Customers and Operations Strategy OS & the Customer Order Winners and Qualifiers OS & the OM System Compiled by: Alex J. Ruiz-Torres, Ph.D. From information developed by many.

OS & the Customer Key element of operations strategy (and part of the link between marketing and operations) is to understand the type/group of customers the organization is targeting. Kmart targets one customer group, Macy’s another. Apple targets one customer group, LG another. Each customers group/ type has a different set of requirements (priorities). Called market segments. While marketing identifies those priorities, its up to operations to make them happen.

OS & the Customer This is a list of typical product characteristics that have different priorities for different customer groups. Cost Reliability Durability Speed of delivery Customization Aesthetics Technology sophistication

OS & the Customer Concept of tradeoffs: organizations (and their products/services) cannot be good at everything. Product with cheap materials will be of low cost, but will have low durability. Instead of dedicated trucks with daily deliveries, orders are filled once a week thus low transportation cost, but higher delivery time. Fewer customer service representatives results in lower labor cost, but customers wait more and therefore lower customer satisfaction. Can’t have it all!

OS & the Customer Hotel rooms (price, aesthetics, comfort) $$ very nice “good amount” $$$ beautiful very high – lots of space… http://www.mountairyhotel.com/suites#gref https://www.pinterest.com/pin/571816483908826078/?lp=true

OS & the Customer Hotel rooms (price, aesthetics, comfort) $ stylish very crammed $ furniture from the 80’s small space, crammed https://www.booking.com/hotel/ru/inbox-capsule.html

Order Winners and Qualifiers The characteristic of a product/ service that is better than the others/ that is unique. The benefit/ characteristic/ feature that will make a product be selected. Order Qualifier Characteristics/ features that must be offered to compete successfully in a category. http://www.garybembridge.com/2010/05/order-winner-order-loser-order.html

Order Winners and Qualifiers Customer Order Winner Order Qualifiers Budget Traveler A Price Travel time < 12 hours First bag free Budget Traveler B 3 Star Service Reputation Only one stop Luxury Traveler A Travel Time 5 Star Service Reputation “Green” Airline Luxury Traveler B Service Reputation Travel Time < 8 hours Price < 8,000 http://www.news.com.au/travel/travel-advice/flying-first-class-versus-economy-class-are-the-benefits-really-worth-it/news-story/02d38aba62ea55293e57bcbe62c3b8aa

Order Winners and Qualifiers Customer Order Winner Order Qualifiers Budget Traveler A Price Travel time < 12 hours First bag free Budget Traveler B 3 Star Service Reputation Only one stop Luxury Traveler A Travel Time 5 Star Service Reputation “Green” Airline Luxury Traveler B Service Reputation Travel Time < 8 hours Price < 8,000 http://www.news.com.au/travel/travel-advice/flying-first-class-versus-economy-class-are-the-benefits-really-worth-it/news-story/02d38aba62ea55293e57bcbe62c3b8aa 9

Order Winners and Qualifiers Customer Order Winner Order Qualifiers Budget Traveler A Price Travel time < 12 hours First bag free Budget Traveler B 3 Star Service Reputation Only one stop Luxury Traveler A Travel Time 5 Star Service Reputation “Green” Airline Luxury Traveler B Service Reputation Travel Time < 8 hours Price < 8,000 http://www.news.com.au/travel/travel-advice/flying-first-class-versus-economy-class-are-the-benefits-really-worth-it/news-story/02d38aba62ea55293e57bcbe62c3b8aa 10

Order Winners and Qualifiers Customer (“Market Segment”) Order Winner Order Qualifiers Student Price Quality “decent” level Delivery speed < 30 minutes Family Customization (multiple ingredients) Price < $20 Worker Delivery speed Price < $15 Connoisseur Quality “high” level Price < $30

R&D, technology, production, transportation, supplier OS & the OM System Order Winners and Qualifiers Customer needs Strategy Products Systems Operations Strategy R&D, technology, production, transportation, supplier

R&D, technology, production, transportation, supplier OS & the OM System Order Winners and Qualifiers Customer needs Strategy Products Systems Operations Strategy R&D, technology, production, transportation, supplier

R&D, technology, production, transportation, supplier OS & the OM System Order Winners and Qualifiers Customer needs Strategy Products Systems Operations Strategy R&D, technology, production, transportation, supplier

OS & the OM System Operations strategy is about planning for the products and systems that match the organization’s customer requirements (OW, OQ) There must be alignment between the organizations capabilities and the products/services offered.