Operations strategy.docx

Operations strategy.docx

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Operationsstrategy

Introduction

AccordingtoanalyzetheconceptionofOperationsstrategy,byusingthetheoryoforderqualifierandorderwinner,knowthecompetitiveobjectivesinfluencethedecisionsofcompany’soperationsstrategy.Inthisessay,thetwolargefashionretailingstore----Marks&SpencerandPrimarkwillbediscussed.Bycomparingandcontrasting,itwillindicatethedifferentareaswhicharefocusedonbythesetwocompanies,aimtospecifythedifferenceshowdifferentcompetitiveobjectivesinfluencethedecision-makingofoperationsstrategy,andfigureoutwhetherthetwocompaniestradeoffthefiveoperationsperformanceobjectives.

Operationsstrategy

Operationsstrategyisthepatternofdecisionsandactionsthatshapethelong-termvision,objectivesandcapabilitiesoftheoperationandwhichischosen,mandated,orstimulatedbytheoverallbusinessstrategy.（Lewis,2002）Theresponsibilityofoperationsstrategyincludesspecifyinghowcompanies’operationsandprocessescancontributetoitsoverallstrategy,transferringmarketrequirementsintoaprioritizedsetofoperationperformanceobjectives,whichdescribecustomerdemands.Ascommonsense,operationsaregenerallyregardedasdailycreationanddeliveryofgoodsandserviceandstrategyisanintangibleconceptionwhichoppositetotheday-to-dayactivities.However,here,operationsaretheresourcesthatcreateproductsandservices.（+bid）Operationsstrategymaynotinstantlyanddirectlybenefitthebusinessesbuthaveaprofoundlong-termeffectonthecompanies.Itwillnotonlyprovidetheorganizationswithadequatesupport,alsoisthekeyfactorforcompetitiveadvantage.Inthedynamicenvironment,anewoperatingabilitymaybequicklyerodedawaybyanothernewone.Nevertheless,thefactisthatdifferentiatingoperations-basedadvantagesarehardtoreplicateorimitateandslowtodiffuse,indeed,iswhatmakesitsovaluable.Inconclusion,operationsstrategiesarecontributedtocompanies’sustainabledevelopmentandcompetitivesuccess.That’sbecausethosecompaniescanachievesuccessinlongtermbyenablingtodosomekindofthingsbetterthantheircompaniescan,notjustbyadvancedfacilitiesortechnologies.

Operationsaddvalueforcustomersandendeavortomeetandsatisfycustomers’requirements.Therearefiveoperationperformanceobjectives,allofwhichwillaffectdecision-makingandcompetitiveness.

●Qualityisthemostvaluedobjectivethatfirmsandcustomersmaypayattentionto,becausecustomerspaymoney,alwaysnotonlyforgood-looking,butalsofortheusage.Productswithbetterqualityobviouslyattractmorecustomers,andalsohavealongerserviceablelife.

●Speedmeansdoingthingstimelinessevenfast.Themanufacturesaimtoreducetheleadtimeinordertominimizethecustomerreceivingtime.

●Dependabilityreferstoaproduct’smeantimeuntilfailureorbetweenfailures.Inotherwords,themeantimeuntilnextfailurethatneedstoberepaired,butnotreplaced.Everycustomerhopestheproducthaveastrongdependabilitysothattheydon’thavetoworryaboutitafterusinglongtime.Sobasically,themoredependabilityaproductsupplies,themoretrustcustomerswillgivetothisproduct.

●Flexibilityisalwaysthoughttobeveryimportantwhentheproductiscustomized,orthechangingforproductisveryfrequent.Firmswhichprovideflexibleproductobviouslyhavestrategicadvantagestotheircustomers,becausetheycanacceptcustomers’erraticchangeindemandmorequicklyandefficiently.

●Costisthemostfrequentobjectivethatfirmsneedtoconsider.Inthecontextofsimilarqualityorservice,firmswhichprovidethecompetitivelylowerpricethanotherswillhavestrategicadvantages.Ofcourse,consideringthelowercostofproduct,firmsarewillingtoacceptthetruththattheprofitmarginisalsoreduced.

Order-qualifierandOrder-winner

Theterms"orderwinners"and"orderqualifiers"werecoinedbyTerryHill.（（Slack,2006）Orderwinnersarethoseaspectswhichareregardedasthevitalfactorsforbuyingtheproductorservice.Itisextremelyhelpfulforcompaniestogainmorebusinessandwinhigherreputation.Toalargeextent,that’sthereasonwhyacompanycouldgetastableoccupationinamarket.Qualifiersarethosethingswhicharegenerallyexpectedbycustomer.Theyaresuppliedwithsatisfiedcriterion.Inotherwords,orderqualifiersmaketheproductstayinthecompetitorlist,whileorderwinnersmakethefirmdefeatothercompetitors.Buttheconclusioncannotbedrawnthat,orderwinnerismore“important”thanorderqualifier,becausethey’retwodimensionsoftheproductcriteria.Withoutorderqualifier,productmayevenlosethechancetoinvolveincompetitions,whilewithoutorderwinnersproducthasnopossibilitytogetcustomers’orderssoastomakeprofits.

