2023-24 Lecture 3 - MMS 7204 (Order Qualifiers and Order Winners)

2/11/2024
MMS 7204 Manufacturing Strategy
LECTURE THREE
Order Qualifiers and Order Winners
Course Lecturer
Dr Catherine Wandera
1
2023/2024 MMS 7204 Manufacturing Strategy
Outline of Lecture Three
3. Order Qualifiers and Order Winners
3.1 Definition of Order Qualifiers and Order Winners
3.2 Contemporary Issues in Manufacturing
3.3 Strategic Scenarios and Approaches in Manufacturing Strategy
3.4 Benchmarking
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3.1 Definition of Order Qualifiers and Order Winners
❑ Order-Qualifiers and Order-Winners are the characteristics that

are important for a product to gain or maintain a market share.
❑ For a product to be successful, all order-qualifiers need to be met;

however, fulfilling the criteria of order-qualifiers do not necessarily
win customer orders.
✓ Therefore, the company also needs to fulfil the requirement of

order-winners.
❑ Order qualifiers and order winners are essential if companies

are to maintain their existing market share and grow in the
business, i.e. to be competitive in the market.
3
Order Qualifiers
❑ Order Qualifiers: These are the criteria that a company must meet
for a customer to consider the company as a possible supplier; i.e. the
necessary attributes that a product must possess for it to enter into
competition in the market.
✓ e.g. customers require companies (suppliers) to be registered under

ISO 9000 series or ISO 14000 series and maintain the registration
in order to be considered as a competitor in a given market.
▪ Therefore, manufacturers (suppliers) who are compliant with the

needed ISO registration achieve the right to bid or be considered.
✓ In order to fulfil the requirement of order-qualifiers, a

manufacturing company only has to be as good as its competitors.
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Order Winners
❑ Order Winners: These are the criteria that a company must put in place
in order to win the customers’ orders; those attributes that lead to
customers to buy a product.
✓ Order-winners for a manufacturing company are those things which
directly and significantly contribute to the company’s winning business.
▪ Order Winners are the key reasons for a customer purchasing the
product or service of a company.
✓ In order to gain market share or increase sales, a manufacturing
company’s order-winning characteristics need to be better than those of
its competitors.
▪ Moreover, order winners change over time and may be different for
different markets.
5
Value Drivers: Order Qualifiers and Order Winners
(Source: Holmberg & Ida, 2013)
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Characteristics that can Constitute Order Qualifiers or Order Winners
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Illustration of Order Qualifiers and Order Winners
Order Qualifiers
Product Quality (ISO, Product Purchase
Product Performance Product Reliability
UNBS Certification) Price
Order Winners
Product Purchase
On-Time Delivery Product Range Flexibility
Price
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Order Qualifiers vs Order Winners
To provide order To provide order winners, a

qualifiers, a manufacturing company needs
manufacturing company to be better than its
needs only to be as good as competitors by having
its competitors by meeting characteristics that encourage
the minimum customers to choose its
requirements that make it products and services over the
to be considered a viable products and services of its
competitor. competitors.
2023/2024 MMS 7204 Manufacturing Strategy 9
Identifying Order Qualifiers and Order Winners
❑ Order-Qualifiers and Order-Winners are the characteristics that are

important for a product to gain or maintain a market share; therefore,
order-qualifiers and order-winners should drive the company’s
manufacturing strategy.
❑ An important aspect of a manufacturing strategy of a manufacturing
business entity is to plan investments and distribute resources that
contribute to improvement of the order-qualifiers and order-winners.
✓ Therefore, it is important for a manufacturing business to
understand the market needs so as to be able to identify order-
qualifier and order-winner characteristics.
✓ A manufacturing firm must understand the order qualifiers and
order winners for each of their products in each of their markets.
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Factors that Influence Order Qualifiers and Order Winners

