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Walmart’s Operations Management: 10 Strategic Decisions & Productivity
Walmart Inc.’s operations management involves a variety of approaches that are focused on managing the supply chain and inventory, as well as sales performance. The company’s success is significantly based on effective performance in retail operations management. Specifically, Walmart’s management covers all the 10 decision areas of operations management. These strategic decision areas pertain to the issues managers deal with on a daily basis as they optimize the e-commerce company’s operations. Walmart’s application of the 10 decisions of operations management reflects managers’ prioritization of business objectives. In turn, this prioritization shows the strategic significance of the different decision areas of operations management in the retail company’s business. This approach to operations aligns with Walmart’s corporate mission statement and corporate vision statement . The retail enterprise is a business case of how to achieve high efficiency in operations to ensure long-term growth and success in the global market.
The 10 decisions of operations management are effectively addressed in Walmart’s business through a combination of approaches that emphasize supply chain management, inventory management, and sales and marketing. This approach leads to strategies that strengthen the business against competitors, like Amazon and its subsidiary, Whole Foods , as well as Home Depot , eBay, Costco , Best Buy, Macy’s, Kroger, Alibaba, IKEA, Target, and Lowe’s.
The 10 Strategic Decision Areas of Operations Management at Walmart
1. Design of Goods and Services . This decision area of operations management involves the strategic characterization of the retail company’s products. In this case, the decision area covers Walmart’s goods and services. As a retailer, the company offers retail services. However, Walmart also has its own brands of goods, such as Great Value and Sam’s Choice. The company’s operations management addresses the design of retail service by emphasizing the variables of efficiency and cost-effectiveness. Walmart’s generic strategy for competitive advantage, and intensive growth strategies emphasize low costs and low selling prices. To fulfill these strategies, the firm focuses on maximum efficiency of its retail service operations. To address the design of goods in this decision area of operations management, Walmart emphasizes minimal production costs, especially for the Great Value brand. The firm’s consumer goods are designed in a way that they are easy to mass-produce. The strategic approach in this operations management area affects Walmart’s marketing mix or 4Ps and the corporation’s strategic planning for product development and retail service expansion.
2. Quality Management . Walmart approaches this decision area of operations management through three tiers of quality standards. The lowest tier specifies the minimum quality expectations of the majority of buyers. Walmart keeps this tier for most of its brands, such as Great Value. The middle tier specifies market average quality for low-cost retailers. This tier is used for some products, as well as for the job performance targets of Walmart employees, especially sales personnel. The highest tier specifies quality levels that exceed market averages in the retail industry. This tier is applied to only a minority of Walmart’s outputs, such as goods under the Sam’s Choice brand. This three-tier approach satisfies quality management objectives in the strategic decision areas of operations management throughout the retail business organization. Appropriate quality measures also contribute to the strengths identified in the SWOT analysis of Walmart Inc .
3. Process and Capacity Design . In this strategic decision area, Walmart’s operations management utilizes behavioral analysis, forecasting, and continuous monitoring. Behavioral analysis of customers and employees, such as in the brick-and-mortar stores and e-commerce operations, serves as basis for the company’s process and capacity design for optimizing space, personnel, and equipment. Forecasting is the basis for Walmart’s ever-changing capacity design for human resources. The company’s HR process and capacity design evolves as the retail business grows. Also, to satisfy concerns in this decision area of operations management, Walmart uses continuous monitoring of store capacities to inform corporate managers in keeping or changing current capacity designs.
4. Location Strategy . This decision area of operations management emphasizes efficiency of movement of materials, human resources, and business information throughout the retail organization. In this regard, Walmart’s location strategy includes stores located in or near urban centers and consumer population clusters. The company aims to maximize market reach and accessibility for consumers. Materials and goods are made available to Walmart’s employees and target customers through strategic warehouse locations. On the other hand, to address the business information aspect of this decision area of operations management, Walmart uses Internet technology and related computing systems and networks. The company has a comprehensive set of online information systems for real-time reports and monitoring that support managing individual retail stores as well as regional market operations.
5. Layout Design and Strategy . Walmart addresses this decision area of operations management by assessing shoppers’ and employees’ behaviors for the layout design of its brick-and-mortar stores, e-commerce websites, and warehouses or storage facilities. The layout design of the stores is based on consumer behavioral analysis and corporate standards. For example, Walmart’s placement of some goods in certain areas of its stores, such as near the entrance/exit, maximizes purchase likelihood. On the other hand, the layout design and strategy for the company’s warehouses are based on the need to rapidly move goods across the supply chain to the stores. Walmart’s warehouses maximize utilization and efficiency of space for the company’s trucks, suppliers’ trucks, and goods. With efficiency, cost-effectiveness, and cost-minimization, the retail company satisfies the needs in this strategic decision area of operations management.
6. Human Resources and Job Design . Walmart’s human resource management strategies involve continuous recruitment. The retail business suffers from relatively high turnover partly because of low wages, which relate to the cost-leadership generic strategy. Nonetheless, continuous recruitment addresses this strategic decision area of operations management, while maintaining Walmart’s organizational structure and corporate culture . Also, the company maintains standardized job processes, especially for positions in its stores. Walmart’s training programs support the need for standardization for the service quality standards of the business. Thus, the company satisfies concerns in this decision area of operations management despite high turnover.
7. Supply Chain Management . Walmart’s bargaining power over suppliers successfully addresses this decision area of operations management. The retailer’s supply chain is comprehensively integrated with advanced information technology, which enhances such bargaining power. For example, supply chain management information systems are directly linked to Walmart’s ability to minimize costs of operations. These systems enable managers and vendors to collaborate in deciding when to move certain amounts of merchandise across the supply chain. This condition utilizes business competitiveness with regard to competitive advantage, as shown in the Porter’s Five Forces analysis of Walmart Inc . As one of the biggest retailers in the world, the company wields its strong bargaining power to impose its demands on suppliers, as a way to address supply chain management issues in this strategic decision area of operations management. Nonetheless, considering Walmart’s stakeholders and corporate social responsibility strategy , the company balances business needs and the needs of suppliers, who are a major stakeholder group.
