1. Chapter 2
Operations performance

2. Slack et al.’s model of operations management
Operation’s performance
Operations strategy
Operations strategy
Design
Improvement
Operations management
Planning and control

3. Key operations questions
In Chapter 2 – Operations performance – Slack et al. identify the following key questions:
Why is operations performance important in any organization?
How does the operations function incorporate all stakeholders’ objectives?
What does top management expect from the operations function?
What are the performance objectives of operations and what are the internal and external benefits which derive from excelling in each of them?
How do operations performance objectives trade off against each other?

4. Operations management can make or break any organization

5. Stakeholder groups with a …’legitimate interest in the operation’s activities’
Lobby / interest groups
Shareholders
‘Society’
Directors / top management
Staff
Suppliers
Customers
Staff representative bodies
Regulatory bodies
Government

6. Operations and processes excellence
Operations and process management contribution to strategy
Capabilities for future innovation
Opportunities for process learning
Enhanced service
Secure revenue
Lower costs
Process efficiency
Operations and processes excellence
Reduced errors, better resilience
Lower ‘operational’ risk
Higher capacity utilization
Lower capital requirements

7. The five competitive objectives
Quality
Being RIGHT
Competitiveness
Speed
Being FAST
Dependability
Being ON TIME
Being ABLE TO CHANGE
Flexibility
Cost
Being PRODUCTIVE

8. The benefits of excelling at the five objectives
Minimum cost, maximum value
Minimum price, highest value
Cost
Fast throughput
Quick delivery
Reliable operation
Dependable delivery
Speed
Dependability
Internal benefits
Error-free processes
Error-free products and services
Ability to change
Frequent new products, maximum choice
Quality
Flexibility
External benefits

9. What does Quality mean 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. 3

10. What does Quality mean in… (Continued)
… an automobile plant?
All assembly is to specification.
Product is reliable.
All parts are made to specification.
The product is attractive and blemish-free.

11. What does Quality mean in… (Continued)
… a bus company?
The buses are clean and tidy.
The buses are quiet and fume-free.
The timetable is accurate and user-friendly.
Staff are courteous, friendly and helpful.

12. What does Quality mean in… (Continued)
… a supermarket?
The store is clean and tidy.
Décor is appropriate and attractive.
Goods are in good condition.
Staff are courteous, friendly and helpful.

13. Two common meanings of ‘Quality’
e.g. Lower Hurst Farm produces organic meat raised exclusively on its own farm.
Quality as the specification of a product or service
Quality as the conformance with which the product or service is produced
e.g. Quick service restaurants like McDonalds may buy less expensive meat, but its conformance must be high.

14. External and internal benefits of conformance quality
Irrespective of a product or service’s specification quality, producing it in a way that it conforms to its specification consistently brings benefits to any operation
Externally – it enhances the product or service in the market, or at least avoids customer complaints.
Internally – it brings other benefits to the operation.
It prevents errors slowing down throughput speed.
It prevents errors causing internal unreliability and low dependability.
It prevents errors causing wasted time and effort, therefore saving cost.

15. External and internal benefits of conformance quality (Continued)
Cost
Speed
Dependability
Internal benefits
Quality
Flexibility
On-specification products and services
External benefits

16. What does Speed mean in…
… a hospital ?
The time between requiring treatment and receiving treatment is kept to a minimum.
The time for test results, X-rays, etc. to be returned is kept to a minimum. 4

17. What does Speed mean in… (Continued)
… an automobile plant?
Time between dealers requesting a vehicle of a particular specification and receiving it is minimized.
Time to deliver spares to service centres is minimized.

18. What does Speed mean in… (Continued)
… a bus company?
The time between customer setting out on the journey and reaching his or her destination is kept to a minimum.

19. What does Speed mean in… (Continued)
… a supermarket?
The time for the total transaction of going to the supermarket, making the purchases and returning is minimized.
The immediate availability of goods.

20. External and internal benefits of speed
Speed again has different interpretations externally and internally
Externally – it means the elapsed time between a customer asking for a product or service and getting it (in a satisfactory condition).
It often enhances the value of the product or service to customers.
Internally – it brings other benefits to the operation.
It helps to overcome internal problems by maintaining dependability.
It reduces the need to manage transformed resources as they pass through the operation, therefore saving cost.

21. External and internal benefits of speed (Continued)
Quality
Cost
Quick delivery
Speed
Dependability
Internal benefits
Quality
Flexibility
External benefits

22. What does Dependability mean in… (Continued)
… 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.

23. What does Dependability mean in… (Continued)
… an automobile plant?
On-time delivery of vehicles to dealers.
On-time delivery of spares to service centres.

