Operation Management shutterstock_7704421
Order Winning Versus Order Qualifying

1. Introduction

According to Professor Terry Hill at London Business School, the design and structure of operations and marketing department in a firm should be mutually supportive and internally consistent. The interaction and the cooperation between operations and marketing functions are critically for any firm to achieve competitive advantage in the marketplace. From this paradigm, order winning and order qualifying are important concepts for any firm to adjust its strategies to fit the requirement and demand of the marketplace (Hill, 1986). Strictly speaking, the operational department is responsible to produce order winning and order qualifying criteria – in which these criteria are identified by the marketing aspect of a firm – to win over orders and purchases from the vast customers (Krajewski & Ritzman, 2001).

This writing will be arranged as followed. Firstly, a review of the concept of order qualifying and order winning will be discussed. Secondly, the concepts of order winning and order qualifying will be applied to the low cost airline and tour operator sector for discussion and evaluation purposes. Then, recommendations on how operation manager can utilize the concept of order winning and order qualifying concepts to attract new customers as well as to retain existing customers will be discussed.

 

2. A Review of Order Winning and Order Qualifying Concepts

2.1 Order Winning Factors

In general terms, order winning factors can be defined as those factors that contribute directly to winning over a business from the customers or consumers (Hill, 1986). These are the factors that enable a company to achieve competitive advantages in the marketplace – as these are the key factors causing the customers to make their final decision in purchasing a particular product or service (Davis, Aquilano & Chase, 2007; Hill, 1986). Generally speaking, by improving on the performance of order winning factors, a company can directly improve the organization’s profitability in the marketplace (Davis, Aquilano & Chase, 2007; Hill, 1986).

 

2.2 Order Qualifying Factors

As the name suggests, order qualifying factors are those factors that may not be a crucial determinants in affecting the ultimate purchasing decision by customers, but they are the factors that must be present in a particular product or service for the customers to even start considering about purchasing the product or service (Davis, Aquilano & Chase, 2007; Hill, 1986). Order qualifying factors can be conservatively assumed as those factors that enable the company to stay afloat in the marketplace. These are those factors that must be fulfilled by a firm, as they are the bottom line to stay equally competitive in the marketplace (Hill, 1986). They are the characteristic of a product that is required by a customer to even consider the purchase of that product. However, by improving on the performance of the various order qualifying factors in a firm, there is unlikely to be any improvements on the firm’s performance in the marketplace. Nonetheless, without the present of order qualifying factors, a firm may suffer lost of sales in the marketplace (Davis, Aquilano & Chase, 2007; Hill, 1986).

 

2.3 Some Characteristics of Order Winners and Order Qualifiers

Both order qualifying and order winning criteria are equally important for a firm to achieve success in the marketplace (Davis, Aquilano & Chase, 2007). Without anyone of these factors, the revenue and survival of a firm may be hurt. Besides, it is worth to mention that both order winning criteria and order qualifying criteria are market specific and time specific. It is market specific because in different markets, the respective order winning or qualifying criteria may differ (Gaither & Frazier, 2009). On the other hand, it is time specific because when the trend or consumers’ preferences or behaviors change, the previous order winning and qualifying criteria may no longer be relevant in the new business environment (Heizer & Render, 2001; Stevenson, 2005). Thus, it is important for management to constantly researching and watching the characteristics of order winning and qualifying criteria in the marketplace. When the perception on order winning and order qualifying criteria by a firm is accurate and match the requirement by customers, the firm can then achieve growth and increases in revenue by fulfilling the real needs of customers (Krajewski & Ritzman, 2001).

 

3. Applying Order Management Concepts to Low Cost Airline Industry

Airline industry is a competitive industry; where the competition is fierce and yet, the entire industry is suffer from cyclical consumers’ demand. In the following section, order management for a low cost airline company will be discussed. The entire operation life cycle for the low cost airline will be discussed in the following section. The life cycle is divided into four main categories, namely: (a) design and sourcing, (b) order management, (c) transformation, and (d) delivery to the end customer. One example of a successful firm in the industry is Southwest Airline. The company is successful because not only the company able to provide order qualifying services to the customers, the company able to deliver order winning services to the end users. All of these will be discussed in the following paragraphs.

Design and sourcing. In designing the services to be provided to the customers in the low-cost airline industry, various factors have to be taken into consideration. The first thing is pricing – as the low costs airline is effectively relying on the pricing to maintain customers. Thus, in this sector, low pricing is the order qualifying factor, for a firm to remain competitive in the market segment. Other areas that must be considered include: quality of services provided to customers, timeliness of air flight, friendliness of the airline crews, number of flight, destination of flight, convenience of the flight, extra assistance provided to customers as well as revenue management system of the airline firm. All of these factors will be furthered discussed in the following paragraphs.

Order management.  Order management in the airline industry is essentially the revenue management system and customer relationship management system. For this, an efficient and error-free order system is an order qualifying criteria for a firm. Customers simply expect the ticket buying process be reliable, fast and error-free. Thus, if there are errors in the ticket buying process, the customers may become angry and switch to purchase the competitors’ services instead. In this stage, it is reasonable to argue that the order winning criteria for an airline operator is the attractive promotion offered to loyal customers – as the loyal customers will feel being treated nicely and most likely to stay as a loyal customer in the future. Besides, it is the attractive promotion that may win over a customer’s order in the competitive low-cost airline industry.