8. Inventory Management . In this decision area of operations management, Walmart focuses on the vendor-managed inventory model and just-in-time cross-docking. In the vendor-managed inventory model, suppliers access the company’s information systems to decide when to deliver goods based on real-time data on inventory levels. In this way, Walmart minimizes the problem of stockouts. On the other hand, in just-in-time cross-docking, the retail company minimizes the size of its inventory, thereby supporting cost-minimization efforts. These approaches help maximize the operational efficiency and performance of the retail business in this strategic decision area of operations management (See more: Walmart: Inventory Management ).
9. Scheduling . Walmart uses conventional shifts and flexible scheduling. In this decision area of operations management, the emphasis is on optimizing internal business process schedules to achieve higher efficiencies in the retail enterprise. Through optimized schedules, Walmart minimizes losses linked to overcapacity and related issues. Scheduling in the retailer’s warehouses is flexible and based on current trends. For example, based on Walmart’s approaches to inventory management and supply chain management, suppliers readily respond to changes in inventory levels. As a result, most of the company’s warehouse schedules are not fixed. On the other hand, Walmart store processes and human resources in sales and marketing use fixed conventional shifts for scheduling. Such fixed scheduling optimizes the retailer’s expenditure on human resources. However, to fully address scheduling as a strategic decision area of operations management, Walmart occasionally changes store and personnel schedules to address anticipated changes in demand, such as during Black Friday. This flexibility supports optimal retail revenues, especially during special shopping occasions.
10. Maintenance . With regard to maintenance needs, Walmart addresses this decision area of operations management through training programs to maintain human resources, dedicated personnel to maintain facilities, and dedicated personnel to maintain equipment. The retail company’s human resource management involves training programs to ensure that employees are effective and efficient. On the other hand, dedicated personnel for facility maintenance keep all of Walmart’s buildings in shape and up to corporate and regulatory standards. In relation, the company has dedicated personnel as well as third-party service providers for fixing and repairing equipment like cash registers and computers. Walmart also has personnel for maintaining its e-commerce websites and social media accounts. This combination of maintenance approaches contributes to the retail company’s effectiveness in satisfying the concerns in this strategic decision area of operations management. Effective and efficient maintenance supports business resilience against threats in the industry environment, such as the ones evaluated in the PESTEL/PESTLE Analysis of Walmart Inc .
Determining Productivity at Walmart Inc.
One of the goals of Walmart’s operations management is to maximize productivity to support the minimization of costs under the cost leadership generic strategy. There are various quantitative and qualitative criteria or measures of productivity that pertain to human resources and related internal business processes in the retail organization. Some of the most notable of these productivity measures/criteria at Walmart are:
- Revenues per sales unit
- Stockout rate
- Duration of order filling
The revenues per sales unit refers to the sales revenues per store, average sales revenues per store, and sales revenues per sales team. Walmart’s operations managers are interested in maximizing revenues per sales unit. On the other hand, the stockout rate is the frequency of stockout, which is the condition where inventories for certain products are empty or inadequate despite positive demand. Walmart’s operations management objective is to minimize stockout rates. Also, the duration of order filling is the amount of time consumed to fill inventory requests at the company’s stores. The operations management objective in this regard is to minimize the duration of order filling, as a way to enhance Walmart’s business performance.
- Reid, R. D., & Sanders, N. R. (2023). Operations Management: An Integrated Approach . John Wiley & Sons.
- Szwarc, E., Bocewicz, G., Golińska-Dawson, P., & Banaszak, Z. (2023). Proactive operations management: Staff allocation with competence maintenance constraints. Sustainability, 15 (3), 1949.
- Walmart Inc. – Form 10-K .
- Walmart Inc. – History .
- Walmart Inc. – Location Facts .
- Walmart’s E-commerce Website .
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A Framework to Design an Effective Operations Strategy
Erica Golightly
Senior Writer
December 12, 2023
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Why do some companies align on strategic priorities and operate at peak efficiency while others have a stockpile of unsuccessful projects?
The short answer is the shelf life of an operations strategy hinges on day-to-day implementation.
In a 2023 ClickUp global survey of hundreds of business leaders, 35% of respondents said operational efficiency is their top focus for business success. This is a call to action for Outcome Champions—operations management professionals coordinating resources, processes, and people to achieve operational excellence. ✨
The fundamental question to ask before taking any steps is a two-parter: What are your organization’s logistical and culturally relevant strategies, and how do you sustain a best-in-class partnership between all leadership levels and teams for success?
Building strategies isn’t just about solving problems. Instead, it should leverage the capabilities of technology and build a workplace that removes fear-based opinions about trying new ideas. And that type of innovation is fuel for both strategic work and production .
- Types of operations strategies
Step 1: Define what the operations strategy will impact or transform
Step 2: identify and secure the essential resources required for successful strategy execution, step 3: co-create an action plan to secure the flow of materials, information, and resources, step 4: leverage technology and be the driving force behind the strategy’s implementation, step 5: set checklists and decision rules for continuous improvement.
What is an Operations Strategy?
Operations strategy is the actionable plan that guides how a company manages its processes and resources in alignment with its overarching organizational goals. These processes involve the production and delivery of products or services that the company offers.
Beyond the jargon, there’s a concept that molds a workplace’s culture, productivity, and business goals. Any company—small, mid, and large—does this to fit what they’re doing, where they’re doing it, and how they want to be different from others in their field.
