Presentation for applied operations management
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Lecturer4-PerformanceinOperations.pptxApplied Operations Management
5LO507
Lecture 4 – Performance in Operations
| Teaching Team: | |
| Dr Simon Peter Nadeem (Module Leader) | |
| Dr Jay Daniel | |
| Mike Edwards |
Sensitivity: Internal
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Performance Management Gets Results!
Measure of Success
Measurement-Managed Organizations
Non Measurement-Managed Organizations
Industry leader over the past 3 years
Three year return on investment (ROI)
Success in last major change effort
74%
44%
80%
45%
97%
55%
Measure of Success
Measurement-Managed Organizations
Non Measurement-Managed Organizations
Agreement on strategy
Communication of strategy
Cooperation and teamwork
90%
47%
60%
8%
85%
38%
Sources: John H. Ingle & Wm. Schiemann, “Is Measurement Worth It” Management Review, March 1996
Morgan & Schiemann, “Measuring People & Performance: Closing the Gap” Quality Progress, January 1999
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Performance Management
Balanced Scorecard
If you can’t measure it … you can’t manage it!
At the highest level, the Balanced Scorecard is a framework that helps organizations translate strategy into operational objectives that drive both behavior and performance.
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Balanced Scorecard
Leading
Lagging
Soft
Hard
Vision
& Strategy
CUSTOMER
“To achieve our vision, how should we appear to our customers?”
Objectives
Measures
Targets
Initiatives
FINANCIAL
“To succeed financially, how should we appear to our shareholders?”
Objectives
Measures
Targets
Initiatives
INTERNAL BUSINESS PROCESSES
“To satisfy our shareholders and customers, what business processes must we excel at?”
Objectives
Measures
Targets
Initiatives
INNOVATION AND LEARNING
“To achieve our vision, how will we sustain our ability to change and improve?”
Objectives
Measures
Targets
Initiatives
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Strategy Map (Cause & Effect Relationship)
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Strategy Map Cascade
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EFQM (European Foundation for Quality Management) as a dashboard system and a tool for management control. We can see it as a management control system.
Design
Planning and control
Operation’s performance
Operations strategy
Improvement
Operations management
Operations strategy
Slack’s model of Operations (2013)
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Why is operations performance important in any organisation?
Performance can have massive impacts (+ve and –ve)
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Distribution Center Metrics Activity
What performance metrics are frequently used by for managing Warehouse / DCs operations?
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Distribution Center Metrics
Source: 2010 Metrics Report, WERC, (May 26, 2010).
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What performance metrics are frequently used by shippers for mange their DCs.
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Shareholders
Directors / top management
Staff
Staff representative bodies
Regulatory bodies
Government
Suppliers
Lobby / interest groups
Customers
Every Operation has Stakeholder’s
‘Society’
You need to identify Stakeholders, and then manage them
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Operations and process excellence
Good enough never is……..
Being excellent is what’s needed today
Enhanced service
Secure revenue
Lower costs
Process efficiency
Reduced errors, better resilience
Lower ‘operational’ risk
Higher capacity utilization
Lower capital requirements
Capabilities for future innovation
Opportunities for process learning
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Sustainable Competitiveness
The five performance objectives of Operations
Quality
RIGHT (First Time)
Speed
Being FAST
Dependability
Being ON TIME
Cost
Being PRODUCTIVE
Being ABLE TO CHANGE
Flexibility
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Minimum cost, maximum value
Minimum price, highest value
Fast throughput
Quick delivery
Reliable operation
Dependable delivery (on time)
Error-free processes
Error-free products and services
Ability to change
Frequent new products, maximum choice
Excelling at the five objectives
Dependability
Cost
Speed
Quality
Flexibility
Internal benefits
External benefits
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A virtuous circle
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Quality in… … a hospital ?
Patients receive the most appropriate treatment.
Treatment is carried out in the correct manner.
Patients are consulted and kept informed.
Staff are courteous, friendly and helpful.
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3
The time between requiring treatment and receiving treatment is kept to a minimum.
Speed in… … a hospital ?
The time for test results, X-rays, etc. to be returned is kept to a minimum.
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4
Dependability in a hospital ?
Proportion of appointments that are cancelled is kept to a minimum.
Keeping appointment times.
Test results, X-rays, etc. are returned as promised.
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Flexibility has several distinct meanings but is always associated with an operation’s ability to change
The products and services it brings to the market – Product/service flexibility
The mix of products and services it produces at any one time – Mix flexibility
The volume of products and services it produces – Volume flexibility
The delivery time of its products and services – Delivery flexibility
Flexibility – What does it mean?
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Flexibility in……. a hospital ?
Introducing new treatments
A wide range of treatments
The ability to adjust the number of patients treated
The ability to reschedule appointments.
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Staff costs
Technology and facilities costs
Bought-in materials and services
Cost in…… a hospital ?
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In small groups discuss and agree some specific performance measure for a multiple supermarket: try and be as SMART as possible with your POs.
Quality
Speed
Dependability
Flexibility
Cost
In Class Activity
A multiple supermarket
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Relative Importance of Performance Objectives
Polar diagrams are used to indicate the relative importance of each performance objective to an operation or process.
They can also be used to indicate the difference between different products and services produced by an operation or process.
Cost
Quality
Flexibility
Dependa-bility
Speed
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Comparing Performance
Cost
Quality
Flexibility
Dependability
Speed
Product/Service
Alternative Product/Service
How do you decide:
Fashion
Food
Transport
Education
etc
How do you decide:
Logistics
Warehousing
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Operations and Supply Chain Benchmarking
You can not improve what you can’t measure it…
Best in class supply chain operate at the half the cost of their peers
Benchmarking tools ?!!
Sensitivity: Internal
Before starting the business improvement journey, it is essential to understand what the destination is?
What is the outcome? What is my target?
Why benchmark my operations and supply chain?
Steven Covey “The 7 Habits of Highly Effective People” book: Habit No 2 is “to begin with end in mind”.
Ops & Supply chain performance: Compare your supply chain with the similar supply chain and best in class.
Best in class supply chain operate at the half the cost of their peers.
The better the level of service provided, the lower the cost---- why: 1- Get things right the first time ( there is no rework, …)
You can not improve what you can’t measure it…
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Trade-offs and paradoxes
‘Do you want it good, or do you want it Tuesday?’
‘No such thing as a free lunch’.
‘You can’t have an aircraft which flies at the speed of sound, carries 400 passengers and lands on an aircraft carrier. Operations are just the same’. (Skinner - 1979)
‘Trade-offs in operations are the way we are willing to sacrifice one performance objective to achieve excellence in another’. Similar to Opportunity Cost in Economics
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Thank you for your attention
Questions?
Sensitivity: Internal
Sheet:
Technology and facilities costs
Staff costs
Brought-in materials and services
