The Market Requirements Perspective

The Market Requirements Perspective

In this lesson, you’re expected to learn:
– how competitive factors affect an organization’s performance objectives
– the difference between ‘order-winning’ and ‘order-qualifying’ factors

Customer Influence On Performance Objective

Performance objectives should reflect the competitive factors valued by customers.

• Obviously, an organization wants to satisfy the requirements of its market.

• Although understanding the market is the domain of the marketing function, it is also relevant to operations management.

• Without an understanding of the market requirements, it is impossible to prioritize performance objectives, which is the tool on the basis of which an organization seeks to satisfy market needs.

The factors valued by customers are called competitive factorsand must be matched by the organization’s performance objectives, as exemplified in the figure below:
Enlarged version: http://bit.ly/2nKqNjI
Order winning and Order qualifying Factors
A particularly useful way of determining the relative importance of competitive factors is to distinguish between ‘order-winning’and ‘qualifying’ factors.
What are order-winning factors?

Order-winning factors are those that directly contribute to winning business. They are regarded by customers as key reasons for purchasing the product or service.

Qualifying Factors

Qualifying factors are not major determinants of success, but are important in another way. They need to be just above a certain level to be considered by the customer.

Performance below this ‘qualifying’ level of performance will possibly disqualify the company. Further improvement above the qualifying level is unlikely to gain the company much competitive benefit.

Order-Winning Factors, Qualifying Objectives & Other Factors
Enlarged version: http://bit.ly/2o4BDTF
[Optional] Order-Winning and Order-Qualifying Criteria
Competitive factors can be easily classified into order winning and qualifying criteria with the help of a scale.
The nine-point importance scale serves to classify competitive factors according to their level of importance.

Source: Slack et al. (2010)
Enlarged version: http://bit.ly/2oLGfR4

Each competitive factor is rated from 1 to 9 (you can survey your clients, for example), such that 1 is the most important and 9 is the least important.
Later, we are going to talk about how to use these results in order to prioritize operations improvement.
Enlarged version: http://bit.ly/2oLGfR4
Consider this example of banking services and observe how the market requirements differ and its impact on performance objectives.
Different banking services require different performance objectives.
Enlarged version: http://bit.ly/2nkJA9Z
[Optional] Order Qualifiers and Order Winners
Watch this 4-minute video by David Goldsmith to learn more:
https://www.youtube.com/watch?v=GJyTdZAvzPM
[Optional] How Order Winners Regress and become Order Qualifiers
Here’s another video (3-min) by David Goldsmith on order winners and qualifiers:
https://www.youtube.com/watch?v=8UPP6CwwqK4
Jim Rohn