While it could be perceived as an overlap with strategic planning , there is a distinction to be mindful of as we explore this guide: Strategic planning sets the overall vision and direction for the organization, often done annually or semi-annually. The operation’s main goals describe the processes and workflows that will be used to complete the work. ⚙️
Let’s take a look at operation strategy examples of specific functional areas within the organization:
Types of operations strategies for improvement, efficiency gains, and innovation
| Strategy Type | Achievements |
|---|---|
| Harnesses a company’s unique strengths to gain competitive advantage, focusing on distinct skills or technologies that define business success | |
| | Aims to be the industry’s lowest-cost provider, offering quality products or services at prices lower than competitors |
| Integrates technology for efficiency, agility, and customer experience by adopting cloud computing, data analytics, automation, and digital reporting tools | |
| Distinguishes a product or service, aiming for perceived quality, unique features, and customer loyalty to justify premium pricing | |
| Drives growth through continuous improvement, fostering creativity, and investing in research and development to stay competitive and relevant | |
| | Nurtures a motivated, committed workforce by fostering a positive culture, enabling growth, and involving employees in decisions |
| Includes various aspects of inventory management (procurement, storage, distribution, and optimization), so the right quantity of goods is available at the right time, place, and cost | |
| | Optimizes processes for efficiency, cost-effectiveness, and quality, driven by continuous improvement methods such as Lean Six Sigma |
| Contracts tasks to external providers, reducing costs, accessing expertise, and allowing internal teams to focus on core business activities | |
| | Focuses on creating products or services that exceed expectations by optimizing the entire lifecycle, from concept to post-launch support |
| Safeguards a business by identifying, assessing, and mitigating potential risks through control measures and contingency plans |
These operations strategies are not mutually exclusive. And this is good news! No one wants to be locked into a single business strategy. An integrated approach lets organizations optimize their operations for different products/services, customer segments, and markets. 🎯
When an organization invests in operations strategy and implementation, it invests in employee productivity. With a direct line of sight to the why and how behind their tasks, they aren’t forced to navigate high levels of ambiguity.
Instead, they are prepped with clear instructions to complete the right tasks.
If you’re eager to begin process mining and outline your operational objectives right now, download the Operational Plan Template by ClickUp . It’s time to declutter your mental garage to make space for exciting, growth-oriented projects.
Extend invitations to your nearest collaborators and organize a systems architecture workshop, whether in real-time or asynchronously! 📧
So far, we’ve learned the inner workings of an operations strategy. Let’s see this in practice.
How to Build the Elements of an Operational Strategy Into Project Plans
This compact guidebook is built for an operations manager to implement the best core business processes and workflows into project plans.
So, why is this guide compact? Disclaimer: We’re all in the same sitcom but reading different scripts. While there are business models and industries we can sort ourselves into, every company has a different set of core values that reflect its purpose and guiding principles.
For this reason, the systems you’ll read below are the key success factors all operational strategies need. Teams can reach their peak performance by putting just one insight into action!
Think short-term perspective (competitive priorities) and long-term vision (trade-offs).
Short-term planning meets immediate customer requirements, helps allocate resources at the right place and time, and provides benchmarks for evaluating team performance.
Long-term planning allows organizations to invest in modern technology solutions, guide market expansion opportunities, and redesign logistics.
Your operational plan should have a narrower scope and be concerned with the day-to-day activities and actions necessary to implement the strategic plan . The key to securing leadership approval and support is articulating your plan’s value, feasibility, and alignment.
This is where co-creating easily measurable KPIs with teams and all levels of leadership is essential to provide each team member with a sense of ownership in their tasks. 🔑
Putting together a task force for the operations strategy is a group effort, especially when partnering with other teams. Collaborators in finance, marketing, human resources, and more will help fill knowledge gaps and advocate for enhancing efficiency , reducing costs, and delivering greater value.
Every department has business-as-usual tasks that keep the ship moving. If your operations strategy requires a significant chunk of time, there needs to be conversations with department leads about the best approach to minimize disruption. 💬
Because operation managers have a complex and multifaceted role, these discussions are teachable moments to influence the outcome of projects.
Three valuable tools—capacity planning, resource planning, and process mapping—will take the guesswork out of this step.
- Capacity planning gives visibility into whether you have enough company resources to meet the demands of a project’s needs
- Resource planning answers the question: What projects are our resources currently working on?
- Process design mapping outlines the sequence of events, tasks, and activities involved in a business process
This action plan will take multiple rounds to finish, but it won’t be complete even then because priorities may evolve as circumstances change. The best safeguard for transparency in any shift in the strategy is having a single source of truth to revisit and make micro-adjustments. ⚖️
The contents of your action plan will vary based on your company’s business model and operational processes. At minimum, the contents of your action plan document should include:
| Section | Content |
|---|---|
| Start with a memorable name that reflects the operational strategy’s impact or focus | |
| Provide a brief overview of the operational strategy, its objectives, and why it’s relevant to the corporate strategy goals | |
| Summarize the key highlights of the action plan, including prioritized objectives, task owners/contributors, timelines, and expected outcomes | |
| Break down the scale and scope of the tasks or initiatives required for implementation | |
| Designate accountability of department heads/individual contributors who will be responsible for any project communication updates, reviews, and approvals | |
| Outline specific timelines for key activities, deliverables, and quality control checkpoints that signify actual progress | |
| Highlight tasks that must be completed before others can begin and address how dependencies will be managed to prevent delays | |
| Detail the allocation of resources, including budget, staff, technology, and materials. List any resource constraints, if there are any! | |
| Identify potential risks and challenges with contingency plans | |
| Describe the communication plan for keeping all stakeholders informed and the level of stakeholder engagement | |
| Include any supporting documents, research, and relevant projects | |
| Specify the metrics and KPIs that will be used to measure progress and success | |
| Add the financial resources allocated to each task or initiative |
If it feels as if the universe gets bored and starts making things happen on its own because it takes you over a week to draft an action plan, try ClickUp AI . We’ve covered you with 100+ tools that use research-based prompts tailored to specific roles! 🤖
Are teams feeling comfortable sharing their ideas, concerns, and feedback? Is there a rise in delayed projects because of a lack of accountability? Are team members asking, “What should I do today?”
