Question

cost

Definition

Process consideration

example

Low-cost operations

Delivering a service or a product at the lowest possible cost to the satisfaction of external or internal customers of the process or supply chain

To reduce costs, processes must be designed and operated to make them efficient using rigorous process analysis that addresses workforce, methods, scrap or rework, overhead, and other factors, such as investments in new automated facilities or technologies to lower the cost per unit of the service or product.

Costco achieves low costs by designing all processes for efficiency, stacking products on pallets in warehouse-type stores, and negotiating aggressively with their suppliers. Costco can provide low prices to its customers because they have designed operations for low cost.

QUALITY

Top quality

Delivering an outstanding service or product

To deliver top quality, a service process may require a high level of customer contact, and high levels of helpfulness, courtesy, and availability of servers. It may require superior product features, close tolerances, and greater durability from a manufacturing process.

Rolex is known globally for creating precision timepieces

Consistent quality

Producing services or products that meet design specifications on a consistent basis

Processes must be designed and monitored to reduce errors, prevent defects, and achieve similar outcomes over time, regardless of the “level” of quality.

McDonald’s standardizes work methods, staff training processes, and procurement of raw materials to achieve the same consistent product and process quality from one store to the next.

Time

Delivery speed

Quickly filling a customer’s order

Design processes to reduce lead time (elapsed time between the receipt of a customer order and filling it) through keeping backup capacity cushions, storing inventory, and using premier transportation options.

Netflix engineered its customer relationship, order fulfillment and supplier relationship processes to create an integrated Web-based system that allows its customers to watch multiple episodes of a TV program or movies in rapid succession.

On time delivery

Meeting delivery-time promises

Along with processes that reduce lead time, planning processes (forecasting, appointments, order promising, scheduling, and capacity planning) are used to increase percent of customer orders shipped when promised (95% is often a typical goal).

United Parcel Services (UPS) uses its expertise in logistics and warehousing processes to deliver a very large volume of shipments on-time across the globe.

Developmental speed

Quickly introducing a new service or a product

Processes aim to achieve cross-functional integration and involvement of critical external suppliers in the service or product development process.

Zara is known for its ability to bring fashionable clothing designs from the runway to market quickly.

FLEXIBILITY

customization

Satisfying the unique needs of each customer by changing service or product designs

Processes with a customization strategy typically have low volume, close customer contact, and an ability to reconfigure processes to meet diverse types of customer needs.

Ritz Carlton customizes services to individual guest preferences.

Variety

Handling a wide assortment of services or products efficiently

Processes supporting variety must be capable of larger volumes than processes supporting customization. Services or products are not necessarily unique to specific customers and may have repetitive demands.

Amazon.com uses information technology and streamlined customer relationship and order fulfillment processes to reliably deliver a vast variety of items to its customers.

Volume flexibility

Accelerating or decelerating the rate of production of services or products quickly to handle large fluctuations in demand

Processes must be designed for excess capacity and excess inventory to handle demand fluctuations that can vary in cycles from days to months. This priority could also be met with a strategy that adjusts capacity without accumulation of inventory or excess capacity

The United States Post Office (USPS) can have severe demand peak fluctuations at large postal facilities where processes are flexibly designed for receiving, sorting, and dispatching mail to numerous branch locations.