Transformation & delivery to the end customers. In the value delivery process, ‘transformation’ for low-cost airline operator can be referred as the delivery of air flight services to customers. From this perspective, the safety of flight is the order qualifying criteria for all low-cost airline operators. The customers must feel safe, before they even consider taking a flight from a place to the destination. However, the other factors such as good services, established brand name, and word-of-mouth reputation of the low-cost operator are the order winning criteria. Most customers will based their purchasing decisions on recommendation by friends, past experiences as well as brand equity of a particular operator to make their purchasing decisions.

 

4. Applying Order Management Concepts to Tour Operator Sector

To begin, a tour operator is the travel agencies that package the entire holiday tour by combining various components in tourism industry, such as the means of travel, accommodation, tourism facilities, destination arrangement and etc. Usually, the tour operator will purchase in ‘bulk’ from the providers of travel services, such as the hoteliers and airlines, and then to break the ‘bulk’ into manageable packages to offer them to the consumers.

Design and sourcing. There are many ways for a tour operator to design the tour packages for customers. Among the order qualifying in this perspective is that the entire tour package provide by tour operator must fulfill the basic customers’ expectations, in which the package must include visits to various tourist destinations, proper accommodation, proper guidance and suitable arrangement of the tour package. The order winning criteria however can be the entire tour package is attractive, nicely designed and able to leave real impacts to the customers memories.

Transformation & delivery to the end customers. In the value delivery process for customers, the tour operator should provide great tourism experiences to the customers as well as to ensure the tourists obtaining what they wanted from their travel. The order qualifying criteria should include the proper arrangement of relevant accommodation for the customer, a well planned visit to various destinations they promised to the tourists. In contrast, the order winning criteria or factors can be more complex and vary depending on the customers’ needs and preferences. For example, the images of the tour operator can be very important, and directly affecting the decision making process of the customers. Similar to the case in low-cost airline industry that we have discussed before, factors such as good services, established brand name, and word-of-mouth reputation of the tour operator are the order winning criteria. Most customers will based their purchasing decisions on recommendation by friends, past experiences as well as brand equity of a particular operator to make their purchasing decisions.

 

5. How Managers can Enhance Customer Satisfaction and Retention?

In this section, the various methods a manager in the airline and tour operator industry can utilize to enhance the customers’ satisfaction and customer retention rate will be discussed, drawing on the order winning and qualifying concepts that we have discussed above, managers shall perform the following to enhance customer satisfaction and ensure customers’ retention in the marketplace.

Understand and able to differentiate the order winning and order qualifying criteria in the marketplace. As discussed before, both order qualifying and order winning criteria are equally important for a firm to achieve success in the marketplace (Stevenson, 2005). Without anyone of these factors, the revenue and survival of a firm may be hurt. Thus, it is critical for a firm to truly understand the order winning and qualifying factors in the marketplace. Without accurate understanding, the firm may not able to fulfill the implicit or explicit needs or requirement of customers (Gaither & Frazier, 2009; Stevenson, 2005). Thus, accurate, realistic and in-depth understandings on the market realities and details are highly helpful for a manger to enhance customer satisfaction and ensure customers loyalty in the marketplace.

Fulfill order qualifying criteria while continuously improve order winning criteria. It is discussed before that to continuously focusing on improving order qualifying criteria may not be helpful towards the performance of a firm. In contrast, to continuously improve on order winning factors for a firm will enhance the competitive advantages of a firm, as order winning factors are essential in affecting customers’ decision making process.

 

6. Conclusion

To summarize, both operation and marketing division of a firm are important to enable growth, success, profitability and superior performance in the marketplace. In this context, the concepts of order winning and order qualifying are important and useful to analyze the products or services provided by a firm to the marketplace. It is important for a manger to realize that the products or services provided by a firm should fulfill both order qualifying and order winning criteria to achieve superior performance compared to the competitors. The order qualifying will enable the firm to sustain its operation to stay on the competitive business environment. However, to achieve competitive advantage in the marketplace, the company should fulfill various order winning factors in the marketplace. This is crucial for the firm to enhance customers’ satisfaction, while on the other hand, to retain the loyal customers in the firm.

 

7. References

Chase, R. B., Aquilano, N. J., and Jacobs, F. R.. (2004). Production and operations management:  manufacturing and services.  Boston, MASS.:  Irwin/McGraw-Hill.

Davis, M. M., Aquilano, N. J., and Chase, R. B.. (2007). Fundamentals of operations management. Boston, MASS.: Irwin/ McGraw-Hill.

Gaither, N., and Frazier, G.. (2009). Production and operations management.  Cincinnati, OH: South-Western College Pub.

Heizer, J. H., and Render, B.. (2001). Operations management. Upper Saddle River, N.J.: Prentice Hall.

Hill, T. J.. (1986). Teaching Manufacturing Strategy. International Journal of Operations & Production Management, 6(3), 10.

Krajewski, L. J., and Ritzman, L. P.. (2001). Operations management: strategy and analysis. Reading, MASS.: Addison Wesley.

Markland, R. E., Vickery, S. K., and  Davis, R. A.. (2002).  Operations management: concepts in manufacturing and services.  Cincinnati, OH:  South- Western College Pub.

Spring, Martin, & Boaden, Ruth. (1997). “One more time: how do you win orders?”: a critical reappraisal of the Hill manufacturing strategy framework. International Journal of Operations & Production Management, 17(8), 757-779.

Stevenson, W. J. (2005). Production/operations management. Boston, MASS.: Irwin/ McGraw-Hill.

 

 

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