Chapter 02 – Operations and Supply Chain Strategy
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Chapter 2
Operations and Supply Chain Strategy
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,
Anderson, and Cleveland is discussed. Other materials by Porter, Skinner, Hayes and
Wheelwright, and Hill, add definition to the concept of Operations and Supply Chain Strategy
and fortify the argument for its relevance.
The chapter may be eye-opening to students who think of operations as nitty gritty or
purely tactical material while the important strategic issues are left to marketing and finance.
The chapter shows how operations can be a “competitive weapon” for the firm by strategically
supporting 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 addressed along with supply chain strategies. This chapter also includes attention to
environmental and sustainable operations issues, and how they fit with operations and supply
chain strategies.
Chapter 2 serves an integrating purpose for the book. It can be taught either at the
beginning or at the end of the course depending on whether one wishes to start or end with a
strategic theme. We have personally used the chapter both ways.
Answers to Questions
1. The reasons for formulating and implementing an operations and supply chain strategy
include:
2. a. Ambulance Service:
Chapter 02 – Operations and Supply Chain Strategy
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Associated Strategies — A central location near a main freeway to insure fast
service, a knowledgeable and well-trained staff, excellent vehicle maintenance,
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
4. Operations Mission: 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,
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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
decisions that have been made. If a consistent pattern of decision-making exists, then
there is an operations strategy, stated or unstated, in the firm.
Specifically, information about the four decision categories – process, quality, capacity,
capacity?
What is the company policy on hiring and layoffs? On training of employees at
various levels? On the level of compensation relative to the competition?
6. Quality. This is the primary goal of most hospitals. Much of the staff is licensed in their
professions, and in-service training is done regularly. Staff-patient ratios are considered
important, and techniques such as peer review, quality committees, and the use of many
kinds of advanced-technology equipment are used to insure quality of care.
Chapter 02 – Operations and Supply Chain Strategy
Cost. Until recently, this objective received low priority. But with rising costs, inflation,
government pressure and payment of standard fees by public health programs and
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, and service in
8. Answers will vary depending on the students’ sources. You should check to see if the
9. Examples of where higher quality costs more occur in all products including automobiles,
10. a. Starbucks Coffee’s distinctive competence is the location of their stores and their
unique product line.
