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408 SUPPLYNETWORKS:DEVELOPING ANDMAINTAININGRELATIONSHIPS ANDSTRATEGIESDell, and Comapaq. Here, individual components and
modules, rather than finished goods, are sent to the dis-
tributor, who assembles, tests, and delivers the individual
orders.
It seems clear from our research that an organiza-
tion’s operational strategy will evolve over time through
dealings with suppliers and customers—indeed many
strategic components may, in fact, be introduced at
their behest (Lowson, 2001b). Further, the model is
dynamic—changing constantly as new building blocks
are introduced. However, this inherent complexity pro-
vides strength. The complementarity, or cohesion, be-
tween the various components (those having both a
strong and a weak emphasis) will determine the differ-
ence between world-class operations strategies, those that
are merely efficient, and those that are suboptimal or
dysfunctional.
Despite having common building blocks, these opera-
tions strategies will have a unique and individual empha-
sis that is dictated by a number of factors, such as types
of trading partners, supply system configurations, and
demand behavior. Here, we can further develop Fisher’s
(1997) conceptualization of supply chains. He argues that
there may be a difference between “physically efficient”
and “market responsive” supply chains, based upon their
purpose in supplying functional or innovative products
and upon the requisite demand patterns. Although Fisher
confines his dichotomy to supply chains rather than the
full range of operations strategies, he accepts the no-
tion that different supply chains satisfy different demand
types. This research allows us to advance a different di-
mension. First, it seems possible that a firm may use a
number of components that are blended into strategic ar-
chitectures that match the exigencies of the competitive
environment. Second, we can also postulate that a supply
network operations strategy will have distinct building
blocks that provide the necessary and unique emphases
to each situation. We can now examine how this strategic
customization is undertaken and the important role that
supply network relationships play.Customization of a Supply Network
Operations Strategy
The supply network operations strategies employed by
a firm in any sector are likely to contain certain com-
ponents that are combined with particular emphases; it
is likely that this act of combination or blending will
confer strategic status. If, for example, supply manage-
ment, time-based competition, and sourcing are of par-
ticular strategic importance. An organization will accord
operations strategy status to that combination of compo-
nents. Again, the following points can be made: (a) Some
building blocks will be common across a number of com-
mercial sectors dealing with particular products or ser-
vices. However, there will be others that may be essential
to a specific industry that might be peculiar to that setting.
(b) Apart from these ingredients of an operations strategy,
there will also be other influences on its final shape. The
emphasis place upon particular building blocks and their
linkages is unique to the operations strategy and provides
its sustainable competitive advantage.These distinct operations strategy “architectures” rein-
force Porter’s (1996) belief that strategy is mainly a matter
of capability development and that activities are the basic
units of competitive advantage. An organization, he sug-
gests, will adopt a distinct “strategic positioning”; it will
compete on the basis of flexibility, cost, quality, speed,
diversity and variety, and so forth. Here, strategic posi-
tioning means “performing different activities from rivals
or performing similar activities in different ways” (Porter
1996, p 3).
In contrast, he describes “operations effectiveness” as
“performing similar activities better than rivals.” Clearly,
operations effectiveness depends on the correct supply
network operations strategy that is a unique blend com-
bining various building blocks. Our premise is that any
supply network operations strategy is aimed at perform-
ing key operations activities better than rivals, thereby
providing support for the overall strategy of a firm, as well
as serving as a firm’s distinctive competence. Companies
can quickly imitate individual activities, but not the way
they are combined to form a unique architecture. How-
ever, in order to tailor an operations strategy in this way,
we must first understand how the building blocks of the
strategic architecture can be put together.
What factors or situations dictate whether a particu-
lar blend of components is adopted? In other words, do
the particular blends vary by demand situation? Develop-
ing an optimal operations strategy is clearly a complex
challenge. Detailed consideration has to be given to the
fusion of building blocks and the emphasis that each can
provide in a particular situation. Many firms operating
in volatile markets are only now coming to grips with
one type of operations strategy; in the future, there will
be a number of strategies, each holding a different sig-
nificance. Perhaps more disturbing, all will be fluid and
transitory.
Our research suggests that there are three “drivers”
that will shape decisions about the supply network oper-
ations strategy and its various building blocks. These are
product group demand behavior, supply network behav-
ior, and supply network performance metrics. In Figure 6
we detail a “filtration process” to explain the customiza-
tion concept.
Figure 6 graphically displays the three main forces
shaping a supply network operations strategy; we will deal
with each of these in a moment. The driving forces shape
the building blocks contained in the strategy (the compo-
sition matrix) by influencing both the type of component
and the emphasis it is given. In this example, the orga-
nization has three strategies, each being customized for
a product group and/or customer. These strategies, then,
drive future operational management activities in support
of a particular product or service. For example, empiri-
cal research reported in Lowson (2002, chap. 4) detailed
how the Aztec Retail Group, a U.S.-based apparel manu-
facturer and retailer, embarked on the development of a
quick-response operations strategy. However, once work
was begun to map the various value streams, it soon be-
came clear that product and customer types were impor-
tant. The same garment would have different operational
needs depending on the type of customer (other retail-
ers, own branches and showrooms, department stores).