Teaching Notes
This chapter reflects the increasing importance of Operations and Supply Chain Strategy
in today’s business environment. The model of Operations Strategy developed by Schroeder,
and fortify the argument for its relevance.
beginning or at the end of the course depending on whether one wishes to start or end with a
level material while the important strategic issues are left to marketing and finance. The chapter
shows how operations can become a “competitive weapon” of the firm by strategic support of the
firm’s distinctive competence. The concepts of multiple objectives and response to external
factors are presented. Linkage of functional strategies and global operations concerns are also
strategic theme. I have personally used the chapter both ways.
This chapter is also well received by executives and experienced managers. For many of
them, it represents a new way to view operations and supply chains. The articles by Skinner
(1969); Ahmad and Schroeder (2002); Adamides and Pomonis (2009); and Schroeder, Shah and
Answers to Questions
include:
To renew emphasis on operations and the supply chain: the fundamental creation
To enable the use of operations and supply chain capabilities as a competitive
Mission — To provide immediate, quick, and safe transportation for ill or injured
Associated Strategies — A central location near a main freeway to insure fast
service, a knowledgeable and well-trained staff, excellent vehicle maintenance,
high capacity relative to use.
b. Production of hybrid automobile batteries:
Mission — To provide environmental friendly automobile batteries for the
sustainability of the environment and reduce energy consumption to meet market
c. Production of electronics products that have a short product life cycle:
Mission — To be first or one of the first to provide an electronics product to the
market at reasonable cost and quality levels.
3. a. No, the business does not have an operations strategy since it can be inferred from
the operations manager complaint that the operations function was not included in
the planning process.
4. Mission of operations: The mission of operations defines the role of operations within
the total business strategy: how operations fit into the overall business plan. The mission
should state the relative priority among the operations objectives: cost, quality, delivery,
and flexibility.
must excel at relative to the competition to provide competitive advantage. It is generally
not possible to excel on several different dimensions: thus the distinctive competence of
a firm requires focus.
5. To determine if a company has an operations and supply chain strategy, study the
What are the most important characteristics of a new process? Quality produced
by the process? Capacity of the process? Flexibility of the process? Amount of
training required for the work force to operate the process?
various levels? On the level of compensation relative to the competition?
The answers to these and other questions should be analyzed for internal consistency. If
an operations and supply chain strategy exists, it can be deduced from the consistent
6. Quality. This would be the primary goal of most hospitals. Much of the staff is licensed
in their professions, and in-service training is used regularly. Staff-patient ratios are
considered important, and techniques such as peer review, quality committees, and the
use of many kinds of high-tech equipment are used to insure quality of care.
Flexibility. This is the ability to respond to different and changing patient needs.
Flexibility implies offering a wide variety of services and the ability to change at a
moment’s notice. A current problem with hospitals is that they stress this objective too
much and duplication of services occurs between hospitals. As a result there are
and HMO’s, hospitals are under extreme pressure to hold costs down while maintaining
or improving quality. The cost effectiveness of each objective, including quality, will
have to be demonstrated as it becomes increasingly costly to provide health care.
All departments are not typically focused on the same objectives. One department may
7. Mission emphasizing imitation and low cost. Strategic decisions include the level of
automation, service levels and inventory policies, store layout and general appearance,
store location, product selection, wage level, service level at check-out, availability of
carry-outs, and service in aisles.
8. a. An airline is affected by many external factors such as:
. fees charged by other comparable passenger carriers
. public perception of safety and service
. competition from other financial institutions
. government regulations
. general economic conditions
c. Semiconductor manufacturing is affected by external factors such as:
students describe something like the mission, objectives, strategies and distinctive
competence of their examples.
10. Students’ examples will vary. But, how firms have been able to achieve these seemingly
conflicting results will be more consistent. Their answers will include reasons such as:
11. Examples of where higher quality costs more occur in all products including automobiles,
clothing, furniture, etc. The definition of quality in this case refers to product design
features, not consistency in producing a given product. If we use the definition of quality
as consistently meeting a given customer need, then higher quality costs less.
12. a. Starbucks Coffee distinctive competence is the location of their stores and the unique
product line that they have.
b. Hewlett Packard has a distinctive competence in the HP Way and in product
13. A distinctive competence in operations provides a basis for providing to customers what
is important to them. It gives the company a way to make a difference from competitors
and to attract customers. It provides a means to keep focused on what is important to the
company.
The above distinctive competencies are hard to duplicate because they rely on internal
values, cultures and systems that are difficult to describe and very path dependent in their
development. These distinctive competencies cannot be purchased on the open market.
15. Students examples will vary. Operations and supply chains must be conceived of as
global in nature. A global distinctive competence should be developed for operations,
operations mission is derived from the business strategy and also should be in agreement
with other functional strategies. If there is misalignment between the business and
operations strategies the company might not be able to give an adequate response to the
market needs. For example, if a company’s business strategy is operational excellence
(or low-cost producer) and if the operations mission is flexibility, then the company
a. An interesting example of competing supply chains is Apple’s supply chain of
suppliers that build components and assemblies of its iPod versus Microsoft’s supply
chain that builds and markets Zune. These portable devices for storing and playing audio
basis of competition is low cost as grocers market standardized, mature items. Take for
example a can of green beans. There is little that differentiates the offering of these two
grocers’ own label of green beans other than price. In this instance, the efficiency of the
supply chain in being able to achieve a low cost per unit offers a distinctive competitive
advantage to consumers.
embed the state-of-the-art computer technology within these competing products.
