Delivery on Quality, Price and Availability
Not all markets are concerned about high quality so we must define what the market requirement for "quality" actually is. What are the prevailing design standards. Higher quality than needed adds to costs and may not be required competitively. Of course the firm may wish to be an innovator/leader in terms of product/service design - operations has to be able to respond.
Delivering on Price
Price competition calls for operational cost reduction and improved efficiency (alongside all other objectives - flexibility, variety and quality etc). Where price competition is less intense, operations can concentrate on premium quality, more variety and responsiveness (unless they become complacent) . Monopoly producers have less incentive to offer variety or to address issues of quality - after all - the customer has no alternative source of supply. This is the classic market-force argument for monopoly and competition regulation.
Availability
Availability relates to
- the speed of making the good or service and
- the reliability with which this is achieved. Markets which require a rapid response usually demand supply from stock.
Retail groceries is a market requiring immediate response - the customer won't order a tin of beans in advance but may forgive the shop who, for once, is out of stock. being out of stock twice may lead them changing teir shopping habits and switching loyalties. By comparison demand for blood in a hospital emergency department requires immediate response and here reliability is of life saving importance.
In the furniture market we might compare MFI or IKEA furniture (immediate availability from stock) with furniture sales where the customer may expect to wait 6-8 for delivery of a new dining room suite. In heavy engineering, long lead times are common. A firm building an gas turbine may order important motorised valves twelve months before they are required with precise delivery specifications. If the valves are late, a multi-million inventment lies idle.
References
BOLA: Quality Management
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