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Chapter 3 Operations strategy 69 Figure 3.6 Different competitive factors imply different performance objectives Order-winning and qualifying objectives Order-winning factors Qualifying factors Less important factors A particularly useful way of determining the relative importance of competitive factors is to distinguish between ‘order-winning’ and ‘qualifying’ factors. 6 Order-winning factors are those things which directly and significantly contribute to winning business. They are regarded by customers as key reasons for purchasing the product or service. Raising performance in an order-winning factor will either result in more business or improve the chances of gaining more business. Qualifying factors may not be the major competitive determinants of success, but are important in another way. They are those aspects of competitiveness where the operation’s performance has to be above a particular level just to be considered by the customer. Performance below this ‘qualifying’ level of performance will possibly disqualify the company from being considered by many customers. But any further improvement above the qualifying level is unlikely to gain the company much competitive benefit. To order-winning and qualifying factors can be added less important factors which are neither order-winning nor qualifying. They do not influence customers in any significant way. They are worth mentioning here only because they may be of importance in other parts of the operation’s activities. Figure 3.7 shows the difference between order-winning, qualifying and less important factors in terms of their utility or worth to the competitiveness of the organization. The curves illustrate the relative amount of competitiveness (or attractiveness to customers) as the operation’s performance at the factor varies. Order-winning factors show a steady and significant increase in their contribution to competitiveness as the operation gets better at providing them. Qualifying factors are ‘givens’; they are expected by customers and can severely disadvantage the competitive position of the operation if it cannot raise its performance above the qualifying level. Less important objectives have little impact on customers no matter how well the operation performs in them. Different customer needs imply different objectives If, as is likely, an operation produces goods or services for more than one customer group, it will need to determine the order-winning, qualifying and less important competitive factors for each group. For example, Table 3.1 shows two ‘product’ groups in the banking industry.
70 Part One Introduction Figure 3.7 Order-winning, qualifying and less important competitive factors Table 3.1 Different banking services require different performance objectives Products Customers Product range Design changes Delivery Quality Volume per service type Profit margins Retail banking Personal financial services such as loans and credit cards Individuals Medium but standardized, little need for special terms Occasional Fast decisions Means error-free transactions Most services are high-volume Most are low to medium, some high Corporate banking Special services for corporate customers Businesses Very wide range, many need to be customized Continual Dependable service Means close relationships Most services are low-volume Medium to high ➡ ➡ Competitive factors Order winners Price Customization Accessibility Quality of service Speed Reliability Qualifiers Quality Speed Range Price Less important Accessibility ➡ ➡ Internal performance Cost Flexibility objectives Speed Quality Quality Dependability Here the distinction is drawn between the customers who are looking for banking services for their private and domestic needs (current accounts, overdraft facilities, savings accounts, mortgage loans, etc.) and those corporate customers who need banking services for their (often large) organizations. These latter services would include such things as letters of credit, cash transfer services and commercial loans.
