Critical operations priorities and capabilities : A systematic literature review

Critical operations priorities

and capabilities

AREA: Industriell organisation och ekonomi med inriktning logistik och ledning AUTHORS: Christian Jebrail, Haris Krajina

SUPERVISOR: David Eriksson JÖNKÖPING 2020 May

Acknowledgements

Without you David Eriksson, none of this would be possible. By you providing us the perfect guidance and providing us with the correct mindset this thesis was made a lot more manageable. You have given us the courage to be the best versions of ourselves. May your force be with us… Jokes aside, we would like to thank David Eriksson, our families and better halves for the support they gave us throughout the whole process when writing this thesis. The many liters of coffee consumed gave us the power and energy to finalize the thesis within the set timeframe. A special thank you to Jönköping University for providing us with great guidance to become better versions of ourselves and evolve as members of this society. Because of all the hard work that was done during these years, we are now ready to go out into the real world and work hard, using the tools that were provided to us by Jönköping University.

Examinator: Leif-Magnus Jensen Supervisor: David Eriksson Credits: 15 hp

Abstract

An increased awareness on competitive priorities and capabilities has been seen among firms. The main focus of this research are the operations capabilities which are connected to the competitive priorities in a company. The purpose of this research is to investigate critical operations priorities and capabilities with the following two research questions:

RQ1: Which critical operations priorities can be identified in the literature? RQ2: Which critical operations capabilities can be identified in the literature?

The competitive priorities represent the company's future emphasis on the manufacturing, indicate the strategic position that is desired in the marketplace and support the corporate strategy. Operations capabilities can be defined as company-specific sets of skills, processes and routines which are developed within the operations strategy management. By conducting a systematic literature review seven priorities and 17 capabilities were identified in total. The developed taxonomy will help companies identify and develop their company-specific operations priorities and capabilities. It can also be used as a framework for other researchers within this area.

Table of content

1

Introduction ... 1

2

Frame of reference... 5

3

Research methodology ... 8

3.3 SYSTEMATIC LITERATURE REVIEW ...10

3.4 THE SEARCH FOR DATA AND ITS LIMITATIONS ...10

3.5 DATA ANALYSIS ...12

3.6 TRUSTWORTHINESS ...13

4

Descriptive analysis ... 14

4.1 DISTRIBUTION OF PAPERS OVER TIME AND JOURNALS ...14

4.2 APPLIED RESEARCH METHODS ...15

4.3 DISTRIBUTION OF PRIORITIES OVER TIME ...16

5

Content analysis ... 18

5.1 IDENTIFIED CRITICAL OPERATIONS PRIORITIES AND CRITICAL OPERATIONS CAPABILITIES ....18

5.2 COST PRIORITY ...19

5.3 QUALITY PRIORITY ...20

5.4 FLEXIBILITY PRIORITY ...20

5.7 SERVICE PRIORITY ...22

5.8 ENVIRONMENT PRIORITY ...22

6

Answering the research questions and implications ... 23

6.1 ANSWERING THE RESEARCH QUESTIONS...23

6.2 IMPLICATIONS ...24

6.2.1 Theoretical implications ... 24

6.2.2 Practical implications ... 25

7

Conclusions ... 26

7.1 CONTRIBUTIONS ...26

7.2 LIMITATIONS AND FURTHER RESEARCH ...26

8

References ... 28

List of figures

Figure 2: Delimitations to the research ... 3

Figure 3: Theories included in the frame of reference ... 5

Figure 4: The research questions connection to the method ... 8

Figure 5: Articles published throughout the years 1997-2019 ...14

Figure 6: Journals where the articles have been published ... 15

Figure 7: Methods used in papers, n = 36 ...16

Figure 8: Distribution of priorities over time ... 17

List of tables

Table 2: Scientific reasoning approaches... 9

Table 3: Summary of the research approaches... 9

Table 4: Search terms ... 10

Table 5: Delimitations of the search ... 11

Table 6: Search strings and sample generation ... 11

Table 7: Trustworthiness criterion described based on (Eriksson, Moral (De)coupling: Moral Disengagement and Supply Chain Management, 2014)... 13

Table 8: Identified competitive priorities and critical operations capabilities ... 18

Table 9: Competitive priorities identified in the research... 23

Introduction

1

Introduction

Section 1.1 will present the background. It will address how competitive priorities and capabilities could be used in order to create and gain competitive advantage. Section 1.2 will present the purpose and 1.3 the research questions. By presenting the purpose a higher understand regarding the use of this thesis will be made possible. Section 1.4 will present the delimitations of this research in context of the operations strategy. Section 1.5 will present the outline of this thesis.

1.1 Background of research

An increased awareness on competitive priorities and capabilities has been seen among firms (Phusavat & Kanchana, 2007). This could be related to an increased pressure from customers, in the form of higher expectations, higher globalization of markets and faster innovation (Wang & Cao, 2008). All of this has put increased pressure of companies to be competitive. There are many competitive strategies, for example with special or standard products (Porter, 1996). This area is captured under competitive advantage (Porter, 1996). The competitive advantage of a company is defined in the business strategy, which is transferred to the operations strategy (Figure 1) (Hayes & Wheelwright, 1984; Flynn et al., 1999). To best be able to reach a competitive advantage, companies have to connect their business strategy to their operations strategy (Skinner, 1969). This is not always easy to do, as different parts of the organization might have different goals (Khan et al., 2012).

Since the 1960s, many firms have moved their manufacturing from high cost to low cost environments (Jensen & Pedersen , 2012). Recent studies have shown that in order to stay competitive in a high cost environment, firms must consider their strategy in the form of operations capabilities (Phusavat & Kanchana, 2007).

