Chapter 2 - Operations Performance

The Triple Bottom Line

Organizations should measure themselves not just on the traditional
economic profit that they generate for their owners, but also on the impact
their operations have on society
1. People (Social)
Businesses should accept that they bear some responsibility for
the impact they have on society and balance the external 'societal'
consequences of their actions with the more direct internal
consequences, such as profit
2. Planet (Environment)
The extent to which business activity negatively impacts on the
natural environment
3. Profit (Economic)
Operations Managers must use the operation's resources
effectively

Stakeholders
People and groups who have a legitimate interest in the operation's activities.

Corporate Social Responsibility

How a business takes account of its economic, social, and environmental
impacts in the way it operates - maximizing benefits and minimizing the
downsides
Is listening and responding to the needs of a company's stakeholders.

The Five Operations Performance Objectives

1 Quality Advantage
Providing error free goods and services
Quality
Consistent conformance to customers' expectations
("doing things right")
Benefits of providing Quality
Reduces costs
Increases dependability
2 Speed Advantage
Minimizing the time between a customer asking for goods or
services and the customer receiving them in full
Benefits of Speed
Customers are more likely to buy something that they
can immediately receive
Reduces inventories
Reduces risks
The shorter the range of the forecast, the less
likely they will get it wrong
3 Dependability Advantage
 Doing things in time for customers to receive their goods or
services exactly when they are needed, or at least when they
were promised
Benefits of Dependability
Saves time (no bottlenecks due to lack of resources)
Saves money
Gives stability
If everything in an operation is always perfectly
dependable, a level of trust will have built up between
the different parts of the organization
4 Flexibility Advantage
Being able to change far and fast enough to meet customer
requirements
Customer Requirements for Flexibility (DPMV)
Delivery Flexibility
Ability to change the timing of delivery
Product/Service Flexibility
Ability to introduce new or modified products and services
Mix Flexibility
Ability to produce a wide range or mix of products and
services
Volume Flexibility
Ability to change its level of output or activity to produce
different quantities or volumes of products and services
Agility
Combination of all the five performance objectives,
but primarily flexibility and speed
Benefits of Flexibility
Speeds up response
Saves time
Maintains dependability
Keeps the operations on schedule even if there are
unexpected events which disrupt the operation's plans
2 Cost Advantage
Produce goods and services at a competitive cost
The lower the cost of producing their goods and services, the
lower can be the price to their customers.
Productivity
The ratio of what is produced by an operation to
what is required to produce it.
Single Factor Productivity
Output from the operation / One input to the
operation
Multi Factor Productivity
Output from the operation / All inputs to the
operation