Competitive Priorities in Operations Management

In operations management, competitive priorities are a crucial decision variable for operations managers. Competitive priorities signify a strategic focus on building specific manufacturing capabilities that can improve a plant’s position in the market. Such focus may guide decisions with regards to the capacity, technology, production process, planning, control, etc. In fact the strength of an operations strategy is dependent on the level of consistency between emphasised competitive priorities and matching decisions concerning operational structure and infrastructure. Fitting a plant’s practices to the competitive priorities is important to developing operations as a competitive advantage.

According to Porter, there are two primary routes for competitiveness: cost leadership or differentiation. In contrast, according to Leong, within manufacturing there are actually 5 dimensions of competitive priorities: cost, flexibility, quality, delivery performance and innovativeness.

We have to make trade-offs within competitive priorities. In a competitive market, no business can normally be on top in all aspects. The purpose of the priorities is to assist in the mission of positioning an organization with an advantage vs its rivals.

Five Competitive Priorities

 

Competitive Priority Manufacturing Implications
Cost Monitoring costs, and distribute it effectively on the different products.
Quality Making sure that the product and its process perform and comply with specification.
Flexibility Capability to manage volume and product mix changes, equipment and workforce-related
Delivery performance Reliable and quick delivery of goods, stock availability.
Innovativeness Time-to-market, how quickly new products or processes can be implemented.

 

On a “high level” the competitive priorities can represent a manufacturing strategy. To develop a manageable strategy, the priorities must be split up into decision categories. As a way to prioritize among the list of competitive priorities, the idea of order winners and order qualifiers may be utilized. Order-winners for a product are the qualities which make an organization receive a new order. Order-qualifiers, in contrast, are required to be able to compete in a marketplace. The main objective of analyzing a company’s order-winners and order-qualifiers is to establish a basis for the manufacturing strategy. Identifying order-winners and order-qualifiers is not a one time activity, but needs to be done regularly, because market demands change as time passes and along with that the order-winners and  order-qualifiers.

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Competitive Priorities in Operations Management