Figure 1: Operations strategy, capabilities and performance (Based on Frohlich and Dixon, 2001; Größler and Grübner, 2006)

Introduction

Defining operations strategy requires the consideration of two fundamental parts (Leong et al., 1990). The first part is defined as priorities, with which they compete (Miller & Roth, 1994). Priorities are desired capabilities that according to Größner and Grübner (2006) show the companies wanted state. A priority can in simple terms be described as the “broad concept” and the capability as something more specific within that concept. To help explain this concept better, we can consider “cost” as a priority of a company, and by adding another term to it and making it more specific, it for example “production cost” it turns into a capability if that is something that the company and management consider to be important to the company in order to stay competitive. Management actions are guided by operations capabilities to develop suitable priorities (Koufteros et al., 2002). The second part is a result of the pattern created by the company's decision making. The pattern occurring is what decides the certain capabilities of the operation system (Hayes & Wheelwright , 1984). When management actions are implemented the result is operations capabilities, which are seen as the same as realized capabilities (Koufteros et al., 2002). The proposed taxonomies prior to this research where competitive priorities and capabilities are discussed are lacking in the way the connections of priorities and capabilities are structured in the literature. This can make it hard for companies to fully grasp the concept of which priorities and capabilities are discussed in the literature.

It is important for companies, in order to gain competitive advantage, to develop capabilities that are hard to copy by other companies. According to Swink and Hegarty (1998), these capabilities are the building blocks for competition between companies. Management actions help to develop capabilities from the company’s priorities using the knowledge and resources which the company currently possesses and is limited to (Figure 1).

1.2 Purpose

This thesis presents a systematic literature review within operations strategy with a focus on competitive operations priorities and capabilities. There are existing studies within operations strategy that discuss operations priorities and capabilities, but they are not clearly identified and structured. It is important that the operations priorities and capabilities are clearly identified and structured because they constitute the basis of a companys operations strategy and in which direction the company is headed towards (Phusavat & Kanchana, 2007). Thus, the purpose of this research is:

To investigate critical operations priorities and capabilities.

Identifying and structuring the critical operations priorities and capabilities in a manner that is easily understood by practitioners can give companies an advantage of swiftly understanding which capabilities and priorities are discussed in the literature. A well-structured framework that presents the priorities and capabilities that are readily discussed can help act as a catalysator for companies to identify their own priorities and capabilities that they need to develop or work on, in order to be more competitive.

Introduction

1.3 Research questions

Two research questions have been formulated in order to fulfill the purpose. The first step in fulfilling the purpose is to identify and present the critical operations priorities that are present in the literature.

RQ1: Which critical operations priorities can be identified in the literature?

The second step in fulfilling the purpose is to identify and present the critical operations capabilities that are present in the literature.

RQ2: Which critical operations capabilities can be identified in the literature?

In order for a company to gain a competitive advantage the critical operations priorities and capabilities must be identified. Thus, the first research question gives the researchers space to identify and present critical operations priorities. By expanding the concept of operations priorities, the second research question identifies and connects the critical operations capabilities to the priorities.

1.4 Delimitations

The focus of this study regards the operations strategy containing competitive priorities and operations capabilities. In order to reduce the complexity of the research the additional elements to Figure 1 are excluded, hence the research solely focuses on the elements fundamental to this research which is shown in Figure 2.

Figure 2: Delimitations to the research

1.5 Disposition

The study is divided into seven chapters:

Chapter 1 presents the introduction and the background of the research. From this the

purpose and research questions are formulated. The chapter is ending with the delimitations of the research.

Chapter 2 presents the frame of reference where operations strategy, competitive

priorities, and operations capabilities are presented.

Chapter 3 presents the research methodology.

Chapter 4 presents the gathered data from the systematic literature review.

Chapter 5 presents the analysis and discusses the findings. The chapter also includes

Introduction

Chapter 6 presents the answers to the research questions followed by the implications

of this study.

Frame of reference

2

Frame of reference

This chapter shows the frame of reference that is used within this thesis. This includes operations strategy, operations capabilities and competitive priorities. As the literature of this paper was collected through a systematic literature review, it was considered appropriate to explain the theoretical framework prior to presenting the methodology.

2.1 Introduction

For a company to be competitive and have an advantage over its competitors, they need to be flexible in order to adapt to the market-changes. They need to do something that differs them from the rest of the competitors, but also being able to retain this. This can be done in multiple different ways e.g. offering greater value for the customers or the same value at a lower price or by combining these two (Porter, 1996).

The main focus of this research is the operations capabilities which are connected to the competitive priorities in a company (Figure 3). These are determined by the operations strategy which decides the outcome of performance that the company has (Hayes & Wheelwright, 1984).

Figure 3: Theories included in the frame of reference

2.2 Operations strategy

A company’s long-term goal is survival and to be able to offer something of value to their customers. Slack and Lewis (2020) describe strategy as setting broad goals that direct the company towards an overall goal and how to reach that goal, while focusing on long-term goals. The operations strategy plays a big role in developing a competitive advantage for the company. Skinner was the first to contribute to the investigation of strategy when he in 1969 (p. 139) defined strategy as “a set of plans and policies by which a company aims to gain advantages over its competitors”.

The concept of operations strategy has been defined in different ways over the years. Another definition of operations strategy proposed by Slack and Lewis (2020, p.46) is that operations strategy is:

“The total pattern of decisions that shape the long-term capabilities of any kind of operation and their contribution to overall strategy, through the ongoing reconciliation of market requirements and operation resources.”

While operations strategy meets the requirements that are set by business strategy, it also helps the organization to develop new opportunities and go into new markets by merging customer requirements with operations capabilities (Beckman & Rosenfield, 2008).

Frame of reference

According to the definition by Slack and Lewis (2020), operations strategy can be seen from two viewpoints. One of the views which operations strategy can be seen from is the market-based view which refers to the external factors. Manufacturers have changed their output based on which trends there has been changes in market demand (Frohlich & Dixon, 2001). The second viewpoint is the resource-based view which refers to anything which can be seen as a strength or weakness internally within a company (Wernerfelt, 1984).

