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Framework
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operat
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capab
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A
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iterature
rev
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w
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new
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Cinzia Sansone (cinzia.sansone@ju.se)
Department of Industrial Engineering and Management School of Engineering, Jönköping University, Sweden
David Eriksson
Department of Industrial Engineering and Management School of Engineering, Jönköping University, Sweden
Per Hilletofth
Department of Industrial Engineering and Management School of Engineering, Jönköping University, Sweden
Abstract
Thispaperinvestigates critical operations capabilities discussedintheliterature. Thefield is constantly evolving and in need of overview. The research is based on a systematic literaturereview,including afinal sample of 157 peer-reviewed papers. Previously, cost, flexibility, quality, delivery, and service were consideredthe main dimensions of critical operations capabilities. This paper alsoidentifiedinnovation and environment, as well as theiressential capabilities.Intotal, 21 operations capabilities were detected.Implications includetheimportance of understandingthe dynamics between operationscapabilities andtheir context, andto constantly be vigilant for newtrends.
Keywords: Operations strategy, operations capability,priority, review
Introduction
Operations strategy is the effective use of operations strengths as a competitive tool to reach businessandcorporate goals(Swamidass, 1987).Itis guided bythecorporate strategy(Koufterosetal., 2002), whichiscentraltothe development ofcompetitive advantage. Competitive advantage has focused on corecompetencies (Ward et al., 1996) and strategy (Porter, 1996), but competitive pressures and changing market landscapes have created a more complicated competitive situation (Hilmola et al., 2015; Eriksson et al., 2013; Wang & Cao, 2008). Events such asthe economic crisis of 2008 and changing demands fromthe customers punish practitionersthat are not ontop oftheir game.
Researchers have notedthatitisstill not determined howto balancecompetitive priorities and operations capabilities, which can have a negative effect on organizational performance (Sarmiento et al., 2008). Thelack of such frameworksis a shortcomingin theresearchfield(Koufteros et al., 2002; Santos-Vijande et al., 2012). For many reasons, such asfuture direction ofthe organization andtheirimportancefor strategy, competitive
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priorities and operations capabilities needto beidentified and established (Hilmola et al., 2015; Phusavat & Kanchana, 2007).
To better understand howto create competitive advantagein a competitive market and to start and addressthelack of frameworks,the purpose ofthis studyistoinvestigatethe topic of operationscapabilities withinthe operationsstrategyareaandto proposea complete framework. As to operationalize the purpose, twospecific research questions were developed:
(1) What arethe critical operations capabilities discussedintheliterature? (2) How has the emphasis on variousoperations capabilities changed overtime? The purposeisaddressed byacontent analysis of papersidentifiedinasystematic literature review. Out of morethan 2000 papersinitiallyidentified, 157 wereincludedin the final analysis.
Methodology
Astructuredliteraturereviewis“anexplicit,andreproducible designforidentifying, evaluating andinterpretingthe existing body of recorded documents” (Fink, 2005, p. 3). A key part ofthe methodologyisto, based onthe research questions, develop a protocol fortheidentification, selection,andreview ofrelevantliterature(Ashby et al., 2012). The review conducted is detailedin each step, so astoimprovethetransparency ofthe process, reduce researcher bias, and enable replication (Crossan & Apaydin, 2010).
Table 1 – Inclusion and elimination process
Step Explanation Sample
1 Search: ("operations" OR "production" OR "manufacturing" OR "supply chain" OR "strategy") AND ("competitive priority" OR "performance objective" OR "manufacturing objective" OR "Intended critical factor" OR "business priority" OR "strategic priority")
787
2 Search: ("operations" OR "production" OR "manufacturing" OR "supply chain" OR "strategy") AND ("competitive priority" OR "performance objective" OR "manufacturing objective" OR "intended critical factor" OR "business priority" OR "strategic priority") OR ("competitive capability" OR "manufacturing capability" OR "strategic capability" OR "strategic dimension" OR "cumulative capability" OR "dynamic capability" OR "operational capability" OR "realized success factor" OR "competitive dimension")
2081 (+1294)
3 Search: ("operations" OR "production" OR "manufacturing" OR "supply chain OR "strategy") AND ("competitive priority" OR "performance objective" OR "manufacturing objective" OR "intended criticalfactor" OR"business priority" OR"strategic priority") OR ("competitive capability" OR "manufacturing capability" OR "strategic capability" OR "strategic dimension" OR "cumulative capability" OR "dynamic capability" OR "operational capability" OR "realized success factor" OR "competitive dimension") OR ("manufacturing strategy" AND "taxonomy")
2089 (+8)
4 Abstract review and paper elimination 446 (-1643) 5 Paper review, and paper elimination 157
(-289)
Forthis review,three areas of keywords were searchedin Scopus,these are ‘operations strategy’, ‘competitive priority’ and‘competitive capability’, andthis was donein March 2015. The resulting papers werethen eliminatedin a stepwise process (Seuring & Gold,
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2012), including abstract review and paper review. The complete search and exclusion processis presentedin Table 1.
