To develop this competitive priority, the operations function must focus primarilyon cutting costs in the system, such as costs of labor, materials, and facilities. Companiesthat compete based on cost study their operations system carefully to eliminate allwaste. They might offer extra training to employees to maximize their productivityand minimize scrap. Also, they might invest in automation in order to increase productivity.Generally, companies that compete based on cost offer a narrow range ofproducts and product features, allow for little customization, and have an operationsprocess that is designed to be as efficient as possible.A company that successfully competeson cost is Southwest Airlines.Southwest’s entire operations functionis designed to support this strategy.Facilities are streamlined: onlyone type of aircraft is used, and flightroutes are generally short. This servesto minimize costs of scheduling crewchanges, maintenance, inventories ofparts, and many administrative costs.Unnecessary costs are completely eliminated: there are no meals, printed boardingpasses, or seat assignments. Employees are trained to perform many functions and usea team approach to maximize customer service. Because of this strategy, Southwest hasbeen a model for the airline industry for a number of years.
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