Competitive Stategy - Chapter 2

Chapter 2: COMPETITIVE STRATEGY: set of customer needs that it seeks to satisfy through products/ services operations strategy •based on how customer prioritizes cost, delivery time, variety & quality Value Chain in Company Support & facilitate function of value chain Finance, Accounting, Info Tech, Human Resources New Product Development creates product specs generate sales emphasize priorities product/service will satisfy ·customer input STRATEGY: what each process/function will do particularly well try to PRODUCT DEVELOPMENT STRAT: portfolio of new products that a company will try to develop →development made internally or outsource MARKETING/SALES STRAT: how market will be segmented & how product will be positioned/priced/ promoted SUPPLY CHAIN STRAT: nature of procurement of raw materials, transportation of materials to/from company, manufacture of product or operation to provide service, distribution of product to customer, follow up service & whether process is in-house or outsourced operations, distribution, & service functions Chapter 2: COMPETITIVE STRATEGY: set of customer needs that it seeks to satisfy through products/services operations strategy • based on how customer prioritizes cost, delivery time, variety & quality Value Chain in Company Support & facilitate function of value chain Finance, Accounting, Info Tech, Human Resources New Product Development creates product specs generate sales emphasize priorities product/service will satisfy ·customer input STRATEGY: what each process/function will do particularly well try to PRODUCT DEVELOPMENT STRAT: portfolio of new products that a company will try to develop →development made internally or outsource MARKETING/SALES STRAT: how market will be segmented & how product will be positioned/priced/ promoted SUPPLY CHAIN STRAT: nature of procurement of raw materials, transportation of materials to/from company, manufacture of product or operation to provide service, distribution of product to customer, follow up service & whether process is in-house or outsourced operations, distribution, & service functions Supplier strategy includes design decisions regarding inventory, transportation, operating facilities, info flows STRATEGIC FIT: requires both competitive & supply chain strategies of a company have aligned goals consistency wl customer priorities competitive Strategy Ropes to satisfy & Capability of supply Chain Strategy aims to build CUSTOMER Demand in Different segments varies • Quantity of product needed in each lot • Response time that customers are willing to tolerate • Variety of products needed • Service level required • Price of product • Desired rate of innovation in the product   IMPLIED DEMAND UNCERTAINTY: demand uncertainty imposed on supply chain because of customer needs it seeks • resulting uncertainty the satisfy inly portion of tan ny demand chain plans to satisfy to based on attributes customer wants DEMAND UNCERTAINTY: uncertainty of customer demand for product Customer needs TABLE 2-1 Impact of Customer Needs on Implied Demand Uncertainty Cause uncertainty. Customer Need Causes Implied Demand Uncertainty to... order quantity Range of quantity required increases Increase because a wider range of the quantity time to wait required implies greater variance in demand Variety Service level desire design Increase because there is less timeain creased difficulty= mark downs are high for produets w/ greater impliA low implied demand uncertainty → table salt • no markdowns • accurate demand forecasts • low margin • low stockout rates high implied demand uncertainty → Smartphone • high margin • inaccurate demand forecasts • high stockout rates • large markdowns (if product fails)