Five Operations Performance Objectives
Operations management is an area of management concerned with overseeing, designing, and controlling the process of production and redesigning business operations in the production of goods or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as few resources as needed, and effective in terms of meeting customer requirements. It is concerned with managing the process that converts inputs (in the forms of materials, labor, and energy) into outputs (in the form of goods and/or services).
The Big 5 of Operations performance objectives Operations add value for customers and contribute to competiveness by being able to satisfy the requirements of its customers. It uses key performance measures to align the needs of the customer with the desired effectiveness of the overall business. Quality: Doing things correctly, RFT (right first time every time), error free, fit for purpose meeting specification. Quality is the cornerstone of any manufacturer or service provision company.
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It is the last word on your company’s reputation – speaking long after the purchase has been made as to how well the good or service performs. The bitterness of poor quality lingers long after the sweetness of meeting schedules has been forgotten. Speed: Do things fast, Reduced Lead time, OTIF (on time in full), minimizing lag. For many businesses quoting super fast turnaround times is the key differentiator in what separates them from their competition. In order to deliver this speed advantage a business must look at the internal value chain as a means to increase efficiency and reduce the system lag.
Lean manufacturing has many tools and techniques for identifying and reducing wasted time in process. Dependability: Doing things on time, staying true to your word, and keeping promises with your customers and suppliers. If your reputation is a key component in your commercial value proposition, then being able to stay true to your word is important. Being able to stay true to your word comes from running a tight organization that does not suffer from extremes of process deviation.
If the business model is predictable and the supply chain (as a part of the extended value chain) is reliable you can make bold statements to your customers and never let them down. Flexibility: To mix and match your output to variable customer demand, to meet their ever-changing vision of supplier service. To introduce new products or services. In terms of new business start-ups, these are becoming less and less volume manufacturers – more good and service is expected to be tailor-made for the customer.
This introduces complexity to a business system and requires load balancing techniques to ensure that all orders and customers requirements can be managed with the same high level of efficiency. Often building a brand new company to service this changing market requirement is easier that trying to turn an existing volume manufacturer into a nimble entity. 3D printing as a manufacturing technique will have a significant impact upon this area of business performance. Cost: Doing things cheaply. Producing goods or services at a price that is right or the market that the enterprise servers and showing margin on top. There are two easy methods to meet this need – the first is to make your goods for a stock replenishment system, wherein volume production enables a balance between the economic batch size and the cost price point per unit. The second method is to build a competitive advantage through customization and personalization – wherein the possibility of increasing the profit margin would be acceptable and allow the company to absorb waste overheads associated with smaller batch production.