Your leadership, communication, and problem-solving skills are essential to the operation strategy’s success. Because you’re working between different teams, you’ll have to organize assorted information that’s coming at you from different channels. 👨💻
You’ll need the right task management container to set everyone up for success and communicate expectations for executing projects. If you think the action plan you wrote in step 3 will be “good enough,” consider this:
Managing tasks through a static action plan can overwhelm larger teams or complex projects. There’s too much noise and clutter to scroll through daily. Dedicated task and project management software sets the stage for individual and team productivity at scale.
Manual models can’t keep up with the demands of an agile workforce, and being agile is a non-negotiable in today’s marketplace as industry-tailored AI use cases continue to grow. Your time and attention should be spent on high-value tasks and activities that move teams closer to their goals.
Take a quick water break, then download the Daily Action Plan Template by ClickUp . This template has all the ingredients to organize task assignments, milestones, deadlines, and contributors.
As ClickUp users, your teams and stakeholders have all the tasks and documentation within reach to monitor progress closely throughout the implementation phase!
Warning: The hidden costs of shortcuts
It’s easy to underestimate the impact of small, seemingly mundane tasks that accrue over time. However, these “save for later” tasks can quickly snowball into a significant team problem.
Let’s take a closer look at the hidden costs of shortcuts:
- Workplace cultural debt : Workplace cultural debt refers to the negative consequences of neglecting the company’s culture and core values, like low employee morale, high turnover, and decreased productivity, which can harm their long-term success
- Technical debt : Technical debt arises when software or technology solutions are developed quickly or with suboptimal coding practices to meet immediate needs
- Process debt : Process debt refers to accumulating inefficiencies and shortcomings in an organization’s workflows and procedures over time
- Knowledge debt: Knowledge debt occurs when organizations fail to invest in continuous learning and development for their employees
Tackling any debt is a team effort. Here are a few quick methods to pull out of your productivity toolbox and tackle small tasks for minimum impact on your production initiatives:
- Prioritize tasks : Prioritize tasks using the Eisenhower Matrix (urgent and important tasks come first, followed by important but not urgent ones)
- Team session blocking : Schedule focused time blocks for small tasks, avoiding multitasking to minimize distractions
- Task batching : Group similar tasks together and address them in batches to reduce context-switching
- Delegate when appropriate : Delegate action items and tasks that others on your team can handle
Now, back to our regularly scheduled program! 🎬
Considering that other routine tasks and special projects are running simultaneously in your workload, how do you maintain group momentum in the operations plan?
Begin with questions to help the operations management team systematically gather and analyze data on a centralized dashboard. This will reduce cognitive burden and allow team members to make confident decisions.
These checklists and rules can be as detailed as you need them to be for internal use. If it helps to assess their true usefulness, run it through a beneficiary test. Give them to project leads, stakeholders, and senior leadership to confirm whether or not they’re focusing on the right questions to evaluate day-to-day implementation. 📊
So, how can operations managers apply checklists and decision rules on a tactical level when they’re up against tight timelines?
Deliver a consistent experience to your team with a scheduled routine.
Here’s a breakdown of operational strategy tasks at intervals. Is there anything you notice that can be added to your personal or team schedule? 🗓️
| Frequency | Action Items |
|---|---|
| Hold brief or huddles with project leads to discuss progress, challenges, and goals for the day/week Address issues or roadblocks diligently to prevent them from escalating into more significant problems Review daily progress and check for any critical issues or bottlenecks Continuously monitor key performance indicators (KPIs) statuses | |
| Draft to stakeholders, highlighting project accomplishments, challenges, and upcoming milestones Review resource allocation and workload distribution so teams are balanced, and no one is overloaded Evaluate new risks that have surfaced during the week and update about task progress and their experiences Analyze progress against project timelines, budgets, and objectives | |
| Take notes to develop a continuous improvement plan that outlines specific actions to processes Host post-project reviews or to document lessons learned from completed projects for future reference Consider long-term resource planning and workforce development needs based on the evolving Verify that ongoing and upcoming projects align with the organization’s overall strategic goals and priorities Collect and analyze customer and stakeholder feedback on project outcomes and performance Assess whether projects are on track to meet their objectives and make any necessary adjustments to Review project budgets and financial performance |
What’s Next?
With your newly acquired operations strategy framework in hand, apply it in the context of your company’s operations and processes . From supply chain management to software and everything in between, you’ll have the tools to coordinate even the toughest operations strategies. 💪
Lastly, if you’ve ever experienced fleeting progress in your responsibilities, it might be because you’re not focusing on the right things at the right time. It’s okay—no, it’s allowed —to ask your peers to challenge your observations when you get stuck.
Count on the team at ClickUp as one of your peers, and reach out if you need help stepping out of a revolving door of unsuccessful implementation. Happy planning! ✍️
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- Nestlé Continuous Excellence (C): Operations and beyond
José Lopez, Nestlé’s executive vice president of global operations, had convincingly demonstrated the benefit of NCE in operations. Now he wanted to see it rolled out to the rest of the organization. NCE’s sustainability, employee engagement and impressive financial returns convinced Lopez that if NCE were implemented in other functions, it could serve as the competitive driver for Nestlé. How should he present the program to his colleagues on the board? This is the final case in this four-part series.
In this session, participants consider how best to convince the top level of management of the benefit of rolling out a successful operations initiative across the entire organization. By asking participants to prepare a presentation to the board, the instructor can help convey the critical role played by the visual and spoken delivery of key arguments, as well as compelling data, in securing board level buy-in and approval.
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- Nestlé Continuous Excellence (A): Beyond cost savings
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Client examples
The following case studies are representative of Strategy&’s experience in operations.
Major logistics transformation
A GCC country's military engaged Strategy& to help it move from a single force operating model to a joint logistics one to improve its efficiency and operational readiness.
read more >
Supply chain resilience strategy
Because of escalating geopolitical tension in the region and heavy dependence on imports for most strategic commodities, the government of a Middle East country decided to formulate a resilience program with the support of Strategy&.
Hospital supply chain strategy
As part of establishing a major multi-specialty tertiary care center, the client engaged Strategy& to help develop its supply chain strategy and operating model.
