Every leader knows that strategy is important and, especially, that operations strategy is critical to an organization's success. Operations strategy allows an organization to better position itself in the marketplace by focusing on competitive priorities.
These "priorities" include cost, quality, delivery and flexibility. To be competitive, a company must be able to position itself on at least one of these competitive measures.
If a company competes on cost, its focus is on keeping its unit costs of production low. This may also include such things as ensuring a high inventory turnover and high labour productivity. In short, because the company is able to keep its operations costs low, it is able to pass on savings to the consumer. These savings are in the form of low prices. For example, big box stores are competing on cost in the marketplace - Walmart, Costco, and Superstore, among others.
A company competing on quality aims for a low percentage of defective products (both produced and returned) and appropriate costs of quality. For instance, both internal and external failure costs are kept low (the goal is elimination of both), while appropriate expenditures are incurred for appraisal and prevention costs. To produce high quality products or services, companies must ensure that they are undertaking appropriate inspections with preventive measures in place to eliminate defects. Examples of companies competing on quality include Lexus and Toyota.
Companies that compete on delivery are able to get their product or service to the customer within the time promised. Think FedEx or Domino's Pizza. Another aspect of on-time delivery is "lead time." How long is customer waiting time from when order is placed until receipt/delivery? The shorter the lead time; the happier the customer. And the more competitive the organization.
Flexible organizations also hold a strategic advantage. They are able to respond quickly to requests for product or quantity changes. For instance, Dell Computers is a company that is very flexible to product variety fluctuations - it is able to deliver customized product to its customers very quickly and because of this, they hold a strategic advantage in relation to flexibility in the marketplace.
If your organization is competitive, it has found its niche in at least one of these market advantages. If it is thriving, it is efficiently executing its competitive advantage.