The content analysis followed that of Seuring and Gold (2012), which is centred on summary, explication,and structuring. This is done in a four-step process: (1) material collection, (2) descriptive analysis, (3) category selection, and (4) material evaluation. Descriptive analysis
Theliterature review revealed a steady growth of papers, startingin 1991 (Figure 1). For the comparison,three papers from 2015 were excluded, duetothetimeof year when the review was conducted. As can be seen, the field has been growing steadily, and since 2008the number of publications per year has been inthe double-digits.
Figure 1 – Papersinthefinal sample, numbers added cumulative per year
Figure 2 – Distribution of publications perjournal
Figure 2 illustrates the distribution of publications per journal. International Journal of Operations & Production Managementisthelargest outlet with 25 publications.Itis followed by Journal of Management (18), International Journal of Production Research (14),International Journal of Production Economics(14),Industrial Management & Data
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 16% 12% 9% 5% 4% 4% 50%
InternationalJournal of Operations & Production Management
Journal of Management
InternationalJournal of Production Research
InternationalJournal of Production Economics
Industrial Management & Data Systems
Production Planning & Control: The Management of Operations
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Systems (6), and Production Planning & Control (6). Half ofthe sample journalscontain 5 orless publications each. Itis noteworthythat about one quarter ofthejournalsincluded intheliterature review only have one paper onthetopic.
The publishedresearchis dominated bysurveys, whichimpliesthatthefieldis explanatory,ratherthanexplorative. Thiscan becontrasted with newerareas of SCM research, such as sustainability, where case studies andinductiveresearch wereidentified as most prevalent(Ashby et al., 2012). The different approachesidentifiedinthisresearch are as follows:
• Survey, 62%
• Multiple methods, 12% (two or more approaches) • Case studies, 12%
• Reviews, 11% • Modelling, 3%
Case studies and surveys are constructed to understand a certain phenomenon in its naturalsetting, whichincludesconsideringthecontext(Williamson, 2002).Itcould, accordingly, be argued that a critical realism (Bhaskar, 1978) is a suitable ontology for researchinthisfield because criticalrealismfocuses specifically ontheinterplay between contextual factors and mechanisms that generate events (Aastrup & Halldórsson, 2008; Eriksson, 2015). Thereis also arather high amount ofliteraturereviews conductedinthe field. This is not to discourage future literature reviews since competitive priorities and operationscapabilities areevolving overtime(Alsmadietal., 2011),andreviewsare importantto capture newtendencies and streams withinthe research field.
Figure 3 – Occurrence of elements overtime (N=154)
The literature review identified seven dimensions addressed in literature: cost, quality, delivery, flexibility andservice, which have been established by earlierresearchers (Frohlich & Dixon, 2001; Miller & Roth, 1994),and two new dimensions:innovation and environment. The occurrence ofthe dimensions, overtime,is presentedin Figure 3. The environment wasfirstaddressedin 1997,and has beenaddressedevery year between 2007-2014. This development is congruent with the findings of Fassin & Van Rossem (2009), who noted that environmental research in SCM has grown since the turn of the millennia. Just as the environmental papers, innovation focused papers are showing up
0 2 4 6 8 10 12 14 16 18 199219951996199719981999200020012002200320042005200620072008200920102011201220132014 Cost Quality Delivery Flexibility Service Innovation Environment
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during the last decade and a half, and it seems reasonable to add this dimensions to the dimensions outlinedinthe mid-1990s and early 2000s.
Content analysis
The final framework of dimensions and operations capabilities is presented in Table 2. Cost, quality, delivery,andflexibilityareincludedina majority ofthe papers. These dimensionsare widelyadopted,andare often discussedinthesame paper. Serviceis addressedin about 15% ofthe papers,innovationis addressedin about everyfourth paper but hasincreasedinthelast years,andenvironmentseemsto beatopicjust gaining ground in operations capabilities. Theterminology forthe different dimensions is different among authors.