Sourcing strategy
In the midst of a rapid global expansion, a large telecommunications company in the Middle East urgently needed to develop a supply chain with a global footprint to support its growth while managing escalating costs.
Improving material availability
A national power utility company was witnessing a significant demand surge owing to unprecedented growth in both the residential and commercial sectors.
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Senior Executive Advisor, Strategy& Middle East
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Operations are the connection between your organization’s strategy and its lasting success. Now, more than ever, companies that use operations to move fast and build new capabilities at scale are gaining competitive advantage.
McKinsey’s Operations Practice sits at the intersection of strategy, technology, and transformation to deliver sustainable, inclusive growth . We connect boardroom strategies to the frontline— infusing technology where and when it matters and rapidly delivering lasting transformations enabled by capability building.
How we help clients
Capital excellence, manufacturing & supply chain, product development & procurement, service operations, creating value beyond the hype, featured video, for operations, the time is now, join the conversation with mckinsey talks operations, learn more about the leadership agenda for operations, our approach.
Great operations transform strategy into success. And deliver holistic impact—fast.
Your organization’s specific needs, culture, and challenges are central to our work with you—focused through a practical, hands-on partnership that delivers sustainable, inclusive growth. We help you ensure the transformation sticks—working with your people to reach their full potential with hands on coaching and structured learning programs .
Our global network of market-leading experts and coaches solve operational challenges to meet boardroom aspirations. Proven problem-solving approaches combined with data, algorithms, benchmarks, and expert insights will help you achieve a new operating model that delivers both long-term competitiveness across the value chain, and the flexibility to respond quickly to a changing world that requires environmental sustainability.
Your transformation is enabled by technology. We’ll help you choose the best tools for your needs, pulling from a rich ecosystem of our own solutions and partnerships with leading providers. And we’ll show you how to reap the full rewards of digitization, drawing game-changing insights from the data produced.
Operations Transformation
Environmentally sustainable operations
Resilience & Reimagination
Case studies.
How Lufthansa is using data to reduce costs and improve spend and carbon transparency
Solving the digital manufacturing disconnect: A case study
How a manufacturing moonshot was made
How a global components manufacturer built an ambitious carbon reduction roadmap
Featured insights.
Today’s industrial revolution calls for an organization to match
Where is customer care in 2024?
Reimagining engineering to deliver more projects, more efficiently
Generative AI will first be successfully scaled in business operations
Today’s good to great: Next-generation operational excellence
Blogs and podcasts.
McKinsey Talks Operations Podcast
The Human Factor in Operations
McKinsey Talks Operations Blog
Featured capabilities.
Innovation & Learning Centers
McKinsey Inclusive Business Accelerator
Senior PartnerMunich
Axel Karlsson
Senior partner, and global leader, functional practices and growth platformsstockholm.
Daniel Swan
Senior partnerconnecticut – darien.
Joseph Tesvic
Senior partnersydney.
Katy George
Senior partnernew jersey.
Kimberly Borden
Senior partnerchicago.
Kweilin Ellingrud
Mckinsey global institute director and senior partnerminneapolis.
Laurie Lanoue
Partnermontréal.
Dr. Ruth Heuss
Senior partnerberlin.
Rob Loughlin
Partnerboston.
Rahul Shahani
Partnernew york.
Marie El Hoyek
Brian Blackader
Partnerdüsseldorf.
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Teaching Resources Library
Operations Management Case Studies
Browse Course Material
Course info, instructors.
- Prof. Charles H. Fine
- Prof. Donald Rosenfield
Departments
- Sloan School of Management
As Taught In
- Globalization
- Operations Management
- Supply Chain Management
Learning Resource Types
Operations strategy, study questions.
These study questions are provided to guide course readings and case write-ups , and to introduce fundamental ideas that will be discussed in class.
| SES # | TOPICS | STUDY QUESTIONS |
|---|---|---|
| 1 | Course introduction; Innovation and operations discipline | 1. What were key operations milestones of McDonald’s over the past 50 years? 2. What are the new challenges McDonald’s faces in the 2000s and beyond? 3. What are the lessons for operations strategy from McDonald’s? |
| 2 | Frameworks for strategy and the decision category approach | 1. How does a company make decisions in each of the areas of operations? 2. What are Zara’s decisions in facilities, capacity, vertical integration, HR, product generation process and production planning? |
| 3 | Developing an operations strategy; Application of decision category approach and the capabilities approaches | 1. How would you characterize BYD’s strategy? How is it different from its competitors? How could it justify entering this industry with such a strong set of competitors from Japan? 2. How consistent are its decisions among the various decision categories? 3. What are the advantages and disadvantages of its manual processes? How might process design be different in a manual system? 4. The production process for BYD’s Japanese competitors relied on several robotic arms per line, with each arm costing RMB 800,000 (approximately US $100,000). How many workers would a robotic arm need to replace for BYD to justify its purchase? 5. Should BYD buy Qinchuan? Can the company’s capabilities be applied to automobiles? To other areas? |
| 4 | Value chain dynamics and operations decisions | 1. In light of value chain dynamics, how do we reconsider the concept of an “operations strategy”? 2. Similarly, how should we define and identify “excellent” operations? 3. What companies particularly impress you with their operations? Why? 4. What’s the “recipe” for a winning operations strategy? |
| 5 | Value chain dynamics: Lessons from the auto industry | 1. How would you describe the key accomplishments of Henry Ford and Alfred Sloan and Taiichi Ohno? Think partly in terms of the product, process, and supply chain (3–D concurrent engineering in ) that each firm engineered. 2. Do you think the Tata Nano (or others like it) could have a disruptive effect on the industry and furthermore, on the current industry leader, Toyota? 3. How might Tata drive such a disruption? 4. What is the role of operations strategy in your suggested approach? |
| 6 | Enterprise architecture and operations strategy | 1. Describe the traditional business model, operations strategy, and enterprise architecture of Southwest. What was the role of the airplane turnaround process in the operations strategy? 2. In what sense was the Southwest business model disruptive? 3. What is your assessment of the evolution of the Southwest model and the decisions Southwest has made over the past decade? 4. What would you recommend to Southwest regarding the opportunity to add slots at LaGuardia airport? Why? |
