Competitive Priorities
The key to developing an effective operations strategy lies in understanding how to create or add value for customers. Specifically, value is added through the competitive priority or priorities that are selected to support a given strategy.
Skinner and others initially identified four basic competitive priorities. These were cost, quality, delivery, and flexibility. These four priorities translate directly into characteristics that are used to describe various processes by which a company can add value to the products it provides. There now exists a fifth competitive priority—service—and it was the primary way in which companies began to differentiate themselves in the 1990s.
Cost:- Within every industry, there is usually a segment of the market that buys strictly on the basis of low cost. To successfully compete in this niche, a firm must necessarily, therefore, be the low-cost producer. But, as noted earlier, even doing this doesn’t always guarantee profitability and success.
Products sold strictly on the basis of cost are typically commodity-like. (Examples of commodities include flour, petroleum, and sugar.) In other words, customers cannot easily distinguish the products made by one firm from those of another. As a result, customers use cost as the primary determinant in making a purchase.
However, this segment of the market is frequently very large and many companies are lured by the potential for significant profits, which are