Strategy and Sustainability

Learning Objectives

Operations and supply chain strategy

Competitive dimensions of Operations and SCM
Order winners and order qualifiers.
Strategic fit.
Productivity
Wall Street evaluation of Operations and SCM

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Operations and Supply Strategy

Setting broad policies and plans for using the

resources of a firm to best support its long-term

competitive strategy and shareholder value
Shareholders: Those individuals or companies that

legally own one or more shares of stock in the company

Stakeholders: Those individuals or organizations who

are influenced, either directly or indirectly, by the

actions of the firm

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Sustainability: Triple Bottom Line

Achieving economic prosperity while being socially and environmentally responsible.

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Triple Bottom Line

Continued

Social: pertains to fair and beneficial business

practices toward labor, the community, and the region

in which a firm conducts its business
Economic: the firms obligation to compensate

shareholders who provide capital via competitive

returns on investment
Environmental: the firms impact on the

environment

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Closed-Loop Strategy Process

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Competitive Dimensions
Price: make the product or deliver the service cheap
Quality: make a great product or deliver a great service

Delivery
Speed: make the product or deliver the service quickly
Reliability: deliver it when promised

Service and Flexibility

Responsiveness
New product introduction speed
Coping with changes in demand/requirements

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Dealing with Trade-offs

For example:
If we reduce costs by reducing product quality
inspections, we might reduce product quality
If we improve customer service problem solving by
cross-training personnel to deal with a wider-range of
problems, they may become less efficient at dealing with
commonly occurring problems
QUALITY
SERVICE

Customer

DELIVERY

PRICE
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Order Qualifiers and Winners

Order qualifiers: the basic criteria that permit the

firms products to be considered as candidates for

purchase by customers
Order winners: the criteria that differentiates the

products and services of one firm from another

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Productivity Measurement
Productivity is a common measure of how well an

organization is using its resources

Fundamental to understanding operations-related

performance

In its broadest sense productivity is outputs divided by

inputs
To increase productivity, we want to make this ratio as

large as practical

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Productivity Measurement

Productivity is a relative measure

Continued

Can be compared with similar operations within its

industry
Can be compared over time

Productivity may be expressed as:

Partial measures: output to one input
2. Multifactor measures: output to a group of inputs
3. Total measures: output to all inputs
1.

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Examples of Productivity Measures

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Partial Measures of Productivity

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How Does Wall Street Evaluate

Operations Performance?
Comparing firms from an operations view is important

to investors
Earnings growth is a function of profitability

Profits can increase through higher sales or lower costs

Highly efficient firms shine during recession periods

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Efficiency Measures Used by Wall Street

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Home Study
Study module 3.

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