| 7 | Vertical integration and outsourcing | |
| 8 | Business processes | 1. What are the key features of the existing fulfillment process at CVS? What parts are in the greatest need of redesign? 2. Does pharmacy fulfillment process improvement represent a significant (financial) opportunity for CVS? How might you assess this? 3. What changes would you recommend to CVS’s pharmacy fulfillment process? 4. What IT changes, if any, would be required to implement your changes? 5. What general principles would you propose for process redesign based on your analysis of the CVS system? |
| 9 | Process technology decisions and multiple plants | 1. What are the implications for both cost and flexibility of automation? Do you agree with the assertion made by one of the managers in the case: “If you automate, you stagnate?” 2. What are your recommendations regarding the issue of standardizing process technology across all plants? Are there motives behind this proposal, other than those stated in the case? 3. As Juergen Geissinger, how would you go about implementing your recommendation? How would you overcome resistance from the plants? As Steve Dickerson, the plant manager at Asheville, North Carolina, what line of reasoning would you use to convince senior management that full automation is the less desirable alternative? 4. As Klaus Lederer, what option would you like to see pursued? How do various options fit into the broader corporate strategy of ITT Automotive? 5. When can the concept of “copy exactly” be applied to a network of plants? |
| 10 | Capacity strategy: How to make decisions on capacity and capacity expansion | 1. How much capacity will Genentech need in 2010 and 2015 for Avastin and the other products listed in exhibits 3 and 4. 2. How do you deal with uncertainty? Assuming a normal distribution and that one standard deviation of demand is 25 percent of demand how much capacity will they need to reach the 85th percentile? How reasonable do you think the normal assumption is? Is the 85th percentile a reasonable approach? 3. Assuming no additional contractor capacity, do you need ccp3? If so what size tanks do you recommend? What if the estimates on page 10 (first pg in the section on “capacity expansion options”) are doubled? 4. What do you recommend on location and what in general do you recommend for how they should proceed in meeting Avastin demands? |
| 11 | Facilities strategies and globalization; Comparisons of plant productivity | 1. Compare the performance of Applichem’s 6 Release-ease plants. 2. Why were some plants “better” performers than others? 3. How would you advise Joe Spadaro to configure his worldwide manufacturing system? |
| 12 | Summary lecture on facilities strategy and globalization | |
| 13 | Sourcing and supplier management | |
| 14 | Information systems and the impacts of the electronic economy | 1. What is Amazon’s strategy and its approach to IT? 2. Do you agree that creating AWS makes strategic sense for Amazon? 3. Why or why not is it consistent with its strategy? 4. What does Amazon need to do to be successful with Web Services? 5. What recommendations would you make to Amazon regarding AWS? |
| 15 | Logistics systems and the fulfillment supply chain | |
| 16 | Competing on quality: Sources of quality and different measures of quality | 1. What are Delamere’s strengths and weaknesses? What does it deliver to customers that other vineyards do not? What does it take to be outstanding in the wine business? 2. What types of uncertainty does Richardson face? 3. What does quality mean in winemaking? 4. What principles and concepts should one apply to improving a production system such as winemaking? 5. What should Richardson do? How will his personality and experience shape his decision? |
| 17 | Competing on cost versus competing on availability | 1. What are the key elements of the New Balance business strategy? What are the key elements of its operations strategy? How well does the operations strategy fit the business strategy? 2. How well do the Lean operations and the Toyota Production System translate to the New Balance environment? How realistic are the NB2E goals? 3. How should the company respond to the Adidas-Reebok merger? Should it change (e.g. less domestic production) or continue the current strategy? 4. Assuming some reasonable value for domestic labor cost (to establish the value of pair of shoes) what is the premium for domestic manufacturing? Given the significantly shorter lead-time, however, this will also yield inventory savings. What would these inventory savings be as compared to New Balance stocking these warehouses based on 9-week lead-time from Asia? What are the implications of this in terms of realistic? |
| 18 | Competing on cost versus competing on features and innovativeness | 1. What are the causes and consequences of BMW’s quality problems with newly launched products? What should be done to improve “launch quality”? 2. What are your recommendations to Carl Peter Forester concerning the R-series prototypes? What should he do regarding future development projects? 3. What changes would you recommend in the way BMW develops new models? What attributes of newly launched products would you expect to improve as a result of these recommendations? Which attributes might deteriorate? 4. What recommendations would you make to Chairman von Kuenheim regarding BMW’s strategy to compete against new Japanese entrants into the luxury car market? 5. Compare and contrast Apple’s approach to the iPhone development to the development process of BMW. What hypotheses are generated by the comparison? |
| 19 | Competition in the housing industry: Improving cost, quality and availability | 1. Why is the industry structured the way it is? Could it be structured differently? What are the roles of the other value chain members (e.g., mortgagelenders)? 2. Where are the opportunities for disruptive change? 3. Finally, assuming that United Building Supply brings a solid commitment and a lot of financial muscle to the task, what must they do to disrupt and transform this industry? What should the end game look like? What are the critical success factors they should focus on? Is this task insurmountable? 4. What might Henry Ford or Alfred Sloan or Taiichi Ohno do? Or does industry require a very different vision and model? |
| 20 | Models for gaining advantage in a global environment; How to position within a value chain | 1. What has been the historic strength and strategy of Li & Fung? 2. How sustainable is this model? 3. What are the weaknesses or vulnerabilities of the model? 4. How did they react to the arrival of the Internet? Did it strengthen them or weaken them? Why? |
| 21 | Globalization, joint ventures, sourcing overseas, and macroeconomic effects of off-shoring | 1. What strategies can a manufacturing or services company follow in the era of outsourcing? When and how can any company stay in a high-cost location 2. What is the likely endgame in manufacturing for high cost countries, such as the U.S.? 3. What are the global macroeconomic effects of off shoring (e.g. Major parts of certain industries going offshore)? |
