1.

Provide business examples of the three operations strategies: make-to-

stock, assemble-to-order, and make-to-order. Explain what it would take
for a company to move from a make-to-stock strategy to make-to-order,
and vice versa. What are the advantages and disadvantages of each
strategy?
 Make-to-stock: Serve customers from finished goods inventory
Example: Off-the-shelf retail clothing, soft drinks, standard automotive parts, or
airline flights, and a hamburger patty at a fast-food restaurant such as McDonald’s
are made-to-stock.
 Assemble-to-order: Combine a number of preassembled modules to meet a
customer’s specifications
Example: Computer systems, pre-fabricated furniture with choices of fabric colors,
or vacation packages with standard options.
 Make-to-order: Make the customer’s product from raw materials, parts, and
components.
Example: Custom-made clothing, custom-built homes, and customized
professional services.
* Changing the company’s operations strategy from one type to another can be a
source of competitive advantage. A company move from make-to-stock to make-
to-order, and vice versa would be completely changing its product offering. For
example, the product of make-to-stock is car. There are standard models available,
where extra components are added to the cars based on customer demand. In the
make to stock, customer need to accept the product as it is available. Sometimes
while purchasing the car, there are only limited choices to the color of the car. This
might not be limited in make-to-order. Therefore, customer satisfaction can be
higher in make-to-order compare to make-to-stock.
* The advantages and disadvantages of each strategy:
Strategy Advantages Disadvantages
Make-to-stock o Spreading resources and o Trends of customers
production cannot be predicted
o Reducing the waiting times of o Either over inventory
the customer or too much less
o Able to design a proper inventory at times
 schedule for understanding the
workflow and making it
smooth
Assemble-to- o Cost of this method will be
order lower than that of other
methods
o Orders can be made according
to the customer demand
o Effective inventory
management
o Fast delivery of items
Make-to-order o Minimizes the cause and effect
of waste
o Reduces the intensity of the
risk of inefficiency
o Products can be specialized
o Customers lose the
ability to customize
the product
o Lower supply if
demand is higher and
lack of availability of
the material
o Lead time can be
longer than expected
o Demand of sales will
be irregular
o The stock material
would be seriously ill
o The waiting times of
the customer will not
be much high

2. Provide business examples of companies that compete on each one of the

identified competitive priorities. Explain how their supply chain strategies
are different based on their specific competitive priority. Select one of the
business examples you provided and explain how the company would need
to change its supply chain strategy if it shifted its competitive priority.
There are five primary competitive priorities:
1) Cost: If the company’s business strategy is to compete on cost, then the
supply chain strategy must be designed to support this. Companies that
compete on cost offer products at the lowest price possible. These
companies are either maintaining market share in a commodity market, or
they are offering low prices to attract cost-sensitive buyers.
Example: Apparel industry where manufacturers often outsource production in
Southeast Asia. The manufacturers insist on fixed production schedules to keep
their costs low. This impacts their flexibility and can hurt retailers when demands
unexpectedly shift, such as when there is an unexpected surge of demand. This
limits retailers in their ability to respond to demand. For many retailers being out
of stock on a regular basis can play havoc with customers and erode market share.
Focusing on price alone, without considering other aspects of the business strategy
may result in a poor supply chain strategy.
2) Time: Time is one of the most important ways companies compete today.
Companies in all industries are competing to deliver high quality products in
as short a time as possible.
Example: FedEx is a company that has chosen to compete on time. The company’s
slogan is that it will ‘‘absolutely, positively’’ deliver packages on time. To support
this business strategy, the entire supply chain has been set up to support this
criterion. Bar code technology is used to speed up processing and handling, and the
company has discovered that it can provide faster service by using its own fleet of
airplanes. This technology has enabled FedEx to compete on time, but it is costly.
Consequently, FedEx neither competes on cost nor does it make any claims
regarding its prices. Its business strategy is to compete on time, and all the other
functions are aligned to support this strategy.
3) Innovation: Companies whose primary strategy is innovation focus on
developing products that the customers perceive as ‘‘must have’’ and
thereby pull the product through the supply chain with significant demand.
Example: Nike is a company that delivers innovative products customers want.
Due to the ‘‘must have’’ nature of these products, this company can typically
command a premium price, which is their advantage because competing on
innovation requires a sizable financial commitment. In addition to the supply chain
capability, the real ability to compete on this dimension lies in superior marketing
and product development, which is directly related to the supply chain. Nike are
‘‘virtual companies.’’ This means that marketing and product design are their
strength, but they outsource all the other aspects of their supply chain and
manufacturing processes, albeit through a tightly controlled system.
4) Quality: Competing on quality means that a company’s products and
services are known for their premium nature. An important part of this
competitive priority are issues of consistency and reliability.
Example: Company competing for quality are is Mercedes. This company focuses
on the high-end class that seek luxurious and expensive vehicles. Since it is one of
the world’s top manufacturers of sumptuous and ultra-luxury vehicles, Mercedes-
Benz values the production of high-class cars. Hence, it focuses on making
durable, unique, and aesthetically attractive cars. The production of quality
products is a strategic measure that helps Mercedes-Benz to maintain the “luxury”
status, gain competitive edge, acquire high profits, and control its production level.
5) Service: Competing on service means that a company understands the
dimensions that its target customers define as high service and has chosen to
tailor their products to meet those specific needs. An important aspect of this
strategy is that these companies typically build customer loyalty, which can
often guarantee continued sales
Example: Excellent customer service is one source of Starbucks’ competitive
advantage. Starbucks’ emphasis on ensuring a positive customer experience has
allowed it to become one of the leading firms in the coffee industry. Its stores are
effectively positioned as a “third place” away from home and work, where people
can spend time in a relaxed and comfortable environment with their friends or
alone. It has embraced opportunities to adapt to changing consumer tastes and
preferences, which sets it apart from its competitors.
 How the company would need to change its supply chain strategy if it
shifted its competitive priority:
Amazon being an American enterprise believes in quality and service as its
competitive priority and is highly customer- obsessed and makes every attempt to
bring in superior customer satisfaction. While the Alibaba works on Cost and time
competitive factors and offers a large variety of products with better prices and
low-cost options. If Amazon would also try to compete on the cost and time then
probably Amazon would have to change its supply chain strategy and will have to
go for more white label products and keeping more inventory in order to better
control the time and cost of the products. The competitive priorities are not so easy
to change as this comes from long term strategy implementation and due to other
resource advantages that a company has.