❑ Order-qualifiers and order-winners for any product/ market Product life
combination are not static but change according to the following cycles vary
factors: for different
1) Customers changing perspectives. products;
some
2) Concepts of the product life cycle phases from introduction phase, products
growth phase, maturity phase and decline phase.
have life
▪ During the introduction phase, design and availability are cycles in
more important order-qualifier and order-winning years,
characteristics. others
▪ During the growth phase, quality and delivery are more months and
important order qualifier and order winner characteristics. others (like
some toys)
▪ During the maturity phase, price and delivery are the more have weeks.
important order-qualifier and order-winner characteristics.
Process for Identifying Order Qualifiers and Order Winners
• Conduct a market research and segment the market

1
• Select sample products and/or customers to represent each market segment

2
• For each market segment, define a relevant time period that reflects the
3 changing characteristics within the market segment
• Analyze and forecast sales volumes and potentials within the chosen time period
4
• Identify order-qualifiers and order-winners for each market segment and time
5 period
(Source: Holmberg & Ida, 2013)

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3.2 Contemporary Issues in Manufacturing

❑ Manufacturing is a means of ❑ Modern manufacturing seeks to
transforming raw materials into strike a balance between humans
semi-finished goods and finished and machines in terms of
goods. productivity and manufacturing
economics with the aim of reducing
❑ Manufacturing has evolved due to production cost per unit.
advances in the following:
▪ However, the modern
1) supply chain, manufacturing industry faces
some challenges that hamper
2) consumer needs,
the potential for realization of
3) technology development, and the desired productivity and
manufacturing economics goals.
4) engineering design.
Eight (8) Challenges faced by the Manufacturing Industry
1. Demand Forecasting
2. Inventory Management
3. Manufacturing Plant Efficiency
Eight (8) Challenges 4. Material Wastage

Faced by the
Manufacturing
Industry
5. Keeping Track of Sales Leads
6. Shortage of Skilled Labor
7. Adoption of Emerging Technologies
8. Environmental Consciousness
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Eight (8) Challenges faced by the Manufacturing Industry (1)

SN Challenge Description of Challenge
1. Limited Demand Despite advancements in demand forecasting and information technology, most
Forecasting manufacturing businesses lack effective monitoring systems for forecasting how
many goods they should sell in the coming months or years. Consequently,
many factories have trouble anticipating future demand and struggle to
incorporate inventory levels into their production planning procedures. As a
result, their products fall short of client expectations and reduce sales.
2. Manual Inventory Inventory management is easier with the help of automated solutions where the
Management by use of software can cut down the time-consuming task of Inventory
small management. Manufacturing firms are under need to consistently deliver high-
manufacturers quality goods that meet the needs of their customers. However, small
manufacturers continue to handle their inventories manually. Manual stock
checks are inefficient and prone to errors, resulting in mistakes, shortages,
excess, and unidentified losses. Moreover, a manufacturer who doesn't keep
track of inventory could experience shortages.
2023/2024 MMS 7204 Manufacturing 15
Strategy

3. Manufacturing Manufacturers are continuously seeking for practical solutions to reduce costs and
Plant increase their factory efficiency. Some manufacturers prefer to cut production costs
Efficiency by reducing product quality which causes customer dissatisfaction with the
resultant decrease in the company’s sales and profitability since dissatisfied
customers will stop buying. Manufacturing companies must make a genuine
commitment to excellence by exploring the essential information required to
increase quality.
4. Wastage of Processes in the manufacturing production cycle generate waste. Waste reduction
material is a critical consideration in production planning in order to avoid financial losses,
prevent high overhead costs, and improve overall plant efficiency.
5. Keeping Track Each sales lead is unique in terms of persona, preferences, and requirements
of Sales Lead which demands that they be treated specially. However, manufacturers often find it
challenging to identify sales leads with high potential which results in
manufacturers focusing on unpromising opportunities.

