Operations Rules: Delivering Customer Value Through Flexible Operations

In recent years, management gurus have urged businesses to adopt such strategies asjust-in-time, lean manufacturing, offshoring, and frequent deliveries to retail outlets. But today,these much-touted strategies may be risky. Global financial turmoil, rising labor costs indeveloping countries, and huge volatility in the price of oil and other commodities can disrupt acompany's entire supply chain and threaten its ability to compete. In Operations Rules, DavidSimchi-Levi identifies the crucial element in a company's success: the link between the value itprovides its customers and its operations strategies. And he offers a set of scientifically andempirically based rules that management can follow to achieve a quantum leap in operationsperformance.

Flexibility, says Simchi-Levi, is the single most importantcapability that allows firms to innovate in their operations and supply chain strategies. A smallinvestment in flexibility can achieve almost all the benefits of full flexibility. And successfulcompanies do not all pursue the same strategies. Amazon and Wal-Mart, for example, are directcompetitors but each focuses on a different market channel and provides a unique customer valueproposition--Amazon, large selection and reliable fulfillment; Wal-Mart, low prices--that directlyaligns with its operations strategy. Simchi-Levi's rules--regarding such issues as channels, price,product characteristics, value-added service, procurement strategy, and informationtechnology--transform operations and supply chain management from an undertaking based on gutfeeling and anecdotes to a science.