Table 2 – Dimensions of operations capabilities (please contactthe corresponding authorfor complete bibliographic details)
Dimension Capabilities Example References Cost 12. To. Productal costivt ity cosReducet, increase produc production andtiv diistytr.ibution 113 Quality 34. Performance . Conformance
5. Durability
High performance products and processes, few defects, durable products.
122 Delivery 6. Dependability
7. Speed Delivery precision, fast deliveries. 113 Flexibility 8. Volume
9. Production mix 10. Customization 11. Broad productline
Adjust production volumes, change product mix, customization, broad productline.
120
Service 12. Customer service 13. After sale service 14. Advertising 15. Distribution
Easy accessto product, after sales service, marketing,large distribution network.
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Innovation 16. New product 17. Newtechnology 18. New service 19. New market
Frequent productintroductions, implement newtechnologies, new service offerings, new and old market development.
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Environment 20. Processes
21. Products Envenvironmenironmentatalllyly fr friendiendlyly processes products,. 10
Thecost dimensioniscentred ontheabilitytoreduce totaland marginalcost. This includes, for example, production,inventory, and distribution (Avella et al., 2001; Chi, 2010; Dangayach & Deshmukh, 2001). Reducing costs is an important step in order to reducethe price ofthefinal product(Amaoako-Gyampah, 2003; Zhao et al., 2006), which is an important factor for competitiveness in certain markets (Zhao et al., 2002).While totalcostis perhapstheterm mostassociate withcosts,the dimensionisalso closely relatedtothe efficiencyin processes and productivity. Improved capacity utilization and labourproductivity reduces the marginal cost per product (Chi, 2010; Gonzalez-Benito & Suarez-Gonalez, 2010).
The quality dimension is growing increasingly important in global competition with high supply and saturation of markets (Alsmadi et al., 2011). Quality has multiple facets (Nair & Bolton, 2008), most common being the quality ofthe productitself (e.g. Zhang and Chen, 2008), whichisreflectedinthe product’s abilityto perform asintended andits durability. Qualityin productsisalsorelatedtotherelative quality between products, conformance,anditisthusimportantto have operations withaneven, high-quality, output (Dangayach & Deshmukh, 2008).
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The delivery dimension can be described with the ability to deliver a product to the customer (Corbett & Claridge, 2002). The dimension partly consists of delivery speed, which creates several operational advantages, but also dependability, so that processes are not disturbed. Speedis sometimes discussed as afunction of time, whichismeasured in multiple ways, such as production lead-time (Chi et al., 2009), manufacturing cycle -time(Devaraj et al., 2004), and production cycle-time (Ward et al., 1998).
Theflexibility dimensionconcernsthelevel ofadaptability of operationssystems, often addressed asflexibility or agility(Größles & Grübner, 2006). Flexibilityis essential toallocateresourcesastorespondto volatility(Phusavat & Khanchana, 2007). The dimensionconsidersflexibilityin volumes(Yusuf & Adeleye, 2002), production mix (Malhotra & Macklprang, 2012),customization(Dangayach & Deshmukh, 2001),and the abilityto offer a broad productline (Corbett, 1996).
The service dimension is important since the line between products and services are blurring;it haseven beenarguedthatthereis no tangible producttodaythat does not include service(Bolivar Cruz & Espino Rodriguez, 2008). Serviceis, accordingly, importantfor strategic positioning(Dekker et al., 2013).Customer serviceis animportant capability, but service does not stop oncethe product has reachedthe customer,itis also importantto provideafter-salesservice(Alsmadietal., 2011). Distributioncould be considered a capability of other dimensions, but broad distribution is also considered a service.Itis also considered animportant capabilityto be ableto advertise,thatis promote andinform,the product.
The innovation dimension is increasingly important for organizations (Krause et al., 2001). So muchsothatitis considered one ofthe primarysources ofsustainable competitiveadvantage(Laosirihongthongetal., 2014). Whilesomeauthorsconsider innovation as a meanstoimprove quality(e.g. Drake et a., 2013),the general view seems to be that it is of such importance and nature, that innovation is a dimension of its own (e.g. Gao & Tian, 2014). Innovationincludestheabilitytointroduce new products (Garrido et al., 2011),manage newtechnology(Crowe, 2007), create new services(Zhang et al., 2008), and acquiring new markets (Zhao et al., 2002).
