Strategic consensus on manufacturing competitive priorities, страница 3

Strategic trade-offs and the competitive priorities that a manufacturing system should pursue are directly linked. In other words, when a company determines that certain performance areas are strategically important (e.g. “quality”, “dependability”, “flexibility”) and considers that another one is not as important (e.g. “costs”), those decisions are largely based on the way a firm decides to compete in the marketplace and also on a trade-off relationship that exists between the unimportant performance dimension and at least one of the performance areas considered as strategically important. Likewise, the high strategic importance assigned to two or more performance areas (e.g. “quality”, “dependability”, “flexibility”) is the result of the compatibility (i.e. non trade-off relationship) existent amongst these areas of manufacturing performance. Ahmad and Schroeder (2002, p. 84) explain this point by writing that “the choice of competitive priority is essentially a synthesis of recognising associated trade-offs and exploiting an organisation's core capability”.

Hayes and Wheelwright (1984) explain how to implement these strategic priorities into the everyday operations of a firm. For example, they emphasise the point that a sound manufacturing strategy should make trade-offs explicit, enabling manufacturing to set priorities that enhance the competitive advantage (p. 33). They also mention that when directing operations, statements in the form of “charters” should define what is expected from the plant, the capabilities it should have, and equally important, it should also include an indication of what the plant will not do (p. 100). The clear implication of these recommendations is the potential interconnectedness and built-in relationships that exist amongst the different manufacturing capabilities, and that any misunderstanding of what the manufacturing system is/is not able to do can affect its performance along the different manufacturing capabilities (e.g. quality, delivery).

Since a single manufacturing capability can be traded-off with a different capability and also be compatible with another one, overemphasis on its importance (and hence the misplacement of resources, time, effort) can have a detrimental effect on more than one capability. This necessarily implies a “two-sided” type of awareness amongst employees at all levels in an organisation.

Keeping the preceding discussion in mind, it is important to note that while business and manufacturing strategy authors recognise the relationship between strategic trade-offs and competitive priorities, when modelling the effect that misalignment around strategic priorities can have on performance, the potential trade-offs relationships between pairs of competitive priorities are not taken into account. For example, studies that have analysed the relation of fit/consensus on strategic priorities with performance (Homburg et al., 1999; Joshi et al., 2003) only consider the effect that a lack of consensus on a particular priority can have on the performance of that priority. The possible effect that such a misfit can have on other priorities is not considered. This misfit is potentially important, particularly when two priorities are traded-off, and given its relevance, this type of relationship could also be included in the model.

The trade-off – compatibility debate amongst competitive priorities is well-established and continuously evolving in the field of operations management. Its importance is evidenced by the number and importance of the papers and research that have analysed it. Thus, it should be expected that when studying consensus on strategic manufacturing competitive priorities and its effect on performance, a model and methodology that capture potential trade-offs – compatibilities amongst manufacturing competitive priorities should be utilised. A more consistent approach should take into account that competitive priorities and operational trade-offs – compatibilities are essentially two sides of the same coin (Hayes and Wheelwright, 1984; Ahmad and Schroeder, 2002). Ideally, the emphasis and importance placed on each competitive priority should be matched by the knowledge of the potential trade-off or compatibility relationship between any given pair of relationships between competitive priorities. These considerations will serve as the basis for the critical review of the literature and proposals for research in the coming sections.