| 22 | Supplier power and overseas sourcing: Moving up the value chain in outsourcing | 1. What were the strategic motives of Global and Chengdu, respectively, for entering the joint venture? Were either of these strategies obviously faulty, ex ante? 2. How would you judge the launch of CSL? What did the partners do right? What did they do wrong? 3. What is your assessment of the negotiating positions of each company, once they got into unexpected territory? Should either party have anticipated these problems? 4. What are the lessons for global joint ventures and working in China? |
| 23 | Student presentations | 1. Should you accept the offer from the OEM for an exclusive contract for iPhone 4? 2. If you are an OEM would you accept an offer from Flextronics for an ODM phone? 3. What are the opportunities and risks for Flextronics as it progresses from state to state as a CM, CDM, and ODM? What are the opportunities and risks for an OEM as it does business with Flextronics at each stage? 4. Would you aggressively pursu_e_ the strategy of being an ODM ? |
| 24 | Student presentations and course wrap- up | |
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OPERATIONS STRATEGY: LITERATURE REVIEW AND CASE STUDY OF IKEA
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This theoretical paper reviews operations strategy literature with the purpose of identifying the applicability of various concepts in the field of operations strategy. The literature in this field is very rich and consists of competing views from various authors. Therefore, it seems to be necessary to elaborate and encourage continued improvement of the domain operations strategy. This review provides an extensive analysis of different perspectives on operations strategy related to the process of operations strategy, the top-down versus bottom-up approach, resource-based approaches, the role of service in operations strategy, the industry and organizational context, and the role of innovation and technological development. Additionally, this paper provides a case study analyzing the operations strategy of the furniture retailer IKEA based on theoretical concepts.
Keywords: Operations strategy, top-down versus bottom-up approach, resource-based approaches, service operations, innovation and technological development
JEL classification: D02, D21, F61, L21, L81
Introduction
The evolving business environment, constant improvement of information technology, and increased globalization has forced organizations to take a strategic approach to operations management (Hayes, Pisano, Upton and Wheelwright, 2005). Hayes and Pisano (1994) state that a clear strategy can be significant for an organization's success. Organizations need a strategy that defines the type of competitive advantage that an organization is striving for and articulates how to achieve this advantage. According to Stevenson (1999), operation can be seen as the core function of a manufacturing organization as there is no reason to start a business without creating something that can be proposed to the market or customer. Hence, without the operations function there would be no need for other functions like finance, marketing, and human resource. An operations strategy can become a competitive advantage in order to achieve organizational goals (Swamidas and Newell, 1987). Although there is no generally accepted definition of operations strategy, it is required to define competitive objectives and priorities related to operations, which are in line with an organization's overall business strategy. It should further pursue these operational objectives and priorities through consistent patterns of actions (Skinner, 1969). In line with that, Slack and Lewis (2002: 16) define operations strategy as a "pattern of decisions which shape the long-term capabilities of any type of operations and their contribution to overall strategy, through the reconciliation of...
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Operations Strategy: Principles and Practice
- Managerial Economics, Decision Sciences and Operations
Research output : Book/Report › Book
| Original language | English (US) |
|---|---|
| Place of Publication | Belmont, MA |
| Publisher | |
| Number of pages | 526 |
| Edition | 2nd |
| ISBN (Print) | 9780989910866 |
| State | Published - 2014 |
Fingerprint
- Operation Strategy Keyphrases 100%
- Case Study Psychology 100%
- Analytical Model Psychology 100%
- Operations Strategy Social Sciences 100%
- Competitive Advantage Economics, Econometrics and Finance 100%
- Dual Emphasis Keyphrases 33%
- Financial Optimization Keyphrases 33%
- Conceptual Thinking Keyphrases 33%
T1 - Operations Strategy
T2 - Principles and Practice
AU - Van Mieghem, Jan A
AU - Allon, Gad
N2 - Operations Strategy: Principles and Practice - 2nd Edition provides a unified framework for operations strategy. The book shows how to tailor the operational system to maximize value and competitive advantage. Conceptual thinking and financial optimization yield guidelines for implementation. This dual emphasis on principles and practice is reflected by analytical models that are illustrated with detailed examples and a dozen case studies of real business situations.
AB - Operations Strategy: Principles and Practice - 2nd Edition provides a unified framework for operations strategy. The book shows how to tailor the operational system to maximize value and competitive advantage. Conceptual thinking and financial optimization yield guidelines for implementation. This dual emphasis on principles and practice is reflected by analytical models that are illustrated with detailed examples and a dozen case studies of real business situations.
SN - 9780989910866
BT - Operations Strategy
PB - Dynamic Ideas
CY - Belmont, MA
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IMAGES
COMMENTS
Strategy& was tasked with reshaping the company starting from product-market-strategy, developing the organizational structure and optimizing the entire process and operations landscape. An overall restructuring concept based on two pillars was developed: 1) Urgent short-term actions focusing on firefighting to ensure customer satisfaction and ...
Walmart Inc. successfully addresses the strategic concerns in the 10 decision areas of operations management, optimizing efficiency and productivity. (Photo: Public Domain) Walmart Inc.'s operations management involves a variety of approaches that are focused on managing the supply chain and inventory, as well as sales performance.
The Case of the Machinists' Mutiny. "You can't be serious!". Mike Trail, the president and fourth-generation owner of Trail Manufacturing, stared at five older men standing uncomfortably ...
Strategy& was tasked with reshaping the company starting from product-market-strategy, developing the organizational structure and optimizing the entire process and operations landscape. An overall restructuring concept based on two pillars was developed: 1) Urgent short-term actions focusing on firefighting to ensure customer satisfaction and ...