Strategy
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6. Shortage of Although the role automation and robotics is increasing in the manufacturing
Skilled Labor industry to help in closing the labor gap, humans are still required to assess and
solve manufacturing problems and manage them.
7. Adoption of Manufacturers often need to adopt use of technologies in the different
Emerging manufacturing segment. However, adoption of emerging technologies is hampered
Technologies by the following factors: the company’s culture and resistance of workers, the
leadership team’s lack of support, complexity of a project, lack of governance and
transparency in the reporting of results, lack of cooperation between teams, lack
of well documented processes or procedures, insufficient adoption speed, and the
discrepancy between “acquiring technology” and “adoption of technology.
8 Environmental Consumers who are more concerned about the environment usually demand the
Consciousness same degree of commitment to the environment from the product brands that they
buy. Process manufacturers that work with chemicals must establish the
environmental impact of the chemicals and seek ways to reduce emissions and
promote greener production.
Strategy
3.3 Strategic Scenarios and Approaches in Manufacturing Strategy
A strategic issue is ❑ A strategic issue may be a welcome or unwelcome scenario in the

a forthcoming manufacturing business in the following ways:
development 1) A strategic issue that is a welcome scenario is one which
(either inside or presents an opportunity to be grasped in the environment or
outside of the an internal strength which can be exploited to the advantage
manufacturing of the manufacturing enterprise.
organization)
2) A strategic issue that is an unwelcome scenario is one which is
which is likely to
an external threat or an internal weakness that endangers
have an important
continuing success and even survival of the manufacturing
impact on the
enterprise.
ability of the
manufacturing ▪ However, external threats, which usually signal significant
organization to discontinuities in the environment, can be converted into
meet its objectives. opportunities by aggressive and entrepreneurial
management.
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Strategic Issues Management

Business firms Strategic Issues Management Process
usually space (1) In the beginning of each year's planning cycle, a review of the last
comprehensive year's progress is done with a focus on strategies which have
revisions of encountered important strategic issues.
their business
strategies (2) A comprehensive analysis of environmental trends and prospects
several years identifies additional strategic issues.
apart because (3) Resolution of the strategic issues identified from the previous year
a strategy is a progress and the environment-derived strategic issues becomes the
long term central focus of the annual planning process.
thrust which
(4) Strategic issue analysis (i.e. analysis of impact and response to
takes several
significant developments) is then added to the manufacturing
years to
strategy analysis in order to determine the necessary thrusts for the
implement.
future development of the manufacturing enterprise).
Strategy
Strategic Issues Management System (SIM) (1)
A Strategic Issue Early identification of Strategic Issues using the

Management System Strategic Issues Management System can be assured
in the following ways:
(SIM) is a systematic
(1) Strategic Issue Management is real time continuously
procedure for early preoccupied with strategic issues throughout the year
identification and and involves a periodic (monthly) review and updating
fast response to of the key strategic issues list.
important trends
and events which (2) Continuous surveillance, both inside and outside the
enterprise, for fast issues that may arise in between
occur both inside and the reviews. When such issues arise, a 'red light
outside the signal', alerts management of the need for immediate
enterprise. attention.

Strategy
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Strategic Issues Management System (SIM) (2)

Fast response of SIM to trends can be assured in the following ways:
(1) Management of the Strategic Issues Management System is the responsibility of the senior
management team which has the resources and authority to initiate prompt action without
unnecessary delays.
(2) Senior management assigns responsibility for individual issues directly to units which are best
equipped to deal with the issues even if it means reaching across several hierarchical levels. If
an issue is not particular to a unit, an ad hoc project which is composed of both affected and
expert individuals is formed and reports directly to senior management; resources are assigned
directly to the project.
(3) The assigned units or ad hoc project are responsible for resolving the issue; thus Strategic
Issues Management System (SIM) is a management action system and not only a planning
system. Moreover SIM involves several ongoing projects which undergo continuous updating
and revision of the strategic issue list; therefore, the separation between planning
implementation periods is not visible in a SIM.
Strategy
Responsibilities for the Strategic Issues Management System are