The approach towards manufacturing has historically been through bottom-up where according to Leonard-Barton (1992), the organization learns from its experiences, developing and improving the operational capabilities as managers try new things by trial-and-error by using their workspace as a kind of “learning-laboratory”. The problem that is associated with the bottom-up perspective that is carried out in this way is that the firm might not be able to recognize what its operations strategy is. Skinner (1969) proposed to use “top-down” perspective in manufacturing where the company starts by analyzing its competitive strategy by looking into how its existing resources and capacities are being used in order to be competitive.

2.3 Competitive priorities

Competitive priorities work as a guide for the company, by containing intentions which are set to provide the managers with guidance throughout decisions and actions. The competitive priorities represent the company's future emphasis on the manufacturing, indicate the strategic position that is desired in the marketplace and support the corporate strategy (Hung et al., 2015). In order for the company to not get less productive it is important for them to understand the importance of their competitive priorities (Takala, 2002).

There are five competitive priorities that have been considered as the fundamental part; price, flexibility, quality, delivery and service (Frohlich & Dixon , 2001). According to Sansone et al. (2020), studies have shown that there are more than just these five. There are two additional competitive priorities that have been identified and starting to gain recognition; innovation and environment.

2.4 Operations capabilities

Operations capabilities can be defined as company-specific sets of skills, processes and routines which are developed within the operations strategy management. These operations capabilities are frequently embedded in the company’s daily work by solving problems regarding the arrangement of its operational resources (Wu et al., 2010).

Operations capabilities often failed to be noticed, even though they are seen as the secret ingredient to the development and the maintenance of competitive advantage (Wu et al., 2010). Hence, it is important for a company to identify and develop their company-specific sets of skills.

Miller and Roth (1994) proposed a taxonomy which has been accepted in academia. By generating the starting point for operations capabilities researchers have used the taxonomy till today and some managed to update it through diligent research. There is at least one capability defined to every competitive priority, which is described in Table

Frame of reference Table 1: Taxonomy of operations capabilities (Miller and Roth, 1994)

Competitive priorities Capability Defined as the capability to

Price Low price Compete on price

Flexibility

Design flexibility Make rapid design changes and/or introduce new product quickly

Volume flexibility Respond to swings in volume

Broad product line Deliver a broad product line

Quality Conformance Offer consistent quality

Performance Provide high-performance products

Delivery Delivery Speed Deliver products quickly

Dependability Deliver on time

Service After-sales service Provide after sales service Broad distribution Distribute the products

broadly

Advertising Advertise and promote the product

For companies it is highly important to understand which capabilities are suitable in order to support their business and manufacturing goals. By understanding which capabilities are suitable the company needs to build and develop these (Hallgren, 2007). Companies which are not interested in sustaining and developing their capabilities risk losing performance and economic profit within their company (Zawislak et al., 2014).

Research methodology

3

Research methodology

This chapter presents the method of choice. It will start by presenting a simplified connection between the two research questions and the method of choice. This includes the research approach, outline of the data collection and then a description of the data analysis. Last the reliability and validity of the study is discussed.

3.1 Introduction

The first chapter of the method will present how the research questions have been answered by using a systematic literature review. Figure 4 simplifies the connection between the research questions and the method of choice.

Figure 4: The research questions connection to the method

In order to answer the two research questions a systematic literature review has been conducted. Reviewing the literature information on what operations priorities and capabilities that are critical for companies have been identified and structurally presented.

´

The following chapter will undertake information that is highly important for the reader regarding how the systematic literature review was conducted and why the method of choice was seen as the most suitable.

3.2 Research approach

The purpose of this study is to investigate critical operations priorities and capabilities that allows companies to be competitive by conducting a systematic literature review. The study is based on prior research conducted within the area of critical operations priorities and capabilities.

Research methodology

In order to increase the validity of a research it is very important to illustrate the research approach (Creswell, 2007). Deductive and inductive reasoning are two scientific reasoning approaches which differs in ways of how the research is conducted, which is explained in Table 2.

Table 2: Scientific reasoning approaches

Deductive

The research starts from general concepts then focuses it down to a more specific concept which has been based on theory. By using the specific concept to create a hypothesis which is followed by an observation.

Inductive

Collecting data through observations is the first step, then analyzing the collected data. The analyzed data is then used to create a general concept or model.

The thesis was based on three main general concepts of “operations strategy”, “competitive capabilities” and “competitive priorities” and all data that was relevant to the main concepts and was present in the current literature were gathered. Hence, this research is considered to have used a deductive approach. However, it only follows the initial step of deduction, where literature is used to create the framework used for future analysis (Eriksson, 2015).

There are three different types of research approaches; qualitative, quantitative and mixed research approach. Patel and Davidsson (2019) claim that a greater number of researchers use a mixed research approach by simultaneously using both a qualitive and a quantitative approach. A systematic literature review can contain a qualitative as well as quantitative research approach (Pluye et al., 2009). The three research approaches are described in Table 3.

Table 3: Summary of the research approaches

Qualitative

The qualitative approach is used when the research questions are requiring textural data. A more holistic approach which uses discovery as a driving factor.

Quantitative

The quantitative approach is often used when research questions are requiring numerical data to be answered.

Mixed The mixed approach uses a combination

of both numerical and textural data.

The systematic literature review includes a mix of quantitative and qualitative aspects where the structural (descriptive analysis) as well as content (content analysis) are analyzed (Seuring & Müller, 2008). The descriptive analysis in this thesis was done by collecting and presenting numerical data and is therefore considered to be quantitative. The content analysis focused more on the textural data and is more towards the qualitative approach. Hence, this thesis was conducted using a mixed approach.

