Future competitiveness: viewpoints from manufacturers and service providers
| Pages | 191-207 |
| Date | 14 March 2008 |
| DOI | https://doi.org/10.1108/02635570810847572 |
| Published date | 14 March 2008 |
| Author | Kongkiti Phusavat,Rapee Kanchana |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Future competitiveness:
viewpoints from manufacturers
and service providers
Kongkiti Phusavat and Rapee Kanchana
Department of Industrial Engineering, Kasetsart University, Bangkok, Thailand
Abstract
Purpose – This paper aims to compare and evaluate competitive priorities between manufacturers
and service providers. A concern over the trends of moving manufacturing/production units overseas,
while maintaining essential service operations at the companies’ headquarters, encouraged senior
administrators of the Federation of Thai Industries (FTI) to suggest the study. This study was part of
an effort to support FTI members facing separate locations between manufacturing and services
operations, and to help evaluate its initiatives’ usefulness towards these members.
Design/methodology/approach – The survey, developed by Takala, was modified to gather the
opinions from top executives of 75 manufacturers and service providers. This survey consisted of six
criteria or competitive priorities with a total of 31 dimensions. The basic statistical techniques such as
Cronbach’s
a
were applied.
Findings – The paper finds that in general, top executives from manufacturing and service
operations shared and agreed that delivery/service provision and quality represented their future
competitive priorities.
Practical implications – The selection of these two competitive priorities was generally consistent
with severalprevious studies. Thesefindings supported past andcurrent initiatives by theFTI as well as
itspolicy on working togetherwith key publicagencies/organizationstowards an achievementof excellent
quality.Top executives, facing a challenge onseparate operations – manufacturingplant in one location
while maintainingservice operations at another location, couldsynchronize and coordinate their future
efforts such asstrategies and plans around delivery/service provision,and quality.
Originality/value – The knowledge on competitive priorities could potentially help companies,
regardless of operational types, to further formulate operational strategies, and later develop action
plans. This knowledge could also serve as feedback (e.g. usefulness and effectiveness) and a milestone
for the FTI’s support and initiatives for its members.
Keywords Competitive strategy, Manufacturingindustries, Services
Paper type Research paper
Introduction
Owing to the impacts from globalization (e.g. free movements of both tangible and
intangible goods),many firms needed to maintain their competitiveness by relocating or
outsourcing their manufacturing/production abroad while still keeping primary service
operations at their headquarters (Hoehn, 2003). This could be attributed to the issues of
labor costs, proximityto raw materials, closenessto markets, and free trades. Despite the
2005 surveyconducted by the United Nations’Commission for Trade and Development –
UNCTAD (2005) thatcited Thailand as the 3rd most attractive foreign direct investment
location in Asia, manylarge local firms had begun to restructure their operations[1]. The
most alarming trend was to move and/or transfer their manufacturing/production
overseas[2].A large portionof these firms belonged to key clusters within the Federation
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Future
competitiveness
191
Received 11 June 2007
Revised 1 September 2007
Accepted 14 September
2007
Industrial Management & Data
Systems
Vol. 108 No. 2, 2008
pp. 191-207
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570810847572
of Thai Industries (FTI) such as automobile and automotive parts, and electrical and
electronics. In fact, according to the Master Plan for Thai Automotive Industry for
2006-2010 conducted jointly by ThailandAutomotive Institute and the FTI, a policyshift
towards internationalizations (i.e. having manufacturing plants in one country within
Association of Southeast Asia Nations or ASEAN while still performing core service
operations such as planning, customer handling, deve lopment, databases and
information, and technical responses) would be inevitable. This prompted a call by
senior FTI administrators for a need to conduct a study on whether there existed the
differences incompetitive priorities betweenmanufacturing and service operations. This
study would providevaluable information to FTI membersfor future planning, and also
help the FTI evaluate the policies and initiatives towards its members.
Sink (1985), Neely (1998) and Takala et al. (2003) indicated that managing firms
successfully required the clarity on three areas:
(1) setting competitive priorities;
(2) formulating operational strategies and objectives; and
(3) developing action plans.
Furthermore, based on Hoehn (2003), competitive priorities represented the future
focus of a company for the next five to ten years – reflecting the future direction and
the concern of a firm; also see Leong et al. (1990) and Takala (2002). In other words,
competitive priorities were considered to be a prerequisite for determining operational
strategies (Chen, 1999). These strategies would later be formulated in parallel with
database readiness, and relevant measurement areas such as profitability,
productivity, and quality of work life (Sink and Tuttle, 1989; Phusavat, 2007). The
action plans dealt with how to achieve these strategies (Kim and Arnold, 1996).
Competitive priorities typically included price (cost), quality, dependability, and
flexibility (Hayes and Wheelwright, 1984; Johnston, 1988; Ferdows and de Meyer, 1990;
Vickey et al., 1993; Butler and Leong, 2000; Kathuria, 2000; Ward and Duray, 2000;
Boyer and Lewis, 2002; Kazan et al., 2006). Others also mentioned that customer-related
consideration such as responsiveness and time to market had become an integral part
of the firms’ drive towards competitiveness (Parasuraman et al., 1988; Leong et al.,
1990; Miller and Roth, 1994; de Meyer et al., 1989; Frohlich and Dixon, 2001; Lee, 2002;
Blanchard, 2004). Specifically, for Asian countries, many studies on competitive
priorities and operational strategies had been conducted on China (Robb and Xie, 2001;
Zhao et al., 2002), Hong Kong (Chan, 2005), India (Dangayach and Deshmukh, 2006),
Japan and South Korea (Lee, 2002), Taiwan (Chen, 1999). For the service-providers’
perspective, the focus on competitive priorities had been primarily on satisfying and
fulfilling customers’ expectation (Parasuraman et al., 1988).
Problem background
Like many countries, private firms in Thailand had been facing significant business
challenges, due to the impacts from globalization, environmental regulations, emerging
new markets for products, and changing customer’s demands and expectations[3].
Building competitiveness became a challenge for top management. Especially, many of
them needed to supervise and were responsible for manufacturing and service
operations concurrently (Manasserian, 2007). According to a report published by
Kasikorn Research Centre (2006), this challenge stemmed from the need to administer an
IMDS
108,2
192
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