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Operations strategy has to match the strategy of the organization and can be centered on some
ordering of emphasis on organizational aspects related to products of cost, speed, quality, and/or
flexibility. A new aspect has been added in the last five or so years, Dependability,
https://smallbusiness.chron.com/objectives-operational-performance-77937.html 08/19/2019. When
designing processes, those processes have to support the strategy. Rolls Royce will not develop a mass
production process; they will design processes where each car produced can easily be modified. On the
other hand, Ford will develop processes that support mass production to reduce the cost of the finished
product.

Cost: cost of production

Speed/Time: speed of product development, speed of throughput time, speed of delivery
Quality: how does the quality of the product compare to other like products in the same price
category.
Flexibility: order size, batch size, characteristics of product, delivery time, order quantity
Dependability: how dependable is the delivery promises of an organization, and then how
dependable is the product over time relative to organizational claims.

There are two theories that explain the relationship between these organizational product
characteristics. The conventional wisdom was that an organization had to be very strong in one of the
aspects relative to its competitors. If an organization were to compete on cost, then they would be slow,
have poor quality, not be dependable, and not be flexible. This theory is called the ‘Trade-off Theory’.
With the information flow, technology, management ability, and competitive nature of a global market
place, the ‘Sand Cone’ theory has been developed to explain how organizations are currently operating.
https://www.ifm.eng.cam.ac.uk/research/dstools/trade-off-models/ 08/19/2019. Quality is almost
always the base of the sand cone, with some ordering of the other three characteristics from most to
least important for a company to gain market share. It was thought that the order was Quality, Speed,
Flexibility, then Cost. Shroeder, Shah, and, Peng 2010 find that industry context drives the order.

https://www.tandfonline.com/doi/abs/10.1080/00207543.2010.509116 08/19/2019

Impacting these five aspects of Operations Strategy are product characteristics. David A. Garvin
proposes there are eight product characteristics that differentiate products within the same market.
READ Product Quality by Dr. GARVIN (1984) http://www.onquality.info/2010/04/product-quality-by-dr-
garvin-1984.html/ 08/14/2019. Presented in this article is also a nice presentation of the five
approaches in defining what quality is and how they tie into the eight product characteristics. In the past
one could say that as one increases the amount of any one of the eight dimensions, cost, time, and
quality will increase, and speed and dependability will most likely decrease. However, organizations are
discovering how to be good in many aspects while keeping all five aspects of Operations Strategy high.
Closely linked to these product characteristics are the concepts of Order Qualifier vs. Order Winner.

READ Order-Winning and Order-Qualifying Criteria at

https://www.referenceforbusiness.com/manageme nt/Ob-Or/Order-Winning-and-Order-Qualifying-
Criteria.html 08/14/2019
Rolls Royce competes on quality and flexibility to the detriment of speed and cost using job shop layouts
and processes.

Ford competes on cost, moderate flexibility, high speed, and moderate-quality using assembly line
layouts and processes. They can compete on cost relative to Rolls Royce because they do not drive each
of the eight characteristics as high as Rolls Royce; thus, they can build faster and use less expensive
material. These two auto companies serve an entirely different market; it is harder to discern the
differences in operations strategy between Ford and GM; which company wins the sale will many times
depend on the service side of the dealerships a customer visits.