Research methodology

3.3 Systematic literature review

In order to answer the research questions and thus fulfill the aim of this research, a systematic literature review was conducted. Due to the fact that there is extensive research done in this area concerning operations capabilities and priorities, this method was chosen to systematically evaluate existing literature. A research literature review is defined by Fink (2005, p.3) as “a systematic, explicit, and reproducible method for identifying, evaluating, and synthesizing the existing body of completed and recorded work produced by researchers, scholars, and practitioners”. According to Kaufmann and Denk (2011, p. 65) literature and theories can be seen as data in research. Being open with the procedure is important for replication and is therefore an important part of how the quality of the systematic literature review is evaluated (Crossan & Apaydin, 2010). When the literature review is done correctly, it is a very powerful source of information for decision-makers and practitioners (Paré et al., 2015). There are many ways of conducting a literature review, depending on whom it is conducted by and in which field. Six common steps are described by Templier and Paré (2015): (1) formulating the research questions and objectives, (2) searching the vast literature, (3) screening for which articles should be included in the review, (4) assessing the quality of the studies, (5) extracting the data and analyzing it, and (6) presenting the results. It is important that boundaries are clearly defined to narrow down the research, and that protocol is established for identifying, selecting and reviewing literature relevant to the specific question (Ashby et al., 2012).

3.4 The search for data and its limitations

The database that was considered to be most appropriate for the search of papers for the literature review was Scopus. The database includes relevant papers for the subject and gives a big sample of articles without the need of using any other database. By only using one database, the risk of failing to identify more articles within the area rises, but limitations were necessary in order to limit the amount of data collected.

A list of keywords was created based on three main concepts: “operations strategy”, “competitive priority” and “competitive capability”. By exploring the subject closer, more search terms were found and an elaboration of the concepts was done by defining synonyms (Table 4) that are related to the main concepts, in order to include as much as possible of the relevant research that has been done within the scope of the area. Adding the synonyms to the search strings gave a larger sample of relevant articles for the research.

Table 4: Search terms

Main Concept Terms (and synonyms) Search terms

Operations strategy

Operations strategy “operations strategy” Production strategy “production strategy” Manufacturing strategy “manufacturing strategy” Supply chain strategy “supple chain strategy”

Competitive priority

Competitive priority “competitive priority” Performance objective “performance objective” Manufacturing objective “manufacturing objective” Intended critical factor “intended critical factor” Business priority “business priority” Strategic priority “strategic priority” Competitive capability Competitive capability “competitive capability”

Research methodology

Strategic capability “strategic capability” Cumulative capability “cumulative capability” Dynamic capability “dynamic capability” Operational capability “operational capability” Realized success factor “realized success factor” Competitive dimension “competitive dimension”

According to Ashby et al. (2012), a systematic literature review requires defining clear boundaries in order to narrow down the research. The delimitations that were made in order to narrow down the research can be found in Table 5. The list of keywords that was created was set as a criterion for the field that was studied and had to be included in title, abstract or keywords of the article that was chosen in the sample. No time delimitation was set since the area of research had a history going back to first real contributions within operations strategy by Skinner (1969). Only papers that were published in academic journals were taken into consideration and they had to have been written in English.

Table 5: Delimitations of the search

Delimitations Explanation

Field Title, Abstract, Keywords

Time No time delimitation

Type of document Article

Source Journal

Language English

The search terms were combined into search strings and used in different rounds to generate a large enough sample of relevant articles, using Boolean logic. The steps that this was done in can be found in Table 6. The first round consisted of combining the search terms “operations strategy” and its synonyms together with “competitive priority” and its synonyms to check if a large enough sample could be generated. The first round generated a total amount of 174 articles. In the second round, “competitive capability” and its synonyms were added to the search and the total amount of 284 articles were obtained. In the third and final round “taxonomy” was added to the search. The last round provided a total amount of 61 articles which were considered to be a large enough sample for the literature review. The exact combinations of keywords and search strings are presented in Table 6.

Table 6: Search strings and sample generation

Round Search string (combinations) Sample (articles)

1 ("operations strategy" OR "production strategy" OR "manufacturing strategy" OR "supply chain strategy") AND ("competitive priority" OR "manufacturing objective" OR "business priority" OR "strategic priority")

174

2 ("operations strategy" OR "production strategy" OR "manufacturing strategy") AND ("competitive priority" OR "manufacturing objective" OR "business priority" OR "strategic priority") OR ("competitive capability" OR "manufacturing capability" OR "strategic capability" OR "cumulative capability" OR "dynamic capability" OR "operational capability" OR "realized success factor" OR "competitive dimension")

284

3 ("operations strategy" OR "production strategy" OR "manufacturing strategy") AND ("competitive priority" OR "manufacturing objective" OR "business priority" OR "strategic priority") OR ("competitive capability" OR "manufacturing capability" OR "strategic capability" OR "cumulative capability" OR "dynamic capability" OR "operational capability" OR "realized success factor" OR "competitive dimension") AND ("Taxonomy" OR "Framework")

Research methodology

In order to ensure that the articles that were identified discussed the topic that was being researched, a screening of the papers was performed. The screening was performed in two steps: abstract screening and article screening. The abstract screening was done by exporting the articles and reading all the abstracts and the article screening was done by reading the full article. From the initial sample of 61 articles, 52 articles remained after screening the abstracts to narrow down the number of articles. After screening the articles by reading the entire paper, 25 articles were excluded thus resulting in 36 relevant papers. The screening was based on the following inclusion and exclusion criteria:

• Articles discussing competitive priorities (or synonyms) • Articles discussing competitive capabilities (or synonyms)

• Papers describing competitive priorities (or synonyms) and/or competitive capabilities (or synonyms) within the operations strategy topic

• Papers that included a taxonomy of competitive priorities (or synonyms) and/or competitive capabilities (or synonyms)

• Papers describing or developing connections between operations strategy (or synonyms) and competitive priorities (or synonyms) or competitive capabilities (or synonyms)

• Papers that were addressing the competitive priorities (or synonyms) or competitive capabilities (or synonyms) in different environments

3.5 Data analysis

In order to be more efficient in the analysis and have a better overview of the information, a spread-sheet was created which contained different categories. The categories included the relevant data from each article that was needed, from the final sample: • Name of author • Year published • Title • Journal • Abstract • Method

• Priority discussed (if present) • Capability discussed (if present)

The final sample of articles was read and reviewed and all the relevant information that was needed from each article was added into the category that it fit into in a spread-sheet template.