24. What does Dependability mean in… (Continued)
… a bus company?
Keeping to the published timetable at all points on the route.
Constant availability of seats for passengers.

25. What does Dependability mean in… (Continued)
… a supermarket?
Predictable opening hours
Proportion of goods out of stock kept to a minimum
Keeping to reasonable queuing times
Constant availability of parking.

26. External and internal benefits of Dependability
Externally – it enhances the product or service in the market, or at least avoids customer complaints.
Internally – it brings other benefits to the operation.
It prevents late delivery slowing down throughput speed.
It prevents lateness causing disruption and wasted time and effort, thereby saving cost.

27. Quality External and internal benefits of Dependability (Continued)
Cost
Dependable delivery
Speed
Dependability
Internal benefits
Quality
Flexibility
External benefits

28. Flexibility – What does it mean?
Flexibility has several distinct meanings but is always associated with an operation’s ability it change
Change what ?
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

29. What does flexibility mean 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.

30. What does flexibility mean in… (Continued)
… an automobile plant?
The introduction of new models
A wide range of options
The ability to adjust the number of vehicles manufactured
The ability to reschedule manufacturing priorities.

31. What does flexibility mean in… (Continued)
… a bus company?
The introduction of new routes and excursions
A large number of locations served
The ability to adjust the frequency of services
The ability to reschedule trips.

32. What does flexibility mean in… (Continued)
… a supermarket?
The introduction of new goods
A wide range of goods stocked
The ability to adjust the number of customers served
The ability to get out-of-stock items.

33. External and internal benefits of flexibility
Cost
Cost
Short delivery lead-time
Reliable delivery
Speed
Speed
Depend-ability
Depend-ability
Quality
Quality
Flexibility
Flexibility
Frequent new products/services
Wide range
Volume and delivery changes
On-specification products and services

34. External and internal benefits of flexibility (Continued)
Quality
Cost
Speed
Dependability
Internal benefits
Quality
Flexibility
Frequent new products/services
Wide range
Volume and delivery changes
External benefits

35. What does Cost mean in… … a hospital ? Technology and facilities costs
Bought-in materials and services
Staff costs

36. What does Cost mean in… (Continued)
… an automobile plant?
Technology and facilities costs
Bought-in materials and services
Staff costs

37. What does Cost mean in… (Continued)
… a bus company?
Bought-in materials and services
Technology and facilities costs
Staff costs

38. What does Cost mean in… (Continued)
… a supermarket?
Technology and facilities costs
Bought-in materials and services
Staff costs

39. Cost
The cost of producing products and services is obviously influenced by many factors such as input costs, but two important sets are
The 4 V’s–volume
– variety
– variation
– visibility
The internal performance of the operation at
– quality
– speed
– dependability
– flexibility

40. External and internal benefits of performance objectives Quality
External benefits
On-specification products and services
Short delivery lead-time
Reliable delivery
Frequent new products/services
Wide range
Volume and delivery changes
Low price, high margin, or both
Cost
Internal benefits
Speed
Dependability
Quality
Flexibility

41. Polar diagrams
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

42. Polar diagrams for a taxi service versus a bus service
Cost
Speed
Dependability
Quality
Flexibility

43. Polar diagrams for a proposed police performance method
Required performance
Actual
performance
Reassurance
Efficiency
Crime
reduction
Crime
detection
Working with
Criminal justice
agencies

44. Polar diagrams for newspaper collection and general recycling services
Cost
Dependability
Speed
Quality
Flexibility

45. Trade-offs ‘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)
‘Trade-offs in operations are the way we are willing to sacrifice one performance objective to achieve excellence in another’.

46. The ‘efficient frontier’ view of trade-offsX C D
Cost efficiency
Variety B
The new ‘efficient frontier’ B1
The ‘efficient frontier’
Variety A C D B X
Cost efficiency
All performance objectives, to some extent, trade-off against each other

47. The ‘efficient frontier’ view of trade-offs (Continued)
Improvement through focus…
…or improvement through overcoming trade-offs
Process principle – Focusing on one (or a narrow set of) performance objective(s) can enable superior performance in that/those objectives
Improvement through increasing ‘focus’ on variety P P1
Variety
Improvement through overcoming the trade-off between variety and cost efficiency
Improvement through increasing ‘focus’ on cost efficiency Q Q1
Cost efficiency

48. The ‘efficient frontier’ view of trade-offs (Continued)
Focus strategies can change the trade-off curve from convex to concave
Variety
Process principle – Highly focused operations can be especially sensitive to any changes in requirements
Cost efficiency