Order-Winning and Order-Qualifying Criteria

Topics: Strategic management, Business terms, Product life cycle management Pages: 5 (1590 words) Published: October 4, 2012
The terms "order winners" and "order qualifiers" were coined by Terry Hill, professor at the London Business School, and refer to the process of how internal operational capabilities are converted to criteria that may lead to competitive advantage and market success. In his writings, Hill emphasized the interactions and cooperation between operations and marketing. The operations people are responsible for providing the order-winning and order-qualifying criteria—identified by marketing—that enable products to win orders in the marketplace. This process starts with the corporate strategy and ends with the criteria that either keeps the company in the running (i.e., order qualifiers) or wins the customer's business.

Many factors shape and form the operations strategy of a corporation, for example, the ever increasing need for globalizing products and operations and thus reducing the unit cost, creating a technology leadership position, introducing new inventions, taking advantage of mass customization, using supplier partnering, and looking for strategic sourcing solutions. All of these factors require an external or market-based orientation; these are the changes that take place in the external environment of the company. Traditionally, strategic decisions were thought of as "big decisions" made by general managers. However, big strategic decisions may not be the only source of competitive advantage for the firm. Jay Barney wrote, "Recent work on lean manufacturing suggests that it is the simultaneous combination of several factors that enables a manufacturing facility to be both very high quality and very low cost. This complicated system of numerous interrelated, mutually supporting small decisions is difficult to describe, and even more difficult to imitate, and thus a source of sustained competitive advantage." Barney contrasted big and small decisions further, "Recognizing that small decisions may be more important for understanding competitive advantages than big decisions suggests that the study of strategy implementation—the process by which big decisions are translated into operational reality—may be more important for understanding competitive advantage than the study of strategy formulation." The strategy expressed as a combination of a few big and hundreds of small decisions leads to setting up competitive priorities for improving operational practices through investments in various programs. These competitive priorities place different and diverse demands on manufacturing. These demands, sometimes called manufacturing tasks, can be organized into three distinctly different groups: product-related demands, delivery-related demands, and cost demands. The emphasis given to these priorities and the state of the organization determine the nature and level of investments deemed necessary to implement the operations strategy. These investments in operational practices are expected to lead to better operational performance, as measured and evaluated internally using indicators like reject rates in the manufacturing process, production schedule fulfillment, and others. Through investments firms create and acquire resources that can isolate them from negative market influences and can serve as a source of competitive advantage for them. These investments can be made in tangible assets (e.g., machinery and capital equipment) and intangible assets (e.g., brand names and the skills of individual employees). A distinction has to be made between investments aimed at creating resources and those aimed at creating capabilities. Few resources on their own are productive. Productive activity requires the cooperation and coordination of teams of resources. An operational capability is the capacity for a team of resources to perform some task or activity. While resources are the source of a firm's capabilities, capabilities are the...
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