After the categories were finalized and the template included all the relevant information, a descriptive analysis and content analysis were performed. The descriptive analysis was performed using different statistical tools to better present statistics concerning which year the articles were published, the most common journals, the method that was used in each article and how the priorities were distributed during the years. In the content analysis, the papers were categorized according to the priorities and capabilities that were extracted from the final sample. The priorities and capabilities

Research methodology

3.6 Trustworthiness

Trustworthiness can be described as confidence in data, methodology and interpretation which are used to retain quality in a study (Denzin & Lincoln , 2017). According to Lincoln and Guba (1985) trustworthiness within a qualitative research can be described in four general criterion which are credibility, dependability, transferability and confirmability. Further Lincoln and Guba (1985) claim that giving the reader an opportunity to evaluate the studies method and findings is seen as the most important criterion.

The main goal is to invite the reader into creating its own opinions regarding the research’s trustworthiness towards method and findings. Table 7 presents the researchers opinion regarding the systematic literature reviews approach towards creating a high sense of trustworthiness.

Table 7: Trustworthiness criterion described based on (Eriksson, Moral (De)coupling: Moral

Disengagement and Supply Chain Management, 2014) Trustworthiness

Criterion

Description Systematic Literature Review Approach Credibility Prolonged engagement Persistent observation Triangulation Peer debriefing Referential adequacy Member checks

Spend enough time in order to understand the context of the study. Take the time needed in order to reach a depth suitable for the study.

Checking data from multiple sources to ensure it is correct and understood.

Involving a disinterested peer in order to review the parts of the research that may be implied by the researchers Keeping some of the data raw in purpose to return to it later.

Allow the source whom supplied the data inspect the data in the study.

Thoroughly conducting a systematic literature review.

Reviewing multiple studies within the area.

Using multiple sources and crosschecking the empirical data with the frame of reference. Allowing students to review the research.

Collecting empirical data which is later discussed within the discussion. Researchers whom have conducted prior research within the area have reviewed the research.

Transferability The ability of providing a description detailed enough which allows someone interested determine if the findings are applicable in another study.

Introducing the research to researchers whom have or are conducting studies within the area. Dependability The opportunity for the reader to

examine the research process.

Reading through the findings, method and frame of reference multiple times.

Confirmability Evaluation of the result of the research and the consistency between theory, framework, data and

findings.

By continuously referring to the theory.

Descriptive Analysis

4

Descriptive analysis

In order to see if there were any patterns that connect the competitive priorities and capabilities to events occurring simultaneously or connections between the publishing journals, the distribution of papers over time and journals are presented in section 4.1. In the papers examined there are multiple methods used. To see if there are any methods that are more suitable to this type of research section 4.2 presents the applied research methods. Since competitive priorities are constantly used, it is important to see how they have been used over time. Hence, section 4.3 presents the distribution of priorities over time.

4.1 Distribution of papers over time and journals

The final sample that was analysed consists of 36 papers. The papers that were analysed in the descriptive analysis were distributed across a timeframe going from 1997 to 2019. As shown in Table 5, no time delimitation concerning publication year was set for the articles. However, the final sample did not include any articles published before the year 1997. The concept of operations strategy had research done before this time by Skinner (1969), upon which many of todays’ studies are based on. A development of the concept into competitive priorities and capabilities was not done during that time. The final sample of articles is shown in Figure 5. As can be seen in the figure, there was an increase in research done within the area of operations priorities and capabilities during year 2000. Interestingly, this increase in research of how companies can stay competitive and survive was done in the same year that the recession happened that affected the western world. A decrease in research the following years may suggest that companies managed to identify and adopt their competitive priorities and capabilities to survive this crisis. However, an increase in publications can be seen in 2010, which could be connected to the great recension of 2008. The reason that publications came two years after could be related to the fact that it takes time to get an article published. Both these increases in published articles suggest that there is a correlation between the need to identify and adopt competitive priorities and capabilities in order to stay competitive and survive economic crisis.

Figure 5: Articles published throughout the years 1997-2019 0 1 2 3 4 5

Descriptive Analysis

The articles that were obtained in the final sample were published in many different journals, which are presented in Figure 6.

Figure 6: Journals where the articles have been published

The journals that were of relevance to the systematic literature review cover many different areas, but the journal that had the most relevant articles to this systematic literature review was the International Journal of Production Research (4 articles). The journal that had the second most relevant articles was the International Journal of Operations and Production Management (3 articles), followed by Journal of Operations Management and Gestao e Producao (2 articles each). The list follows with several other journals that include areas which are researched in this study; operations management, decision management and production management. By finding articles from multiple different journals shows that the research area is widely adaptable and has not yet found its origin that it belongs to.

4.2 Applied research methods

There were four different types of research methods identified throughout the literature. The methods were then classified into different groups depending on which group was suitable for each specific method. The groups were (1) survey, (2) empirical study, (3) literature review, and (4) multiple. Researchers who used (4) multiple were using a combination of more than one research method, often combining (3) literature review with (2) empirical study. Distribution of the methods is presented in Figure 7.

0 1 2 3 4 5

International Journal of Production Research International Journal of Operations and Production Management Journal of Operations Management Gestao e Producao Manufacturing and Service Operations Management Journal of Industrial and Production Engineering Computers and Industrial Engineering Journal of Service Management International Journal of Lean Six Sigma Industrial Management and Data Systems Decision Sciences Management Science Production and Operations Management Integrated Manufacturing Systems

Descriptive Analysis

Figure 7: Methods used in papers, n = 36

As seen in Figure 7, 28% of the papers were using literature review as their main research method. Researchers that used survey as their main research method often based their survey on prior research that they had conducted within the same area. There were 14% papers using survey as their primary research method. Papers that used empirical study as their primary research method were 8% of the papers, thus being the research method with the lowest usage. 50% of the papers used multiple methods in order to fulfil the requirements of their research.

