Week 3

This week we covered chapter 2 - Operations Strategy.  We focused a lot on competitive priorities and capabilities.  There are nine broad competitive dimensions, which fall into four groups:

• Cost
• Quality
• Time
• Flexibility

Cost basically speaks for itself.  There are two dimensions of quality- top quality, and consistent quality.  Time has three dimensions- delivery speed, on-time delivery, and development speed.  There are also three dimensions to flexibility- customization, variety, and volume flexibility.

Competitive priorities are the dimensions one aims to compete on.  Competitive capabilities are what one actually possesses and is able to deliver.  As we discussed these competitive dimensions, I was reminded of what a good friend of mine said last weekend. 

Her husband owns a small business that provides services such as embossing, piecing, gluing, and die-cutting.  I asked her about some of the local scrapbooking companies, and if they used her husband’s services.  She replied that work has been done for some of these scrapbooking companies.  I inquired as to whether a lot of these companies are going to China for manufacturing.  She replied that some of them have.  She added that sometimes these companies need something faster than what they can get through their regular manufacturing operations in China.  These companies will approach her husband for the job.  He tells them he’d be happy to help them.  They express their gratitude and add a request.  They wonder if my friend’s husband can drop the price to match what they pay through their regular operations in China.  My friend’s husband knowing his competitive capabilities, that he cannot compete on the cost, kindly replies that he understands there are three things they want- low cost, quality, and speed.  He then points out that they can have only two of these three desires at present.  They must choose between a combination of quality and speed or quality and low-cost.   Ultimately they go for the quality and speed he has to offer.  He understands that speed is what they are after right now.

I’ll try to remember this for the future when negotiating price- there are more competitive dimensions than just cost.  I won’t forget that cost is a big dimension though, and  always strive to keep my costs down.