3e2a1b56-dafb-454d-87ad-86adea3e7b86

68
Part One
Introduction
The market requirements and operations resources perspectives
Market-requirements-based strategies
One of the obvious objectives for any organization is to satisfy the requirements of its markets.
No operation that continually fails to serve its markets adequately is likely to survive in the
long term. And although understanding markets is usually thought of as the domain of the
marketing function, it is also of importance to operations management. Without an understanding
of what markets require, it is impossible to ensure that operations is achieving the
right priority between its performance objectives (quality, speed, dependability, flexibility and
cost). For example, the short case Giordano describes a company that designed its operations
to fit what it saw as a market that was starting to prioritize quality of service.
Short case
Giordano
With a vision that explicitly states its ambition to be ‘the
best and the biggest world brand in apparel retailing’,
Giordano is setting its sights high. Yet it is the company
that changed the rules of clothes retailing in the fastgrowing
markets around Hong Kong, China, Malaysia
and Singapore, so industry experts take its ambitions
seriously. Before Giordano, up-market shops sold
high-quality products and gave good service. Cheaper
clothes were piled high and sold by sales assistants
more concerned with taking the cash than smiling at
customers. Jimmy Lai, founder and Chief Executive
of Giordano Holdings, changed all that. He saw that
unpredictable quality and low levels of service offered an
opportunity in the casual clothes market. Why could not
value and service, together with low prices, generate
better profits? His methods were radical. Overnight he
raised the wages of his salespeople by between 30 and
40 per cent, all employees were told they would receive
at least 60 hours of training a year and new staff would
be allocated a ‘big brother’ or ‘big sister’ from among
experienced staff to help them develop their service
quality skills. Even more startling by the standards of his
competitors, Mr Lai brought in a ‘no-questions-asked’
exchange policy irrespective of how long ago the
garment had been purchased. Staff were trained to talk
to customers and seek their opinion on products and the
type of service they would like. This information would
be immediately fed back to the company’s designers for
incorporation into their new products. How Giordano
achieved the highest sales per square metre of almost
any retailer in the region and its founding operations
principles are summarized in its ‘QKISS’ list.
● Quality – do things right.
● Knowledge – update experience and share knowledge.
● Innovation – think ‘outside the box’.
● Simplicity – less is more.
● Service – exceed customers’ expectations.
Source: Alamy Images
Competitive factors
The market influence on performance objectives
Operations seek to satisfy customers through developing their five performance objectives.
For example, if customers particularly value low-priced products or services, the operation
will place emphasis on its cost performance. Alternatively, a customer emphasis on fast
delivery will make speed important to the operation, and so on. These factors which define
the customers’ requirements are called competitive factors. 5 Figure 3.6 shows the relationship
between some of the more common competitive factors and the operation’s performance
objectives. This list is not exhaustive; whatever competitive factors are important to customers
should influence the priority of each performance objective. Some organizations put
considerable effort into bringing an idea of their customers’ needs into the operation.