4.3 Distribution of priorities over time

The priorities identified in this research differ in how much they are discussed, depending on which year the paper was published. The distribution of priorities over time that were identified are presented in Figure 8. Since Miller and Roth (1994) presented their framework of priorities (cost, quality, flexibility and delivery) additional priorities has been identified. The seven priorities that are identified in this research and presented in Figure 8 are (1) cost, (2) quality, (3) flexibility, (4) delivery, (5) service, (6) innovation, and (7) environment.

Multiple 50% Literature review 28% Empirical study 8% Survey 14%

Descriptive Analysis

Figure 8: Distribution of priorities over time

The priorities by Miller and Roth (1994) have been accepted by researchers since being introduced, with additional priorities that have been added during the years. Peaks that can be seen in Figure 8 have no clear explanation to them, since there was no information regarding this in the papers that were analyzed. Most papers include these four priorities in their research which can be a reason why they have been reaching a peak simultaneously. In the 2000s, priorities started gaining more recognition, which is shown by the increase of mentions about cost, quality, delivery and flexibility in the literature. In 2014 an economic crisis in the form of deflation arose in Russia which made prices drop significantly. This could have triggered fear in many other countries making them focus more on their companies´ competitiveness. This may be the reason why the capabilities were reaching a peak in acknowledgement during 2014.

0 1 2 3 4 5 1997 1998 2000 2001 2003 2006 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cost Quality Delivery Flexibility Innovation Service Environment

Content Analysis

5

Content analysis

In section 5.1 each identified competitive priority and capability will be defined together with a definition that shows what ability each capability belongs to. Following this in sections 5.2-5.8 each priority-finding will be presented together with the capabilities identified within the priority. All presented competitive priorities and capabilities together with their definition was found throughout conducting a systematic literature review.

5.1 Identified critical operations priorities and critical operations

capabilities

The purpose of this study is to investigate critical operations priorities and capabilities that allows companies to be competitive. All identified critical operations priorities and capabilities are presented in Table 8.

Table 8: Identified competitive priorities and critical operations capabilities

Priority

Capability Definition Sources

Cost Waste elimination

Total cost

Capacity utilization rate

The ability to reduce costs of unused capacity.

The ability to reduce production and distribution costs.

The ability to use the

company’s resources to its full extent

(Göleç, 2015)

(Wu et al., 2010)

(Gao & Tian, 2014)

Quality Performance

Conformance

Durability

The ability to provide a product or process that has a high performance compared to other products or processes

The ability to fit the product or activity to its design

specification.

The ability to manufacture a product which is able to function properly with a strong use over a long period of time.

(Martín-Peña & Díaz-Garrido, 2008)

(Zhao et al., 2006; Ketokivi & Heikkilä, 2003)

(Dangayach & Desmukh, 2001; Safizadeh et al., 2000)

Flexibility Product customization

Volume

Production mix

The ability to customize products to fit the customers’ needs.

The ability to react to changes in volume regarding the customer needs.

The ability to react to unusual orders received from

customers, which are not in the

(Safizadeh et al., 2000; Cil & Evren, 1998)

(Avella et al., 1998; Chen et al., 2018)

Content Analysis

Delivery Dependability

Speed

The ability to meet delivery dates with the correct amount and specifications.

The ability to provide fast delivery and respond quickly to customer orders.

(Gonzalez-Benito & Lannelongue, 2014; Grant et al., 2013)

(Grant et al., 2013)

Innovation New product development

New technology

The ability to introduce updated or new products to the market. The ability to introduce updated or new technologies to a product or process.

(Hallgren, 2007; Zhao et al., 2006)

(Cil & Evren , 1998)

Service After sales services

Customer service

The ability to provide value-adding services after the purchase has been completed The ability to provide the customer with valuable information about the product that is value-adding for the product and making it easily available for the customer

(Avella et al., 1998; Guajardo & Cohen, 2018)

(Chen, 2016; Zhao et al., 2006)

Environment Minimize repercussion of manufacturing activities on different environmental elements Environmentally friendly products

The ability to design

manufacturing processes that are causing the minimal effect on the environment

The ability to manufacture products that have the minimal effect on the environment

(Pooya & Faezirad, 2017)

(Martín-Peña & Díaz-Garrido, 2008)

5.2 Cost priority

Cost can be defined as the priority that aims to decrease costs within the production, this by reducing inventory, increasing equipment and capacity utilization (Leitner & Filho, 2019). In order to gain a competitive cost companies should focus on eliminating waste that can affect the costs for a company. By not being able to increase the prices of products companies are in the risk of losing the market, and the only way to maintain profits is to decrease the costs (Göleç, 2015).

The first capability that was identified for the priority of cost was waste elimination. Waste elimination can be defined as the ability to reduce costs of unused capacity. The cost of waste is the cost that the company pays for overflow of material, working hours etc. that are not being used to its full capacity. By eliminating waste companies are decreasing costs and increasing profits (Göleç, 2015).

The second capability that was identified for the priority of cost was total cost. The totalt cost is the ability to reduce production and distribution costs (Wu et al., 2010). Pooya and Faezirad (2017) claim that by reducing the product cost companies can increase the profits per product. Reducing the product cost means that all costs

Content Analysis

The third capability that was identified for the priority of cost was capacity utilization rate. The capacity utilization rate can be defined as the ability to use the company’s resources to its full extent (Gao & Tian, 2014). If the resources are not used to its full capacity, the company is paying for more than they are using, and overall profits are reduced.

