Competitive priorities

Product plants serve the company s entire market for the products they produce specializing on the competitive priorities associated with their product portfolio. 

As discussed earlier in this chapter, the basic approaches that companies take to compete with each other in a market segment are grouped into one of four categories or competitive priorities. These are cost, quality, delivery, and flexibility. 

Many customers do not consciously evaluate whether one product has this particular competitive priority or that competitive priority. Customers do evaluate the value a product has for them. They may do this consciously or unconsciously, but they are making a value choice when they purchase a product. A very important point about value is that it is the customer s perception that determines the value of the product. Melnyk and Denzler (1996) describe this using the following Value Equation. ... 

Notice that the value equation contains the competitive priorities and that these are also the order-winning and order-qualifying characteristics. To... 

This chapter was supported by the Project financed from STRUCTURAL FUNDS within the framework of the Sectorial Operational Programme "Increasing of the Economic Competitiveness", Priority Axis 2 - Operation 2.2.1. - Developing the existing R D infrastructure and creating a new R D infrastructure. 

The customer area contains dimensions such as the strategic supply chain orientation of a company in order to decide whether the supply chain is agile or leagile . Furthermore, it is determined which competitive priorities are essential and if the product shall be delivered as a stocked product, make-to-order product, or engineer-to-order product. 

Dimensions in morphological box Competitive priorities and strategic SC orientation... 

Competitive priorities Fiexibiiity Quality Cost Lead time ... 

This section aims at evaluating the current strategic supply chain orientation for a customer segment and, in a first step, some basic questions are presented to prepare the reader for the actual determination of the supply chain strategy. In a second step, the concept of competitive priorities is explained in order to describe the current supply chain strategy of a company. Finally, the strategic supply chain orientation is evaluated. 

Fig. 9.6 Competitive priorities matrix for agile vs. lean supply chain strategy, referring to Mason-Jones et al. (2000)...

However, in order to determine which competitive priority best describes a supply chain, the four criteria quality, cost, flexibility, and lead time need to be traded-off against each other in order to rank them appropriately. The process is briefly described in the following. 

Table 9-1 Examplary approach to weighting and ranking the competitive priorities ...

Assessing the relative importance of [these] four main competitive priorities helps to distinguish different strategic orientations... 

First, the competitive priorities are traded-off against each other in pairs,... 

Second, the assigned weights to each of the competitive priorities in the first part of Table 9.2 are added up and the fraction is translated into a percentage as shown in the second part of the table, indicating the strategic importance of each of the competitive priorities . In this specific example, cost at 50 % is ranked as the most important indicator to characterize the current supply chain strategy followed by quality, lead time and, finally, flexibility. 

To determine the present manufacturing strategy, a second question aims at evaluating whether it is possible to describe the manufacturing strategy in terms of competitive priorities such as quality, cost, flexibility, and lead time. 

Strategic supply chain orientation Corresponding competitive priority... 

In general, the results from the two analyses conducted in the CMl deliver six possible strategic supply chain orientations presented in Table 9.15. Regarding the Active example, the desired supply chain orientation and the corresponding competitive priorities are marked in bold. Only the two first competitive priorities of the ranking are marked due to the fact that those are the most important to be considered. 

In a next step, the table checks to detect performance metrics especially relevant to the operations of the company which are not covered by the supply chain strategy and the corresponding competitive priorities filters. If there are additional performance metrics which need to be taken into account, they should be added to the existing list. 

In case of the strategic path, the completed morphological boxes from SCD-Phase 1 and 2 are used to perform a gap analysis, which compares desired and actual supply chains and thereby helps to uncover differences between these two supply chain designs. The operative path provides that based on an organization s competitive priorities adequate key performance indicators (KPIs) are selected. Decision makers can use these KPIs to conduct a self-benchmarking of their... 

In section 1.1 we showed the supply chain as a network of operating processes. In section 1.2 we emphasised the need to integrate these processes to maximise flow and focus on the end-customer. And in section 1.3 we saw how supply chains can choose to compete on a range of different competitive priorities. Now it is time to put these ideas together and show how strategies need to be aligned across the supply chain. 

If different links in the supply chain are directed towards different competitive priorities, then the chain will not be able to serve the end-customer as well as a supply chain in which the links are directed towards the same priorities. That is the basic argument for alignment in the supply chain (Cousins, 2005). Where the links are directed by a common and consistent set of competitive criteria, then that supply chain will compete better in the marketplace than one in which the links have different, conflicting priorities. This is the concept of focus. ... 

Following the benchmarking phase, suppliers met every quarter to formulate strategy, share market and product development information, and share plans for implementing best practice. The new plans were then deployed within individual supplier companies by training workshops. In turn, these plans spawned improvement projects aimed at achieving the competitive priorities. 

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