Driving Competitive Advantage with Operations Management

LBS Insight

Driving Competitive Advantage with Operations Management

The delivery of services and products is evolving as a complex phenomenon in today’s global economy. An area of real concern is in the deployment of value flow to customers at a low cost, with consistent quality, and speedy delivery. Operations, as a transformational hub of value, entails the supply chain integration of value stream flow from the raw material (source) to the end-user in the form of services or products. Suppliers constitute the upstream, where value flow cascades towards the customer in the downstream of the business ecosystem.  The management of the upstream and downstream flow of operations can be leveraged as a competitive advantage in a developing economy like Nigeria; however, leaders and managers in some Nigerian organisations are yet to take advantage of this aspect of operations.

Supply chain constitutes about 40 to 80 percent of operational cost. To be competitive in a dynamic and highly cost-sensitive environment such as Nigeria, three key competitive operational priorities of cost, quality, and speedy delivery of service and products are essential for business continuity and survival. Disruptions are inherent in the business ecosystem, but operations executives that proactively leverage on using the lean supply chain as a comparative advantage would attain an operational edge.  Recall that operations would serve as an organisational competitive advantage only if an organisation distinctively elicits competence in executing similar strategies better than its competitors. Only organisations that strive to deploy acumen regarding the critical aspects of their operational architecture would be competitive in terms of optimal value delivery to their customers.

Strategy is not synonymous with operational excellence.  Operational excellence exists in the ability of an organisation to grow its value stream vis-à-vis competitive priorities of speedy delivery, low-cost, innovation, flexibility, and consistent quality. These competitive operational attributes may become elusive due to the suboptimal nature of the supply chain value stream flow.  Thus, the following operational tactics can be adopted by operations leaders or executives in both service and product-based organisations:

  1. Closer Supplier Ties: Organisations rely on suppliers for the flow of raw materials, consumables or services to its ultimate customers. If the relationship that exists between the organisation and supplier is deficient, it can cause an unnecessary disruption of the flow of value to customers in the form of poor quality, high-cost, and suboptimal delivery speed, hence there is need to maintain a healthy relationship with suppliers.  Practically, an occasional visit to the supplier’s site, proactively engaging the supplier using the win-win technique of collaboration rather than resorting to the win-lose approach would stand an organisation in good stead.

 

  1. Small lots sizes of value flow in the form of inventory:  Organisations can leverage on the Vendor-Managed Inventory (VMI) system whereby materials flow from upstream (suppliers’ end) to the organisation when it is required for the transformation of value flow to the customer. However, due to the issue of infrastructure deficit in Nigeria, capable organisations can circumvent the challenge by using the internet of things (IoT). It is unimaginable that some Nigerian organisations are yet to leverage IoT’s capability to drive some critical aspects of their supply chain and operations towards enabling real-time synergy with their suppliers and customers.  IoT helps in reducing supply chain complexities and disruption, thereby fostering lean supply chain architecture towards reducing the cost of operations and improving quality at the source of material flow to the organisation.  This is an emerging aspect of industry 4.0.

 

  1. Pull-work flow: Related to the usage of IoT towards driving low-cost operations and sustaining consistent quality from the supplier’s end is the pull-flow value tactic. This tactic uses the demand flow from the customer end to activate the production of a service or item.  Due to the challenge of infrastructure deficit in the Nigerian operations environment, most organisations tend to use the push-flow value tactic because of the likelihood of supply chain disruptions. The pull-flow value can be leveraged with human capital based on an attuned management infrastructure.  A management infrastructure that exists in the constant attuning of the operating system, mindset, and behavioural of organisational employees would work in tandem with the pull-flow tactics in driving a comparative advantage.
  2. Total preventive maintenance: This is not only an operational tactic for forestalling equipment failure, it can also be used for the improvement of value stream flow from upstream to downstream along with the entire supply chain hub as a competitive edge.

 

Disruptions are bound to occur, but operations leaders that proactively explore areas of synergy with their suppliers and suppliers’ suppliers, pull-flow tactics of value delivery, alignment of management infrastructure with operating systems and mindset cum behavioural aspect of their organisations have a competitive advantage in this evolving global economy.

 

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