Chapter 2.

Operations and Supply

Strategy

Operations Strategy & Competitive Dimensions

Order Qualifiers and Winners
Strategy Design Process
A Framework for Manufacturing Strategy
Service Strategy Capacity Capabilities
Productivity Measures

Operations Strategy & Competitive

Dimensions

Setting broad policies and plans to utilize

the firms resources optimally to support
its longer term competitive strategy.

Competitive Dimension
Competitive Dimensions include:
Cost or Price

Make the Product or Deliver the Service Cheap

Quality

Make a Great Product and (not or) deliver a Great Service ( X

vs Mercedes)

Delivery Speed

Make the Product or Deliver the Service Quickly

Delivery Reliability

Deliver It When Promised

Coping with Changes in Demand

Change Its Volume

Flexibility and New Product Introduction Speed

Change It, more frequently then GM or Ford, who is this

company?

Other Product-Specific Criteria

Support It

Trade-Offs
Focus and trade-offs, cant do it all at the same
time

Lexus cant be made and sold for $25,000. T or F?

A few examples:
Generally low-cost strategy is not compatible with
flexibility or speed of delivery
Cost
Flexibility

Delivery
Quality

High quality and low cost tend to be incompatible

Straddling occurs when a firm seeks to mimic a
competitors position while trying to maintain
their original (successful) position.
4

Order Qualifiers and Winners

Order qualifiers are the basic criteria that
permit the firms products to be considered as
candidates for purchase by customers

Through the 1980s nobody got fired buying IBM

products

Order winners are the criteria that differentiate

the products and services of one firm from
another

Caterpillar 48 hours parts/service guarantee

Class examples:

Steps in Developing a Manufacturing

1.Strategy
Segment the market according to the product
group
2. Identify product requirements, demand
patterns, and profit margins of each group
3. Determine order qualifiers and winners for
each group
4. Convert order winners into specific
performance requirements

Service Strategy Capacity

Capabilities

Process-based

Capabilities derived from activities that transform

material or information and provide advantages on
dimensions of cost and quality

Systems-based

Operating capabilities that are broad-based involving

the entire operating system and provide advantages of
short lead times and customize on demand

Organization-based

Organizational ability to master/implement (learn) new

technologies, faster new plant/product introductions
These capabilities are more difficult to replicate thus
provide a strong operations-based competitive
advantage

Productivity
A common, seemingly simple but very
complicated measure
How a country, region, industry, company,
business unit, department, ... uses its
resources (relative to others).
Broadly defined as the ratio of OUTPUTS to
INPUTS
Total, partial, or multifactor measures:

Productivity Example

Some Partial Productivity Measures

Business
Restaurant
Retail Store
Chicken Farm
Utility Plant
Paper Mill

Productivity Measure
Meals per hour
Sales per square foot (meter)
Kilo of meat per Kg. of feed
Kilowatt per ton of coal
Tons of paper per cord of
wood