Transcript Document

Chapter 2
Operations Strategy and Competitiveness
Operations Management
by
R. Dan Reid & Nada R. Sanders
2nd Edition © Wiley 2005
PowerPoint Presentation by R.B. Clough - UNH
© Wiley 2005
1
Chapter 2 Lecture Outline

Business mission and strategy



Operations strategy and other functional
strategies
Order qualifiers & order winners
How operations helps firms compete


Competitive priorities in operations
Technology
© Wiley 2005
2
Mission Statement

Explains




What business the organization is in
Who the customers are
How the company's values will determine
what the company does
A mission statement explains what the
organization will do.
© Wiley 2005
3
Business Strategy

Explains how the organization will achieve
its mission
 Long-range plan to compete in the
marketplace
 Explains how the firm will differentiate
itself from competitors
 Sets competitive priorities
 Basis for functional strategies
© Wiley 2005
4
Business Strategy
and Functional Strategies
© Wiley 2005
5
Functional Strategies






Marketing
Operations
Finance
Management information systems
Human resources management
The functional strategies should be
consistent with each other and with the
business strategy
© Wiley 2005
6
Order Qualifiers & Order Winners




Order qualifiers are characteristics that a product
must have to be considered for purchase
Order winners are characteristics that a product
must have to make the sale.
Both depend on the target market.
Both change over time.
 If most competing products have a certain
characteristic, it is likely to become an order
qualifier.
© Wiley 2005
7
Competitive Priorities in Operations

Product characteristics that can be
order qualifiers & order winners.




Cost
Quality
Time
Flexibility
© Wiley 2005
8
Competitive Priorities

Meeting the needs of a target market





What are the order qualifiers?
What are the order winners?
These dictate your competitive priorities.
Product characteristics that are not order
winners or qualifiers may not be needed.
The company cannot be all things to all
customers. The company may have to
make choices (tradeoffs).
© Wiley 2005
9
Competing on Cost

In marketing books, this is called
competing on price



Low prices require low costs
Often a basic product
Quality must be acceptable in target
markets
© Wiley 2005
10
2 Ways to Compete on Product Quality

High performance design:


Superior features, high durability, and excellent
customer service
Product or service consistency:



Meets customer requirements in its market
Product is made according to the design
Error free service and delivery
© Wiley 2005
11
Process Quality



Designing and operating a process to
produce error-free products
Essential for firms that compete on quality
Reduces operating costs for any firm –
"doing it right the first time" reduces costs
and keeps customers
© Wiley 2005
12
3 Ways to Compete on Time



Fast delivery: Reduce time between order
placement and delivery
On-time delivery: Deliver product exactly
when needed every time
Rapid new product development:
Shorten new product development time
© Wiley 2005
13
2 Ways to Compete on Flexibility

Product flexibility:



Must be able to easily switch production from
one item to another
May customize product to customer needs
Volume flexibility: Ability to increase or
decrease production to match market
demands
© Wiley 2005
14
Strategic Role of Technology

Technology should support competitive priorities

Product technology: used to create product
characteristics and performance

PDA's, hybrid vehicles, stain-resistant fabric,
package tracking, e-commerce

Product technology affects costs
© Wiley 2005
15
Strategic Role of Technology (2)

Process technology: how goods and services
are produced





Includes both equipment and methods
Often includes information technology
Just-in-time, automation, fast food process, selfservice checkout, bar-code scanners
Can reduce costs
Can be used to produce new goods or services
© Wiley 2005
16
Strategic Role of Technology (3)

Information technology: allows users to
create, collect, process, store, and transmit
information

Internet, wireless, point of sale systems,
management information systems,
communication networks
© Wiley 2005
17