5.3 Quality priority

Quality can be defined as the ability to produce a product with high quality and high performance which is conformable and meets or exceeds the customers’ expectations (Lin et al., 2012; Gao & Tian, 2014). Lin et al. (2012) also describe quality as producing and delivering products that are of highest standards, consistently. In order to reach high quality products, the value-adding quality operations must be emphasized throughout the flow of the product life cycle (Göleç, 2015).

In the literature, quality products” are also described as products that have “high-performance”, thus the first identified operations capabilities related to quality is performance. High performance refers to the ability to provide a product or process that has a high performance compared to other products or processes (Miltenburg, 2008).

The second operations capability that was identified is conformance which is defined as the ability to fit the product or activity to its design specification (Martín-Peña & Díaz-Garrido, 2008).

The third operations capability that was identified was durability of product. Product durability was found to be important to have in the offering of products and was seen to be of high quality if it was durable. Product durability is defined by Dangayach and Deshmukh (2001) as the ability to manufacture a product which is able to function properly with a strong use over a long period of time.

5.4 Flexibility priority

Flexibility can be defined as the ability to react to e.g. changes in volume, product range, design, new customer needs, machine and equipment failure (Lin et al., 2012; Leitner & Filho, 2019). The changes that require the ability to react can be either internal or external factors affecting the business (Leitner & Filho, 2019). Markets are getting more sophisticated, customers changing their choices and a more global competition, manufacturing companies are under greater pressure which creates the need of being flexible (Dangayach & Deshmukh , 2001).

The first capability that was identified for the priority of flexibility was product customization. This is the ability to customize products to fit the customers’ needs (Dangayach & Deshmukh, 2001). Zhao et al. (2006) define the customization ability as the ability to make quick design changes. Clear to see is that both definitions have one factor in common, which is adapting the product to fit the customers’ needs.

The second capability that was identified for the priority of flexibility was volume flexibility. This can be defined as the ability to react to changes in volume regarding the customer needs. Zhao et al. (2006) claim that companies which compete in volume

Content Analysis

flexibility have a production flow that is designed to be flexible enough to adapt to changes in volume.

The third capability that was identified for the priority of flexibility was production mix flexibility. According to Chen et al. (2018) production mix flexibility can be defined as the ability to react to unusual orders received from customers, which are not in the usual assortment of products.

5.5 Delivery priority

Delivery can be defined as the ability to deliver the right product at the right time to the customer. Delivery is sometimes discussed in the literature under the label of “time” (Lin et al., 2012). Time can also be discussed as an operations capability under the priority of delivery referring to the shortening of product development and production cycle times. Some authors also define delivery as dependability (Dangayach & Deshmukh, 2001) or speed (Lin et al., 2012). In this paper, dependability and speed are considered as operations capabilities.

The first capability that was identified within the priority of delivery was dependability. According to Lin et al. (2012) delivery is made up of two components: delivery reliability and speed. Delivery reliability can be defined as the ability to meet delivery dates with the correct amount and specifications. Gonzales-Benito and Lannelongue (2014) showed that companies that consider dependability important use just in time production planning to adapt the production to demand, since it is a good tool for the company to use when they need to achieve alignment. In this paper, the term “dependability” will be used as synonym for “delivery reliability” because reliable delivery is included in the definition of delivery dependability. Thus, the first operations capability, dependability, is defined as the ability to provide reliable delivery by meeting delivery schedules (Dangayach & Deshmukh, 2001).

The second operations capability that was identified for the priority of delivery is speed. With increasing competition and the ability to buy the same product from multiple different companies, the speed that orders from customers are handled is highly important (Alsmadi et al., 2011). The company that is able to respond to and deliver the product fast will be the company that is able to sell to that customer looking to buy the product. Thus, delivery speed is defined by Dangayach and Deshmukh (2001) as a company being able to provide fast delivery and respond quickly to customer orders.

5.6 Innovation priority

Innovation can be defined as the ability to quickly introduce new products, processes and make design changes to existing products (Dangayach & Deshmukh, 2001; Gao & Tian, 2014; Miltenburg, 2008).

The first identified capability related to innovation was new product development. A new product can be a product, a service, or a bundle of product and service that was previously not available to customers (Dixon et al., 2014). The new product refers to both updated products of existing ones, but also products that were previously not present in the market. A company that is the first to enter a market before competitors will have an advantage when it comes to market shares (Göleç, 2015). The first identified capability, new product, can be defined as the ability to introduce updated or

Content Analysis

The second capability that was identified comes from the definition of innovation presented by (Gao & Tian, 2014) is the ability to use new technology in manufacturing processes, thus the second identified capability is new technology. New technology can be defined as the ability to introduce updated or new technologies to a product or process.

5.7 Service priority

Service can be defined as the ability to provide service prior, during and after sales has been conducted. The constant growing importance of the additional services incorporated in the products allows companies to gain a competitive advantage over its competitors (Avella et al., 1998).

The first capability that was identified within the priority of service was after sales services. After sales services can be defined as the ability to provide value-adding services after the purchase has been completed (Alsmadi et al., 2011). Further, Alsmadi et al. (2011) claim that after sales services can be as important as the purchase itself.

The second capability that was identified within the priority of service was customer service. Customer service can be defined as the ability to provide the customer with valuable information about the product that is value-adding for the product and making the product easily available for the customer (Martín-Peña & Díaz-Garrido, 2008; Chen, 2016).

5.8 Environment priority

Environment can be defined as the ability to produce products and contain processes that reduces the impact on the environment. The environmental issues are central for companies, this without compromising the competitive advantage (Martín-Peña & Díaz-Garrido, 2008; Johansson & Winroth, 2010). Environmental awareness has risen in the past years which has led companies into investing more time into defining environmentally friendly processes and products (Martín-Peña & Díaz-Garrido, 2008).

The first capability that was identified within the priority of environment was to minimize repercussion of manufacturing activities on different environmental elements. This can be defined as the ability to design manufacturing processes that are causing the minimal effect on the environment (Pooya & Faezirad, 2017).

