2.

3 Operations and Supply

Chain Strategies
2.3 Operations and Supply Chain Strategies
● Operations and supply chain strategy
○ Functional strategy
○ Indicates how structural and infrastructural elements will be:
■ Acquired
■ Developed
○ Necessary to support the overall business strategy

● Executing successful operations and supply chain strategies means choosing

and implementing the right mix of structural and infrastructural elements
2.3 Operations and Supply Chain Strategies
Customer Value

● Evaluation often based on performance dimensions such as

○ Performance quality
○ Delivery speed
○ After-sales support
○ Cost

● Value index
○ Uses performance and importance scores
○ Calculates a score that indicates overall customer value
2.3 Operations and Supply Chain Strategies
Four Performance Dimensions:

● Quality
○ Characteristics of a product or service that bear on its ability to satisfy stated or implied needs
○ Subdimensions
■ Performance Quality
■ Conformance Quality
■ Reliability Quality
● Time
○ Delivery Speed - How fast is the need fulfilled?
○ Delivery Reliability - Is it always that fast?
■ Delivery Window
2.3 Operations and Supply Chain Strategies
Four Performance Dimensions Continued:

● Flexibility
○ Mixed flexibility - ability to produce a wide range of products or services
○ Changeover flexibility - ability to provide a new product with minimal delay
○ Volume flexibility - ability to meet volume required by the customer
● Cost
○ Labor
○ Material
○ Engineering
○ Quality-related
○ etc
2.3 Operations and Supply Chain Strategies
Trade-offs

● Decision to emphasize one performance dimension over another

● Based on the recognition that excellence on some dimensions may conflict
with excellence on others

Order Winners and Order Qualifiers

● Order Winners - Performance dimension that sets a company above others

● Order Qualifiers - Performance dimension on which customers expect a
minimum level of performance
2.3 Operations and Supply Chain Strategies
Four Stages of Alignment within the Business Strategy:

● Stage 1: Internally neutral

○ Management seeks to minimize negative potential in the operations and supply chain areas
○ No effort to link these areas with the business strategy

● Stage 2: Externally neutral

○ Follow the industry - what works for them will work for us
○ No effort to link these areas with the business strategy
2.3 Operations and Supply Chain Strategies
Four Stages of Alignment with the Business Strategy Continued:

● Stage 3: Internally supportive

○ Operations and supply chain areas participate in the debate
○ Management recognizes the need to align elements with business strategy

● Stage 4: Externally supportive

○ The business strategy actively seeks to exploit the core competencies