Strategic Thinking

The systems viewpoint requires strategic planning. Goals and strategies must be
congruent and realistic. Assume that the game being coached is called business
and that players’ positions are known as marketing, finance, operations, etc. The
successful coach emphasizes coordination of these functions to pursue a strategy
aimed at achieving the objectives. Apply this same statement to football, baseball,
basketball, soccer, etc., and it works as well. Managers of all functional areas need
to understand P/OM, and P/OM managers need to understand areas that interact
with their own. Understanding global competitors requires understanding their
strategies within the context of the international character of their operations management
systems. That is why this text directs P/OM managers to focus on the use
of the systems approach for strategic planning and tactical actions. The need begins
with the development of strategies for product line planning. P/OM strategy is discussed
in more detail in Chapter 2; innovation and new product development are
discussed in Chapter 11.
1.4 Use of Models by P/OM
The Greyhound bus driver is an operations manager assessing highway-driving conditions.
The driver knows how rain slows velocity (v), which cuts down miles that
can be driven per day (m). The manager in charge of operating the fleet of buses
could describe this relationship as follows: m = vt, where m is the driver’s output
in miles driven per 8-hour day, v is the velocity, measured in miles per hour, and
t = 8 hours. If v is 50 mph in clear conditions and 30 mph when it rains, then the
driver can achieve only 240 miles when it rains. The strategy of making up the 160-
mile difference must be clear to the driver in planning stops and achieving the bus’
final destination.
This method of quantitative description is often used by P/OM to build a
model—a representation of the real situation. The model permits P/OM to test the
effect of different t’s and v’s. A general quantitative model that describes output is
O = pt, where O is the output per day. O changes as a function of the production
rate per hour (p) and the hours worked (t). P/OM develops models to describe productivity
(p) as a function of scheduling, training, technology, and capacity.
There are various P/OM models used to make equipment selection, workforce
and production scheduling, quality control, inventory, distribution, plant location,
output capacity, maintenance, and transportation decisions, among others.
Decision models organize the elements of a problem into actions that can be taken,
forecasts of things that can happen that will affect the results, and thereby, the relative
likelihood of the various outcomes occurring. Thus, decision models organize
all of the vital elements in a systematic way.