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David Walters: Department of Business, School of Economic and Financial Studies, Macquarie University, Australia
Introduction
While marketing has been developing and refining its approach and contribution to corporate strategy so too has operations management. Marketing has extended its focus by becoming market strategy led (see Day, 1990; Webster, 1994; Best, 1997) while operations functions (materials management, manufacturing and logistics) have pursued an increasing involvement in contributing to corporate strategy.
This article takes the opportunity to consider the implications of these developments for the marketing/operations interface. It discusses recent developments in operations management and considers these from a marketing viewpoint. The article also uses the opportunity provided by Michael Porter's views on value as a strategy issue. Porter's contribution is interesting in that he suggests that many organisations demonstrate an inability to distinguish between operational effectiveness and strategy; "... is a problem for many." Porter (1996) claims: "The quest for productivity, quality and speed has spawned a remarkable number of management tools and techniques ... Although the resulting operational improvements have often been dramatic, many companies have been frustrated by their inability to translate these gains into sustainable profitability. And bit by bit almost imperceptible management tools have taken the place of strategy".
Operational effectiveness, claims Porter, is insufficient for long term competitive success. However, competitive strategy; "... is about being different ... the essence of strategy is in the activities - choosing to perform activities differently or to perform different activities than rivals". In essence Porter is suggesting strategic effectiveness is doing the right things; operational effectiveness is doing the right things right. Porter's model of a productivity frontier does not identify the entire problem. The productivity frontier, rather than being; "... the sum of all best practices at any given time ... the maximum value that a company delivering a particular product or service can create at a given cost ...", may be better viewed as a coordinated value creating process in which delivered customer value is optimised within a set of constraints imposed by the necessity to deliver long-term shareholder value (including "sustainable profitability and a strong positive economic cash flow"). Operational effectiveness is achieved by extending value creation into the implementation of the customer value delivery (see Figure 1).
Value strategy
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