The environmental dimensionisincreasinglyimportant and firms recognizethe interdependence betweenthe environment and andthemselves (Avella et al., 2011). The dimension can be seen astwo sided. One sideis considered withthe environmentalimpact of the product (e.g. Longoni & Cagliano, 2015). The other side is considered with the environmentalimpact of operation processes (e.g. Díaz-Garrido et al., 2011).
Conclusions
Answeringthe research questions
The first research question was formulated as follows: “What arethe critical operations capabilities discussedintheliterature?” The 21 critical operations capabilitiesidentified inliterature are summarizedinTable 2. However,the operations capabilities are specific and it is more suitable to understand them in groups, or dimensions,as they have been referred tointhis paper. Inliterature,therewere five generally accepted dimensions, as discussed by Frolich & Dixon (2001) and Miller & Roth (1994): includingcost, quality flexibility, delivery,andservice. Theresearchshowsthat,amongthese dimensions, service is the least discussed. Additionally, the research identified two new dimensions gainingtractioninthe field:innovation and environment.
The second research question was formulated as follows: “How has the emphasis on various operations capabilities changed over time?” The field has had a steady growth and atleastten publications per years since 2007. Itis, once again, hardto make detailed
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conclusions about individual operations capabilities, but the dimensions give an insight tothe changed emphasis overtime. Itis interestingto notethatthe environmental dimensioncould beidentified,a developmentthatisalso notedin SCMresearch on sustainability(Fassin & Van Rossem, 2009). Tentatively,itisreasonableto see a continued growth ofthis dimension. Serviceand innovation haslong been discussed withinthe field, butis yettojointhefour biggest dimensions, cost, quality, delivery, and flexibility.
Contributions andimplications
This research set out to propose a complete framework of operations capabilities. The constructedframeworkis presentedin Table 2. It contains seven dimensions, out of which five were recognized byearlier publicationsinthefield, and twoadditionalcould be discerned inthis research. Subsequently,the conclusions inthis paper are both a continued development ofthe body of knowledgeinthe field and a verification of older knowledge. Operations strategyis not static, but needstorespondtoits context(Frohlich & Dixon, 2001).Itcouldtherefore beexpectedthatcertain dimensions gain orlose importance. Lookingintothefuture,itisreasonabletoassumethatresourcescarcity (Graedel et al., 2015)increasesthe needtoreduce quality defects andimprove designfor resourcerecovery, which would haveanimpact on howcompaniesareachievinga competitive advantage.
There aretwo mainimplicationsforresearchers. Thefirstisthatitisimportantto keep up withthe developments ofthefield. Eventhoughthe main operations capabilities have remained over time, new ones are emerging as the competitive landscape evolves. The second is that there is not yet a ‘theory of operations capabilities’ that account for the evolving context. Such atheory needtoinclude boththe phenomenon, operations capabilities; and the context, a changing global competitive landscape. If we develop a theory forthe current global competitivelandscape, we needto be attentivethatit might not betransferrable or as usefulinthe future.
The mainimplicationfor practitionersistheimportance of keepinganeartothe ground. Thatisrecognizingthat, while old dimensionsarestillimportant, new ones emerge withthe potentialto changethe competitivelandscape. In growing marketsthis might not be of such a bigissue, as economic growth can be sustained by protectingthe current marketshare. However,in highlycompetitive marketsand markets with no growthitisimportantto be abletoincreasethe market share andimprove efficiencyto increase competitiveness. Thisis a much more dauntingtask,but by understanding how dimensions changeitis possibleto get a clue on howto be competitive.
Limitations andfurther research
In future researchitisinterestingtotry and worktoward atheory of operations capabilities. Itisalsointerestingtoinvestigate howthecapabilitiesrelateto not only internal, but alsosupply chain operations capabilities(Hilletofth, 2012; Eriksson & Hedenstierna, 2012). Also, as can be seeninthis paper, some dimensions contain capabilitiesthatcould beassociated with other dimensions,forexample‘distribution’ whichis includedintheservice dimension and notthe delivery dimension. Similarly, product development, whichis hererelatedtoseveral operations capabilitiesinthe innovation dimension, has inresearch been discussedto beanimportant process for reducing a product’s environmentalimpact(e.g. Alblas et al., 2012; Eriksson & Svensson, 2016), and canthus belinkedtothe environment dimension.As alwaysin socialresearch itis hardto separatethe studied objectfromits context anditis hardto perform controlled experiments. Assuch, we might,atthe moment, needto besatisfied withtheory that
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describes and explains reality (Svensson, 2013, p. 468), while prediction seems only to be possible within a defined context.
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