operation strategy and competitiveness

Here’s a detailed summary of the Operations Strategy and Competitiveness slides:

1. Introduction to Operations Strategy and Competitiveness

• Operations strategy focuses on setting policies and plans to utilize resources effectively to support a firm's competitive priorities and corporate strategy.

• It plays a key role in ensuring a company remains competitive in its industry.

2. Competitive Priorities

Competitive priorities are the dimensions on which a company chooses to compete. These include:

• Cost – Competing on low cost by optimizing processes and reducing expenses.

• Quality – Includes two aspects:

  • Quality of design: Features and specifications of a product.

  • Quality of conformance: Consistency in meeting design specifications.

• Time – Speed-related priorities:

  • Delivery speed: How fast a company can fulfill customer orders.

  • On-time delivery: Reliability in meeting promised deadlines.

  • Development speed: How quickly a company can develop and launch new products/services.

• Flexibility – Ability to adapt to customer needs:

  • Customization: Modifying products/services for customers.

  • Variety: Offering a diverse range of products.

  • Volume flexibility: Scaling production up or down efficiently.

3. Competitive Dimensions and Trade-offs

• Companies often face trade-offs when selecting competitive priorities.

• Example trade-offs:

  • Reducing inspection costs may lower expenses but could reduce product quality.

  • Offering customized products increases flexibility but may slow delivery times.

• Businesses must carefully decide which dimensions to prioritize and how to manage trade-offs.

4. Order Winners vs. Order Qualifiers

• Order qualifiers: The minimum standards required for a product/service to be considered by customers.

• Order winners: The factors that differentiate a company’s product and make customers choose it over competitors.

• Example: A low price may be an order qualifier for a discount retailer, but exceptional customer service could be an order winner.

5. Operations Strategy Framework

A structured approach to aligning operations with business strategy, including:

• Corporate Strategy – Overall direction based on market environment, core competencies, and competitive positioning.

• Market Analysis – Identifying customer needs and market segmentation.

• Operations Strategy – Setting broad policies and plans to support competitive priorities.

6. Case Studies: Operations Strategies in Action

Example 1: Costco

• Competitive priority: Low cost.

• Operations strategy:

  • Efficient warehouse-style stores.

  • Bulk packaging to reduce handling costs.

  • Strong supplier negotiations.

Example 2: McDonald’s

• Competitive priority: Consistent quality.

• Operations strategy:

  • Standardized work methods.

  • Rigorous training through “Hamburger University.”

  • Strict control over procurement and food preparation processes.

7. Productivity Measurement

• Productivity measures how efficiently resources are used to produce outputs.

• Types of productivity measures:

  • Partial productivity: Output relative to a single input (e.g., labor productivity).

  • Multifactor productivity: Output relative to multiple inputs (e.g., labor and materials).

  • Total productivity: Output relative to all inputs used.

Example:
If a company processed 560 insurance forms in 2400 labor hours this week (compared to 480 forms in 2000 hours last week), its labor productivity decreased slightly:

• This week’s productivity = 560/2400 = 0.23

• Last week’s productivity = 480/2000 = 0.24

8. Key Takeaways

• Operations strategy is essential for maintaining a competitive advantage.

• Companies must carefully choose their competitive priorities and manage trade-offs.

• Understanding order winners and qualifiers helps businesses differentiate themselves.

• Measuring productivity allows companies to assess efficiency and improve performance.

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