assigned to among three Groups
(1) Staff group: Concerned with detection of trends, evaluation of their
impact and timing, assessing the time required for response, and
alerting decision makers about sudden and important issues; also
responsible for maintaining an up to date key issue list and their
priorities and monitoring progress of projects toward assigned
objectives.
(2) General management group: Responsible for strategic control of the
SIM which involves assessing relative importance of issues, selecting
key strategic issue list, deciding how issues are to be treated, assigning
responsibilities for their resolution, and providing appropriate resources,
continual re-evaluation of the significance of issues and redefinition of
both priorities and direction of projects which also means timely
cancellation of projects dealing with issues which turn out to be false.
(3) Workers Group: These are the units or ad hoc groups that are assigned
the responsibility of resolving specific issues. When the strategy of
response to an issue is not clear, these groups may be asked to act as
planners and to submit action recommendations. But the success of SIM
depends on making the projects resolvers, and not planners, of issues.
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Strategic Issues Management
❑ There are three possible sources of

information about impending strategic
issues:
1) the trends in the external

environment,
2) the evolutionary trends within the

enterprise, and
3) the trends in its performance
Priorities for Strategic Issues
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Priorities for Strategic Issues
❑ In order to assure
adequate attention is
given to both positive
and negative prospects,
it is useful to list
separately the
opportunities/strengths
and threats/weaknesses.
❑ The types of action to be

taken for each list can
next be determined with
the aid of a matrix.
Aspects to Consider in Formulation of a Manufacturing Strategy that

Considers Strategic Issues
❑ A process for formulation of a manufacturing strategy should take
into consideration the following aspects:
1. Take into account customer requirements.
2. Take into account the competitors.
3. Take into account manufacturing capabilities.
4. Consider all options available to manufacturing.
5. List all the outputs that manufacturing will provide and

specify the optimal set of changes needed to accomplish them.
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3.4 Benchmarking
❑ Benchmarking is the search for best ✓ Benchmarking redirects the corporate focus
practices in order to achieve superior from assessing internal performance
performance. (typically using internal measures) to
externally checking how the company’s
✓ Benchmarking involves continuously
performance compares with the best practice.
measuring a company's products,
Consequently, benchmarking enhances a
services and practices against both the
company’s competitive position in the market
company’s competitors and the leaders
by strengthening the following aspects of the
in the company’s business sector as a
business:
means of helping the company to
achieve levels of competitiveness. (i) Identification of market requirements,
✓ Benchmarking is a dimension in the (ii) Differentiation of the company’s offering

domain of order-winners which from competitors’ offerings, and
measures a company’s performance (iii) Establishment of the level of
against relevant criteria of externally performance to be achieved within each
derived best-practice. competitive dimension.
Importance of Benchmarking
❑ Benchmarking forces companies to ❑ A company’s failure to assess and monitor its
look outwards to get an external competitors is a mark of corporate
perspective that enables them to complacency and a sign of strategic naivety.
identify the levels of performance
that should become their new targets. ❑ The process of a company monitoring its
competitors has two important dimensions:
❑ Benchmarking moves a company 1) Continuously updating the level and
from having an inward bias to dimensions of competition within a
incorporating external perspectives company’s markets.
which help a company to assess what
is going on and also to manage itself 2) Proactivity seeking to improve a
within its own environment thus company’s own business performance by
invariably introducing a stepped learning from other companies how to do
change in terms of performance. things better.
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Advantages of Benchmarking
❑ Checking a company’s performance against 3) Benchmarking reinforces the executive
the performance of other businesses (even role as a key element in bringing about
those in unrelated sectors) leads to the sustained performance improvement,
following advantages: rather than the support staff role.
1) Benchmarking describes the 'what' 4) External comparisons are often perceived

rather than the 'how’ so companies that as being more objectively derived and
benchmark with on others are presented therefore they are more readily accepted.
with targets not solutions, which in turn
increase the aspect of ownership. 5) Benchmarking opens up new improvement
horizons that represent a stepped change
2) Having targets to aim for helps to create in performance; therefore, it provides the
a uniform response from all parts of a opportunity to leapfrog competitors in
business. When goals are common, selected and relevant dimensions of
improvement becomes a shared task. performance.
The Dynamics of Implementing Benchmarking