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sixth edition OperatiOns ManageMent
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Further reading in Operations Manag
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Pearson Education Limited Edinburgh
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Contents Guide to ‘operations in
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Contents ix Chapter 12 Inventory pl
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Guide to ‘operations in practice
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Guide to ‘operations in practice
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Making the most of this book and My
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Making the most of this book and My
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Preface xix Illustrations-based Ope
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To the Student . . . Making the mos
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About the authors Nigel Slack is th
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Publisher’s acknowledgements We a
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Part One INTRODUCTION This part of
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Chapter 1 Operations management 3 O
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120 Part Two Design Short case Squa
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122 Part Two Design Critical commen
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124 Part Two Design Reducing design
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126 Part Two Design Figure 5.7 A QF
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128 Part Two Design Purpose Basic f
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130 Part Two Design Interactive des
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132 Part Two Design Early conflict
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134 Part Two Design Summary answers
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136 Part Two Design similar. It was
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Chapter 6 Supply network design Key
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140 Part Two Design The supply netw
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142 Part Two Design a particularly
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144 Part Two Design and expanding o
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146 Part Two Design Figure 6.4 Offs
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148 Part Two Design Controversially
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150 Part Two Design Energy costs. O
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152 Part Two Design product and fas
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154 Part Two Design Figure 6.7 Cent
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156 Part Two Design The blue dotted
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158 Part Two Design Table 6.4 The a
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160 Part Two Design Figure 6.11 Rep
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162 Part Two Design Case study Disn
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164 Part Two Design plastic, and ap
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166 Part Two Design of a failing Di
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Supplement to Chapter 6 Forecasting
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170 Part Two Design Figure S6.2 Som
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172 Part Two Design Figure S6.3 Tim
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174 Part Two Design Table S6.3 Expo
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176 Part Two Design a comparative s
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178 Part Two Design Operations in p
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180 Part Two Design The basic layou
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182 Part Two Design In functional l
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184 Part Two Design Figure 7.5 The
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186 Part Two Design shown with thre
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188 Part Two Design Table 7.2 The a
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190 Part Two Design Combinatorial c
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192 Part Two Design The general fun
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194 Part Two Design Heuristic proce
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196 Part Two Design Figure 7.16 (a)
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198 Part Two Design the total work
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200 Part Two Design Working from th
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202 Part Two Design ● ● ● Hig
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204 Part Two Design Table 7.4 Stand
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Chapter 8 Process technology Key qu
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208 Part Two Design What is process
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210 Part Two Design be used where c
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212 Part Two Design Here we will ex
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214 Part Two Design E-business E-co
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216 Part Two Design Table 8.2 Examp
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218 Part Two Design Customer-proces
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220 Part Two Design ‘drive’ it.
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222 Part Two Design Figure 8.6 Diff
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224 Part Two Design Short case SVT
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226 Part Two Design Table 8.5 Prese
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228 Part Two Design Anticipating im
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230 Part Two Design Case study Roch
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232 Part Two Design Problems and ap
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234 Part Two Design Operations in p
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236 Part Two Design Human resource
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238 Part Two Design Table 9.2 Cause
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240 Part Two Design ● Group resou
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242 Part Two Design Job design Job
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244 Part Two Design ● ● ● ●
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246 Part Two Design Figure 9.7 A ty
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248 Part Two Design asked to contri
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250 Part Two Design ● ● ● Eff
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252 Part Two Design Table 9.3 Examp
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254 Part Two Design Qualified worke
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256 Part Two Design Case study Serv
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258 Part Two Design 3 4 5 Step 1 -
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260 Part Two Design them. This mean
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262 Part Two Design Work measuremen
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264 Part Two Design Figure S9.1 Tim
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Key operations questions Chapter 10
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Chapter 10 The nature of planning a
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270 Part Three Planning and control
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276 Part Three Make-to-stock Planni
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282 Part Three Last-in first-out se
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Chapter 12 Inventory planning and c
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Chapter 14 Enterprise resource plan
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Part Four IMPROVEMENT Even the best
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Chapter 18 Operations improvement 5
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in both scientific management and m
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Chapter 19 Risk management Key ques
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Risk mitigation actions Chapter 19
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■ ■ Chapter 19 Risk management
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Chapter 19 Risk management 599 1.24
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Chapter 20 Organizing for improveme
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● ● ● ● understand and beli
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The Deming Prize Chapter 20 Organiz
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Part Five CORPORATE SOCIAL RESPONSI
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Chapter 21 Operations and corporate
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● ● ● ● ● Chapter 21 Oper
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Notes on chapters 653 3 Sources inc
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Notes on chapters 655 ground data:
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Notes on chapters 657 national Jour
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Glossary 659 Breakthrough improveme
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Glossary 661 Division of labour: an
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Glossary 663 Internal customers: pr
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Glossary 665 Partnership: a type of
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Glossary 667 Reliability: when appl
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Glossary 669 Transformation process
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‘blue sky’ research projects 45
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cumulative representation 317-22 cu
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failures (continued) estimates of o
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inventories (continued) de-coupling
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mitigation of ethical practice brea
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precedence diagrams 197-9, 481 prec
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esources 7-8 business continuity 59
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supply chains (continued) meaning 3
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