How Transparency Sped Innovation in a $13 Billion Wireless Sector. by Jay Fitzgerald. Many companies are wary of sharing proprietary information with suppliers and partners. However, Shane Greenstein and colleagues show in a study of wireless routers that being more open about technology can lead to new opportunities. 18 Jun 2024.
A breakdown of operational strategy examples to achieve the overall business strategy. Strategy Type. Achievements. Core competency strategies. Harnesses a company's unique strengths to gain competitive advantage, focusing on distinct skills or technologies that define business success. Cost leadership strategies.
This study is a single embedded case study. Data were collected through interviews with ten customers of each business unit (BU). ... Keywords: Operations strategy; Competitive criteria; Customer ...
This article reviews the case study research in the operations management field. In this regard, the paper's key objective is to represent a general framework to design, develop, and conduct case study research for a future operations management research by critically reviewing relevant literature and offering insights into the use of case method in particular settings.
Operations strategy Magazine Article. Hau L. Lee. Artwork: Michael Johansson, Self Contained, 2010, containers, caravan, tractor, Volvo, pallets, refrigerators, etc., 8.2 x 10.8 x 2.4 m Hong Kong ...
The case study delves into strategic transformation and leadership transitions at Unilever since 2009. Unilever has been an industry leader of business sustainability. Paul Polman was a pioneer who introduced the idea that, by addressing social and environmental problems, a company can unlock new growth opportunities.
In an operations strategy case, you will have to look into how the organization allocates resources, how costs can be minimized and how to make the product more effective. The overall business strategy should be taken into account, as well. In case of doubt, you can always have a look at our detailed case solution.
Improving material availability. A national power utility company was witnessing a significant demand surge owing to unprecedented growth in both the residential and commercial sectors. read more >. Case studies of consulting services provided by Strategy& to the leading businesses in the Operations sector in the Middle East.
September 19, 2023 -. Scaling digital transformation across factory networks can be fraught with challenges. However, one food-manufacturing company took a pragmatic, network-based approach that successfully helped it scale the right digital solutions across more than 40 plants—quickly. In just 12 months, the business was able to transform 20 ...
Explore materials that align with your operations management learning objectives. Give your students hands-on experience making decisions. Explore a collection of operations management cases featuring female protagonists curated by the HBS Gender Initiative. Discover readings that cover the fundamental concepts and frameworks that business ...
Back to Case Studies. Teaching Resources Library. Operations Management Case Studies. Teaching Resources Library A Background Note on "Unskilled" Jobs in the United States - Past, Present, and Future. Teaching Resources Library Boeing's 737 MAX 8 Disasters.
across the globe and maintain a 36.7% market share in the United States (Appendix 1) and has operations in over 60 countries. Starbucks is also the most recognized brand in the coffeehouse segment and is ranked 91st in the best global brands of 2013. 8 Starbucks effectively leverages its rich brand equity by merchandizing
This section provides study questions to guide course readings and case write-ups, and to introduce fundamental ideas that will be discussed in class. ... Part IV: Globalization, Outsourcing and Other Critical Issues in Operations Strategy and Policy in the 21st Century: 20 Models for gaining advantage in a global environment; How to position ...
Additionally, this paper provides a case study analyzing the operations strategy of the furniture retailer IKEA based on theoretical concepts. Keywords: Operations strategy, top-down versus bottom-up approach, resource-based approaches, service operations, innovation and technological development. JEL classification: D02, D21, F61, L21, L81.
This dual emphasis on principles and practice is reflected by analytical models that are illustrated with detailed examples and a dozen case studies of real business situations. AB - Operations Strategy: Principles and Practice - 2nd Edition provides a unified framework for operations strategy.
It's a great example of a strategic approach to operations in action. 2. The case shows how a strategic approach to human resource and talent development at all levels really matters. This company competes in an industry not known for engaging its front-line workers. The case shows how engaging these workers can really pay off. 3.
ieve these goals. Operations Strategy is defined by making choices that are aligned with a firm's competitive strategy in several. ecision categories. These decision categories can be grouped in two classes: Structural decisions are decisions that modify the brick-and-mortar str. cture of a company. They typically require substantial capital ...
Representing a broad range of management subjects, the ICMR Case Collection provides teachers, corporate trainers, and management professionals with a variety of teaching and reference material. The collection consists of Operations case studies and research reports on a wide range of companies and industries - both Indian and international, cases won awards in varies competitions, EFMD Case ...
Tesla's Strategic Mastery: A Case Study in Vertical Integration. ... Tesla redesigned its software to support alternative chips, which showcases agility in its operations.
Restaurant Case Study #2: Multi-Brand Portfolio Strategic Mid- and Long-Term Business Plan Advisory The client was a multi-brand, multi-product platform in Latin America. COMPANY STATS. The group had 10-15 brands in LATAM and was backed by one of the most important family offices in the region; Annual revenue in the $40m-$50m range, ~10% EBITDA
Client Background . An e-commerce company, in the beauty industry, with over 200 employees. The Situation . The company was facing significant challenges with their current systems, including QuickBooks, which weren't robust enough to support their growth trajectory and international expansion.
Although prior studies have broadly examined the external economic consequences of corporate green innovation (GI) strategies, whether and how GI strategies influence firms' internal operations is underexplored.
Read more on AI and machine learning or related topics Automation and Operations strategy DK Daniel Kuepper is managing director and senior partner of BCG, based in Cologne.
Digital Twin is becoming an increasingly powerful resource in the field of building production, replacing traditional processes in the Architecture, Engineering, Construction and Operations sector. This study is concerned with the development of a DT, enabled by Building Information Modeling, artificial intelligence, machine learning, and the Internet of Things to implement space management ...
New economic realities requires businesses to be flexible in their capital raising strategies to get through these challenges. Quick adjustments to market conditions are key for survival, and being adaptable can help discover new funding options by making the most of available resources.. Creative approaches set businesses apart from competitors and attract a broader range of investors.
With UnitedHealthcare, Minneapolis Public Schools has experienced a higher utilization of benefits, quicker resolution of issues and an improved health care experience for employees.