❑ Process of Benchmarking
1. Implementing benchmarking starts with determining the key

functions within a business that need to be reviewed.
2. The relevant performance variables to measure the key functions

are agreed, and then the target is set by identifying the best-in-class
performances.
3. This is followed by the task of assessing the action programme to

bring corporate performance into line and then to surpass the
performance achieved by the best-in-class companies.
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Key Elements for Successful Implementation of Benchmarking
❑ For successful implementation of 3) Accountability: Benchmarking represents an

benchmarking, the following key elements ongoing procedure for measuring performance
need to be in place: and ensuring improvement. A prerequisite for
benchmarking is to instil in all staff of the
(1) Rigour: It is essential for companies company the responsibility and authority for
to ensure that the targets to be identifying, checking and implementing the
achieved are set high enough. Targets changes necessary to achieve the desired
need to be derived from knowledge performance improvement.
and not intuition.
4) Culture Change: Managers spend most of
(2) Overcoming Disbelief: In the initial
their time on internal issues; benchmarking
phases of the benchmarking process,
requires companies to reorients themselves to
companies need to convince
be externally focused rather than internally
themselves that they can not only do
focused which is an essential facet of the
better but can meet the daunting
successful introduction of culture change and
tasks that benchmarking reviews
associated improvements.
typically identify.
Best in Class Exemplars

❑ A following different comparison categories provide the means by which
companies can assess themselves against externally derived standards:
1. Other parts of the same company - internal benchmarking

2. Direct competitors
3. Companies in the same industrial sector but not direct competitors
4. Latent competitors
5. Companies outside the industry
❑ Recognizing the different categories of comparison enables a firm to

identify a broader range of potential best-in-class sources, thereby
improving the quality and representative comparison.
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Ways to Improve Performance (Close the Gap)

❑ Improving performance is the result of a number of coordinated actions in line
with the key functions of the manufacturing firms.
❑ Particular improvements will need the company to reflect on the tasks at hand
and recognize the following levels of achievement that exist :
(i) Try Harder: This is a classic approach that implies a failure to recognize
the principles underpinning benchmarking.
(ii) Emulate: This involves setting achievement targets at par with

competitors and/or best-in-class exemplars.
(iii) Leapfrog: This involves setting targets higher than existing exemplar
norms.
(iv) Change the Rules of the Game: This entails setting the pace in driving
the order-winners and qualifiers in relevant markets.
References (1)
1. Jian Wang and De-bi Cao, 2008. Relationships between two approaches for planning
manufacturing strategy: A strategic approach and a paradigmatic approach,
International Journal of Production Economics, Volume 115, Issue 2, October 2008,
Pages 349-361
2. E. Holmberg, and M. Ida, 2013. Identification and Categorization of Order Qualifiers

and Order Winners in Knowledge Intensive Business Services,
https://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=3807219&fileOId=
3807223
3. Appstrail Technology, https://appstrail.com/8-challenges-faced-by-the-manufacturing-

industry/, Last accessed 12th April 2023
4. J. Sarkis, 1995. Manufacturing Strategy and Environmental Consciousness,

Technovation, Volume 15, Issue 2, March 1995, Pages 79-97,
https://www.sciencedirect.com/science/article/abs/pii/016649729596612W?via%3Dihub
34
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2/11/2024
References (2)
5. K.W. Platts, 1994. Characteristics of methodologies for manufacturing strategy
formulation, Computer Integrated Manufacturing Systems, Volume 7, Issue 2, 1994,
Pages 93-99, ISSN 0951-5240, https://doi.org/10.1016/0951-5240(94)90003-5.
6. J. Miltenburg,, 2005. Manufacturing strategy: how to formulate and implement a

winning plan. CRC Press.
7. T.J. Crowe, and C. Cheng, 1996. "Using quality function deployment in