18. The distinctive competence of Wal-Mart rests on its ability to coordinate a vast network
of suppliers and to efficiently resupply and operate its stores. This is difficult to duplicate
because of its large purchasing power, its fleet of trucks and warehouses, store locations,
Associated Strategies — A central location near a main freeway to insure fast
service, a knowledgeable and well-trained staff, excellent vehicle maintenance,
high capacity relative to use.
b. Production of hybrid automobile batteries:
Mission — To provide environmental friendly automobile batteries for the
sustainability of the environment and reduce energy consumption to meet market
c. Production of electronics products that have a short product life cycle:
Mission — To be first or one of the first to provide an electronics product to the
market at reasonable cost and quality levels.
3. a. No, the business does not have an operations strategy since it can be inferred from
the operations manager complaint that the operations function was not included in
the planning process.
4. Mission of operations: The mission of operations defines the role of operations within
the total business strategy: how operations fit into the overall business plan. The mission
should state the relative priority among the operations objectives: cost, quality, delivery,
and flexibility.
must excel at relative to the competition to provide competitive advantage. It is generally
not possible to excel on several different dimensions: thus the distinctive competence of
a firm requires focus.
5. To determine if a company has an operations and supply chain strategy, study the
What are the most important characteristics of a new process? Quality produced
by the process? Capacity of the process? Flexibility of the process? Amount of
training required for the work force to operate the process?
various levels? On the level of compensation relative to the competition?
The answers to these and other questions should be analyzed for internal consistency. If
an operations and supply chain strategy exists, it can be deduced from the consistent
6. Quality. This would be the primary goal of most hospitals. Much of the staff is licensed
in their professions, and in-service training is used regularly. Staff-patient ratios are
considered important, and techniques such as peer review, quality committees, and the
use of many kinds of high-tech equipment are used to insure quality of care.
Flexibility. This is the ability to respond to different and changing patient needs.
Flexibility implies offering a wide variety of services and the ability to change at a
moment’s notice. A current problem with hospitals is that they stress this objective too
much and duplication of services occurs between hospitals. As a result there are
and HMO’s, hospitals are under extreme pressure to hold costs down while maintaining
or improving quality. The cost effectiveness of each objective, including quality, will
have to be demonstrated as it becomes increasingly costly to provide health care.
All departments are not typically focused on the same objectives. One department may
7. Mission emphasizing imitation and low cost. Strategic decisions include the level of
automation, service levels and inventory policies, store layout and general appearance,
store location, product selection, wage level, service level at check-out, availability of
carry-outs, and service in aisles.
8. a. An airline is affected by many external factors such as:
. fees charged by other comparable passenger carriers
. public perception of safety and service
. competition from other financial institutions
. government regulations
. general economic conditions
c. Semiconductor manufacturing is affected by external factors such as:
students describe something like the mission, objectives, strategies and distinctive
competence of their examples.
10. Students’ examples will vary. But, how firms have been able to achieve these seemingly
conflicting results will be more consistent. Their answers will include reasons such as:
11. Examples of where higher quality costs more occur in all products including automobiles,
clothing, furniture, etc. The definition of quality in this case refers to product design
features, not consistency in producing a given product. If we use the definition of quality
as consistently meeting a given customer need, then higher quality costs less.
12. a. Starbucks Coffee distinctive competence is the location of their stores and the unique
product line that they have.
b. Hewlett Packard has a distinctive competence in the HP Way and in product
13. A distinctive competence in operations provides a basis for providing to customers what
is important to them. It gives the company a way to make a difference from competitors
and to attract customers. It provides a means to keep focused on what is important to the
company.
The above distinctive competencies are hard to duplicate because they rely on internal
values, cultures and systems that are difficult to describe and very path dependent in their
development. These distinctive competencies cannot be purchased on the open market.
15. Students examples will vary. Operations and supply chains must be conceived of as
global in nature. A global distinctive competence should be developed for operations,
operations mission is derived from the business strategy and also should be in agreement
with other functional strategies. If there is misalignment between the business and
operations strategies the company might not be able to give an adequate response to the
market needs. For example, if a company’s business strategy is operational excellence
(or low-cost producer) and if the operations mission is flexibility, then the company
a. An interesting example of competing supply chains is Apple’s supply chain of
suppliers that build components and assemblies of its iPod versus Microsoft’s supply
chain that builds and markets Zune. These portable devices for storing and playing audio
basis of competition is low cost as grocers market standardized, mature items. Take for
example a can of green beans. There is little that differentiates the offering of these two
grocers’ own label of green beans other than price. In this instance, the efficiency of the
supply chain in being able to achieve a low cost per unit offers a distinctive competitive
advantage to consumers.
embed the state-of-the-art computer technology within these competing products.
18. The distinctive competence of Wal-Mart rests on its ability to coordinate a vast network
of suppliers and to efficiently resupply and operate its stores. This is difficult to duplicate
because of its large purchasing power, its fleet of trucks and warehouses, store locations,