5.3.

THE ROLE OF STRATEGY 69

emergency fire service implies that time is an inappropriate choice. Hence, the
primary buffer used in such systems is capacity. As a result, fire engines are
utilized only a small fraction of time in order to ensure that they are available
when needed.

Organ Transplants: Both supply and demand for human organ transplants are
subject to variability. Because organs are perishable, they cannot be invento-
ried for any length of time. Since organs only become available when donors
die, capacity cannot be augmented (ethically anyway). This means that both
inventory and capacity are largely unavailable as variability buffers. This
leaves only time, which is why people in need of organ transplants typically
have to wait a long time to receive them.

5.3 The Role of Strategy

The appropriate mix of variability buffers is not determined by the physical system
alone. As an example of physically similar systems that made use of different buffer
types, consider McDonalds and Burger King in the 1960’s. Both had menus consist-
ing largely of hamburgers, fries and drinks. Both made use of similar, though not
identical, production processes. And both were subject to unpredictable demand,
since fast food customers do not schedule their orders ahead of time. But, because
the two companies had different strategies for targeting customers, they developed
different operations systems.
As the first nationwide fast food hamburger chain, McDonalds established its
reputation on the basis of delivery speed. To support this key component of their
business strategy, they used a policy of stocking inventories of finished food products
on a warming table. This enabled them to respond quickly to variable demand, since
staff needed only to bag the food to fill an order.
In contrast, Burger King elected to distinguish itself from McDonalds in the
marketplace by offering customers more variety. Their “have it your way” adver-
tising campaign encouraged customers to customize their orders. But this gave
them a much broader effective product line (i.e., because holding the pickles or the
lettuce resulted in different end products). Therefore, Burger King could not du-
plicate McDonalds’ practice of stocking finished hamburgers without building up
excessive inventory and incurring the resulting spoilage loss. So instead, they as-
sembled burgers to order from the basic components. Of course, to be effective in
the marketplace, Burger King had to ensure that their assembly speed was suffiently
fast to avoid excessive delays that would not be tolerated by customers of fast food
restaurants. To do this, they probably had to maintain more hamburger production
capacity than McDonalds as well. In effect, Burger King traded inventory buffers
for a combination of time and capacity buffers in order to provide their customers a