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Managing organisations - Process and strategy

The fiercely competitive business of supplying office products provides a limited area for achieving competitive advantage. Most everyday office products are available from all suppliers in the same specifications. Differentiation of one supplier over another rests on price and on speed of delivery.

Viking, has invested in really fast processes for dealing with customer orders. Good IT, a high level of in-house stock, good hardware and dispatch processes and really efficient carriers guarantee next day delivery without fail. This is a classic example of processes supporting the strategy of business.

Ratner’s the jewellers, in its heyday, invested heavily in inventory replenishment processes at its high street stores. One of the company’s primary customer groups was young teenage women. Their shopping patterns were such that once an item was bought, the young woman’s friends, having seen it, would also want one. This created ‘runs’ of sales which were only profitable if the shop carried the stock to satisfy a flurry of demand.

The use of electronic point of sale inventory control systems enabled Ratner’s to monitor centrally the stock movements in all of its shops. By rapid overnight stock replenishment they were more able than competitors to reap the benefit of this distinctive customer buying pattern. In other words, Ratner’s internal processes supported a particular organisational stock replenishment strategy across the company’s several hundred retail outlets.

An increasing focus for many companies, particularly in the high technology area, is to reduce cycle time, the time taken for the design, development and launch of new products. This means that the processes by which products are developed must be really fast. Technology (CAD/CAM) often accelerates the design process, but backing it up must be fast decision making on investment and resource allocation. Additionally, the processes by which the products are brought to the market – marketing, selling, channel distribution and so on – must support rapid error free launches.

Among the reasons that business process re-engineering has become so widely practiced is that a fairly common strategy among companies is to reduce cost of internal operations. To have an organisation which operates at an overhead cost less than that of competitors plainly provides an element of competitive advantage. At least it provides the organisation with slightly more time to manoeuvre in the event it loses market share unexpectedly or suffers some other competitive setback.

Excerpts from The University of Leicester Diploma in Management – Resource Development International (RDI) Jamaica. www.rdijamaica.com
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