The second capability that was identified within the priority of environment was environmentally friendly products. This can be defined as the ability to manufacture products that have the minimal effect on the environment (Pooya & Faezirad, 2017).

Answering the research questions and implications

6

Answering the research questions and implications

In section 6.2 the research questions will be answered by using the gathered information from the systematic literature review. In section 6.2 the implications will be presented, these containing information on how this thesis can be used in theoretically and practical environments. In section 6.3 the method is discussed and reflected upon.

6.1 Answering the research questions

The purpose of this thesis was to investigate critical operations priorities and capabilities that allow companies to be competitive by conducting a systematic literature review. In order to fulfill the purpose of this thesis the two research questions stated will be answered.

Answer RQ1: Which critical operations priorities can be identified in the literature?

The competitive priorities that were identified include cost, quality, flexibility, delivery, service, innovation and environment (Table 9). The identified competitive priorities and capabilities, if developed and implemented, could be important for companies to achieve competitive advantage. The original taxonomy of priorities that was presented by Miller and Roth (1994) included price, quality, delivery, flexibility and service. The systematic literature review that was conducted showed that researchers and companies should also consider priorities such as innovation and environment in order to gain competitive advantage.

Table 9: Competitive priorities identified in the research

Competitive priorities identified throughout the systematic literature review 1. Cost 2. Quality 3. Flexibility 4. Delivery 5. Service 6. Innovation 7. Environment

Answering the research questions and implications

Answer RQ2: Which critical operations capabilities can be identified in the literature?

Within the above-mentioned priorities, 17 different capabilities were identified and explained (Table 10). By including two more priorities to the taxonomy presented by Miller and Roth (1994), four more capabilities were introduced by conducting a systematic literature review.

Table 10: Critical operations capabilities identified in the research

Competitive priorities Critical operations capabilities

1. Cost Waste elimination

Total cost

Capacity utilization rate

2. Quality Performance

Conformance Durability

3. Flexibility Product customization

Volume Production mix

4. Delivery Dependability

Speed

5. Service New product development

New technology

6. Innovation After sales services

Customer service

7. Environment Minimize repercussion of manufacturing activities on different environmental elements

Environmentally friendly products

6.2 Implications

Leitner and Filho (2019) claim that competitive priorities are a set of parameters that a company needs to value in order to stay competitive against its competitors, and that these are based on what is expected from the market and what their competitors are emphasizing.

6.2.1 Theoretical implications

The theoretical implications of this thesis present the importance of competitive priorities and critical operations capabilities, and how companies continually have to revise and update the priorities and capabilities in order to successfully stay competitive to its competitors. This systematic literature review contributes in its way of condensing and summarizing relevant and existing literature in a structured and systematic way to provide an overview of the current literature on the researched topic.

Answering the research questions and implications

6.2.2 Practical implications

By creating a framework, the systematic literature review gives practitioners a better understanding about competitive priorities and capabilities that may be of importance in order to gain a competitive advantage and succeed in todays’ market. Furthermore, it lays the foundation of improving their existing critical priorities and capabilities in order to increase the operational performance. Based on the findings, managers can get an overview of which capabilities they should focus on in order to be more competitive while at the same time helping researchers use the framework as an initial step for future research.

Conclusion

7

Conclusions

This chapter will present the conclusions from this thesis research. The contribution in relation to the purpose will be presented in section 7.1. Following this, section 7.2 will present the limitations and how further research within this area can be conducted.

7.1 Contributions

The purpose of this study is to investigate critical operations priorities and capabilities that allows companies to be competitive. In order to fulfill this purpose a systematic literature review was conducted. There were two research questions structured in order to fulfil the purpose of the research.

The higher awareness regarding competitive priorities and capabilities that has been seen forces companies to adapt and develop their own company-specific competitive priorities and capabilities. In order to reach the goal of identification of the company-specific priorities and capabilities a structured taxonomy will contribute to their competitiveness. The research presented in this thesis enables companies to use the presented taxonomy as a support in their development and identification of the company-specific competitive priorities and capabilities. Not only companies gain an advantage by using this structured taxonomy, other researchers will save time and may create a deeper understand of what the competitive priorities and capabilities are, by using this compiled data and information presented within this thesis.

The most important contribution of this thesis is the creation of a deeper understanding on what competitive priorities and capabilities are and how these can be used within a company or research. It also describes the importance of prioritizing the competitive priorities and capabilities in order to gain a competitive advantage. In a company emphasizes

7.2 Limitations and further research

This thesis looks at which critical operations priorities and capabilities are present in the literature, on a general level but with no specific country or region that is specified and studied. The conducted research is done with existing literature and does not include any quantitative data that is collected through for example surveys. In order to gain more depth into the valued importance of each priority and capability, surveys can be conducted. To narrow down the research and zoom in on a specific environment, surveys or case-studies can be done in a specific environment by including specific countries, for example high-cost or low-cost countries. An important social aspect of developing competitive priorities and capabilities in companies of high- or low-cost environments is that more jobs can be created.

The systematic literature review focused on competitive priorities and capabilities but not management actions in order to limit the scope of the research and be able to create a good final result. Furthermore, more research can be done on how specific industries and sizes of firms identify and implement competitive priorities and capabilities and which management actions are good for them.

It can be interesting to conduct more case studies that can help get a real context perspective on these capabilities; for example, evaluating these capabilities in a real

Conclusion

environment around the company changes, and also that capabilities should be constantly updated in order to fit with the environment that the company is operating in.

Future research could include:

1. Conducting case studies to investigate more in depth from a real context perspective of how these capabilitis are developed and how they affect the performance of the companies.

2. To evaluate these capabilities through different surveys, by using different companies that are part of different industries to get an overview of how these capabilities are evaluated from a company perspective. This in turn, could allow comparison of how different industries categorize the capabilities regarding importance.