Operations Performance Analysis SLACK 2 Operations Performance Analysis

Learning Objectives The “Triple Bottom Line” approach to measuring Operation Performance The five operation performance objectives

The Triple Bottom Line

Operations Performance Objectives GOAL: Satisfy customers and contribute to competitiveness Quality Speed Dependability Flexibility Cost

Internal and external effects of Performance Objectives

Quality Quality reduces costs Quality increases dependability

Speed Speed means the elapsed time between customers requesting products or services and them receiving them Speed reduces inventory Speed reduces risk

Dependability Dependability can give the potential for more reliable delivery of services and products and save costs. Dependability saves time Dependability saves money Dependability provides stability

Flexibility Flexibility means being able to change the operation in some way. This may mean changing what the operation does, how it is doing it, or when it is doing it. Specifically, customers will need the operation to change so that it can provide four types of requirement: product/service flexibility – the operation’s ability to introduce new or modified products and services; mix flexibility – the operation’s ability to produce a wide range or mix of products and services; volume flexibility – the operation’s ability to change its level of output or activity to produce different quantities or volumes of products and services over time; delivery flexibility – the operation’s ability to change the timing of the delivery of its services or products.

Flexibility Mass Customization Agility Some companies have developed their flexibility in such a way that products and services are customized for each individual customer. Yet they manage to produce them in a high-volume, mass-production manner which keeps costs down. Example: Dell Build to Order computers Agility Agility is really a combination of all the five performance objectives, but particularly flexibility and speed. Responding to market requirements by producing new and existing products and services fast and flexibly

Cost Low cost is a universally attractive objective Cost is always an important objective for operations management, even if the organization does not compete directly on price. Operation influences costs on – Labor Facilities Technology and Equipment Material

Trade-offs between Performance Objectives

Quality

Speed

Dependability

Flexibility

Next session: Quiz # 1: Stevenson Chapters 1 and 2, and Slack Chapter 2 Final Group rosters with Project Manager due