manufacturing strategic planning", International Journal of Operations &
Production Management, Vol. 16 No. 4, pp. 35-
48. https://doi.org/10.1108/01443579610114068
8. M.J.H. Oomens and F.A.J. van den Bosch, 1999. Strategic Issue Management in
Major European-Based Companies, Long Range Planning, Volume 32, Issue 1, 1999,
Pages 49-57, ISSN 0024-6301, https://doi.org/10.1016/S0024-6301(98)00124-1.
35
References (3)
9. R. Phaal, C.J.P. Farrukh, and D.R. Probert, 2007. Strategic Roadmapping: A
Workshop-based Approach for Identifying and Exploring Strategic Issues and
Opportunities, Engineering Management Journal, Volume 19, 2007 - Issue 1, Pages
3-12, https://doi.org/10.1080/10429247.2007.11431716
10. H. Igor Ansoff, 1980. Strategic Issue Management, Strategic Management Journal ,
Apr. - Jun., 1980, Vol. 1, No. 2 (Apr. - Jun., 1980), pp. 131-148, Wiley,
https://www.jstor.org/stable/2486096
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2/11/2024

MMS 7204 Manufacturing Strategy

Outline of Lecture Three

3. Order Qualifiers and Order Winners

3.1 Definition of Order Qualifiers and Order Winners

3.2 Contemporary Issues in Manufacturing

3.3 Strategic Scenarios and Approaches in Manufacturing Strategy

3.1 Definition of Order Qualifiers and Order Winners

❑ Order-Qualifiers and Order-Winners are the characteristics that

❑ For a product to be successful, all order-qualifiers need to be met;

✓ Therefore, the company also needs to fulfil the requirement of

❑ Order qualifiers and order winners are essential if companies

✓ e.g. customers require companies (suppliers) to be registered under

▪ Therefore, manufacturers (suppliers) who are compliant with the

✓ In order to fulfil the requirement of order-qualifiers, a

Value Drivers: Order Qualifiers and Order Winners

(Source: Holmberg & Ida, 2013)

Characteristics that can Constitute Order Qualifiers or Order Winners

Illustration of Order Qualifiers and Order Winners

Order Qualifiers vs Order Winners

To provide order To provide order winners, a

2023/2024 MMS 7204 Manufacturing Strategy 9

Identifying Order Qualifiers and Order Winners

❑ Order-Qualifiers and Order-Winners are the characteristics that are

Factors that Influence Order Qualifiers and Order Winners

Process for Identifying Order Qualifiers and Order Winners

• Conduct a market research and segment the market

• Select sample products and/or customers to represent each market segment

(Source: Holmberg & Ida, 2013)

3.2 Contemporary Issues in Manufacturing

2023/2024 MMS 7204 Manufacturing Strategy 13

Eight (8) Challenges faced by the Manufacturing Industry

3. Manufacturing Plant Efficiency

Eight (8) Challenges 4. Material Wastage

6. Shortage of Skilled Labor

7. Adoption of Emerging Technologies

2023/2024 MMS 7204 Manufacturing Strategy 14

Eight (8) Challenges faced by the Manufacturing Industry (1)

Eight (8) Challenges faced by the Manufacturing Industry (1)

SN Challenge Description of Challenge

2023/2024 MMS 7204 Manufacturing 16

Eight (8) Challenges faced by the Manufacturing Industry (1)

3.3 Strategic Scenarios and Approaches in Manufacturing Strategy

A strategic issue is ❑ A strategic issue may be a welcome or unwelcome scenario in the

Strategic Issues Management

Strategic Issues Management System (SIM) (1)

A Strategic Issue Early identification of Strategic Issues using the

2023/2024 MMS 7204 Manufacturing 20

Strategic Issues Management System (SIM) (2)

Responsibilities for the Strategic Issues Management System are

Strategic Issues Management

❑ There are three possible sources of

1) the trends in the external

2) the evolutionary trends within the

3) the trends in its performance

2023/2024 MMS 7204 Manufacturing Strategy 23

Priorities for Strategic Issues

2023/2024 MMS 7204 Manufacturing Strategy 24

Priorities for Strategic Issues

❑ The types of action to be

2023/2024 MMS 7204 Manufacturing Strategy 25

Aspects to Consider in Formulation of a Manufacturing Strategy that

1. Take into account customer requirements.