1. 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.

2. 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.

3. 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

4. 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!

5. OS & the Customer Hotel rooms (price, aesthetics, comfort) $$
very nice
“good amount”
$$$
beautiful
very high – lots of space…

6. OS & the Customer Hotel rooms (price, aesthetics, comfort) $ stylish
very crammed $
furniture from the 80’s
small space, crammed

7. 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.

8. 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

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 9

10. 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 10

12. 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

13. 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

14. 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

15. 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

16. 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.