Production and Operations Management Systems Chapter 1: Introduction

Stage 2 Companies

• A Stage II company manages traditional P/OM processes and has a relatively short-term planning horizon.
• It makes efforts to secure orders and to meet customers’ service desires.
• The primary goal of Stage II companies is to control costs.
• Quality tends to be defined as products or services that are not worse than some standard.
• These companies consider the most important advantages to be derived from economies of scale, which means that as output volume increases, costs go down.
• W&H* describe such firms as being externally neutral; they strive to have parity in P/OM matters with the competition.
• *Source: Wheelwright, Steven C., and Robert H. Hayes, Competing Through Manufacturing, Harvard Business Review, January–February 1985, pp 99–109. (W&H)