2-1: Compare the different levels of strategic planning, and identify the performance measures in each.

Strategic planning sets the overall direction of the organization’s future. Generally, firms have distinct but interrelated levels of strategies, including (a) a corporate-level strategy; (b) a business unit-level strategy, and (c) supply-chain- and operations-level strategies. Increasingly the corporate strategies firms formulate create three types of value: (a) economic value—the traditional bottom line of economic performance; (b) environmental value—the value created by sustainable practices; and (c) social value—the value that results when the well-being of workers and other stakeholders is taken into account.

2-2: Define operations strategy, and describe how it is formulated and evaluated.

An operations strategy is a collection of decisions and action plans implemented within the operations function that creates value. An operations strategy focuses on four elements: (a) customers, (b) operational critical success factors, (c) product factors, and (d) a firm’s core competencies. There are several ways to evaluate an operations strategy, ranging from financial modeling using the strategic profit model (SPM) to the balanced scorecard approach. The balanced scorecard approach aligns the firm’s customer, financial, internal business process, and learning and growth goals.

2-3: Contrast the formulation and evaluation of operating strategies for service organizations with those for manufacturing organizations.

The strategic planning process for service operations can be represented in a hierarchical planning framework that consists of three levels: strategic positioning, service operations strategy, and tactical execution, with a continuous improvement cycle as the fourth component.

2-4: Compare the different types of productivity measurements, and explain how firms use them strategically.

There are three common types of productivity measures: the single-factor productivity measure, the multifactor productivity measure, and the total productivity measure. Productivity measures are used to assess the firm’s performance and to compare how well different departments within the firm are performing to determine whether their productivity has increased or decreased over time. Productivity measures assess the impact of certain decisions, such as whether new processes, equipment, or worker motivation techniques are improving the firm’s performance. In addition, productivity measures can help a firm compare its productivity with that of its competitors. The means for measuring productivity can be either relatively straightforward as in the case of manufacturing organizations or more complex as in the case of service organizations.

2-5: Describe how both manufacturers and service organizations formulate and evaluate their supply chain strategies.

To support their business strategies, firms need to create supply chain strategies. Supply chain strategies provide clear directions that maximize efficiencies within the supply chain and drive down operational costs. All elements of the firm’s operations strategy must be fully integrated with the supply chain strategy. Strategic fit in a supply chain strategy requires a firm to know its customers and uncertainties related to its supply chain, know the capabilities of the supply chain, and match the capabilities to the needs and expectations of customers. The supply chain operations reference (SCOR) model can identify the critical processes in a supply chain and, therefore, better understand exactly what to measure when assessing their performance. Furthermore, it allows organizations to benchmark their supply chains against those of their competitors.

2-6: Identify the key capabilities firms need to formulate and implement global operations and supply chain strategies and manage the risks related to them.

Companies that have experienced success integrating their operations and supply chains globally have developed three capabilities: supply chain adaptability to respond to changes in the marketplace, financial-engineering capabilities to create new ways to exchange and raise capital, and systematic ways to identify threats to their operations and supply chains and mitigate their effect.

2-7: Describe what companies are doing to incorporate sustainability into their supply chain strategy and the problems they face in doing so.

Companies are incorporating sustainability into their supply chain strategy by designing sustainable products, reducing carbon emissions, using energy-efficient lighting and recycled materials, and so forth. Yet, incorporating sustainability throughout a company’s supply chain is difficult because it is time-consuming and may require changes in the firm’s structure and infrastructure.

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