael (2008), "Operations Strategy", 2nd Edition, Prentice Hall, Great Britain
- University of Warwick(2008), “The Warwick MBA: Operations Strategy", Lesson 6, Warwick Business School.
- University of Warwick(2008), “The Warwick MBA: Operations Strategy", Lesson 8, Warwick Business School.
- Customer Fulfillment Operation Communication Meeting (http://w3-05.ibm.com/isc/customerfulfillment/emea/csoemea.nsf/bef928bbebab9e43c12566fd00429f10/ddfd9e141fb5538f802573d00034f3d6/$FILE/CF%20Comm%20Meeting%20260207_Parte%20I.pps)