Orderqualifiersandorderwinnersmaybenotstableovertime.Thisiscausedbythechangingofmarketenvironmentovertime.Forexample,fashionmarketwhichisaquicklychangingindustry.Withincreasinglynewdesignofclothesandthechangingperceptionforpersonalization,requirementforclothesbycustomershavevaried.Priceandqualityusedtobefrequentorderwinnersinthepast.However,atpresent,justreasonablepriceandgoodqualitycan’tsatisfytheconsumers.Fashioncoluresandcharmingdesignarebecomingnewfavoritism.

Onthebasisoftheabove,theconclusioncannotbedrawnthatorderqualifierandorderwinnerarecloselyrelatedandmaytransformfromonetotheother.Theykeepthecompanyintherunningandmakesuretheproductcanwincustomer’sbusiness.

Inthefollowing,PrimarkandMarks&Spencerwillbediscussedandcomparedastherepresentativeswithdifferentoperationsperspectiveinfashionretailingmaeketplace.

Primark

Currently,fastfashionisthenewfad.Justonlyafterseveralweekswhentheyfirstappearedonthecatwalk,thelateststylescanbesuppliedwiththeconsumers.Meanwhile,thepricemeansthattheycanwearacooljackettwiceormoreandthenthrowawayandgetanewone.ThisphenomenonmaybecausedbytheexpansionoflowvalueretailerslikePrimark.Itisrenownedforitslowpriceandvariedproducts.TheproductprovidedinPrimarkhasegregioussimilaritybetweenitemsonitsshelvesandthoseinhighfashionshop;however,thepriceismuchcheaper.Primarkisbecominganewtrendinshopping.Thecheappricestheyoffermakeconsumptiondecision-makingmucheasierthanthoseinfashionshoplikeHouseofFraser.ThestrategyadoptedbyPrimarkisskillatspeed-to-market----replicatingnewtrendsforamassmarketinshortesttimeandatminimalpricewhichhasbeenanewfashioniconathighstreetsandmakingpopularamongmothers,teenagegirls.Itisstatedthatitsprofitsincreasedby30%in2006andsaleswereworthover￡1billion.（TheGuardian,2006）

Primarkhasaclearpositioninthemarket.Itaimstoprovidecheaper,latestandstylishproducttocustomers.Therefore,whendecidingthecompaniesstrategy,beingcheaper,leanerandfasterbecomethekeyperformanceobjectives.Onlybewinneratthesethreeaspects,Primarkcangetcompetitiveprioritiesandachieveprofits.Leanproductioncouldbringtwobenefits:

thefirstistoimprovethespeedtomarket.Retailerscanrespondtocustomerpreferenceinrealtimeandgettingmorepreciseorders;thesecondisthatifordermisjudgedandstockedinwarehouse,itcouldreducethecost.Atthemeanwhile,itisatoughtaskbetweensuppliersandbuyers.Infastfashion,forsuppliers,itneedsmuchmoreflexibleandresponsivereplytotheirbuyers.AccordingtooneSriLankanfactoryownerinterviewedbyOxfam（2004）,

“in2005,thedeadlineswereabout90days...in2006,thedeadlinesfordeliveryareabout60days.Sometimeseven45...Theyhavedrasticallycomedown.”

Theserequirementsputalotofpressureonsuppliers.HowdoPrimarkpersuadethemtodothis?

InPrimark,suppliersareputincompetitionbyconstantlyjumpingwitheachotheraslongastheyfindacheaperorfasterone.NewtonResponsibleInvestment,aPrimarkshareholder,reportedthefollowinginNovember2005,

“KeytoPrimark'sbusinessmodelisthesourcingofproductsfromthecheapestpossiblesupplier.Primarkhasusedhundredsofsupplierslocatedacrosstheworld.Relationshipswithsupplierscanbeshortandvariable,sometimesevenchangingmid-season.”（Newtonresponsibleinvestment,2005）

Thefollowingtable（LabourBehindtheLabel,2006）illustratesthenegotiationbetweenPrimarkandsuppliersintermsofPrimark’sperformanceobjectives.

Areasofnegotiation

Retailerpressuressupplierfor…

Cost

Pricedeductions

Reducingflexibilitythroughpricingmechanismlikeopen-bookaccounting

Speed

Shorteningleadtimes

Requiringjust-in-timedelivery

Imposingairdeliveryoffinesforlatedelivery

Flexibility

Makinglastminuteorderchanges

Ensuringthatthereisalwaystheoptiontoreduce,cancelorincreaseanorder

Risk

Using‘saleorreturn’terms

Negotiatingrebatesandprofitcontributionbasedonsalesvolume

Encouragingsupplierstoreducecostpriceonpromotionstohelpdrivevolume

Quality

Tighteningqualityspecifications

Imposingfinesfornon-conformingproducts

Inconclusion,cheappriceandhighflexibilityarethekeyfactorsforPrimarktoattractmorecustomers.

Marks&Spencer

Foroveracentury,Marks&Spencer（M&S）isageneralandleadingretailerofsellingclothes,food,gifts,homefurnishingsandfinancialservices.Thecompanywasstartedin1884,whichwasfoundedatLeedsKirkgateMarketbyMichaelMarks.Recently,M&Shasover450storeslocatedthroughouttheUK,additionally,thecompanyhas150storesinthewholeworld,including