OM - Handout 2 (1).pdf

Module 02 : Measuring Performances in Operations and Value Chains Transformation Process Resource Inputs of Various Operations Operations In terms of Processes Measurement Act of quantifying the performance of: - Organizational units and goods and services - Processes, people, and...

Module 02 : Measuring Performances in Operations and Value Chains Transformation Process Resource Inputs of Various Operations Operations In terms of Processes Measurement Act of quantifying the performance of: - Organizational units and goods and services - Processes, people, and other business activities Provides a scorecard of performance Helps identify performance gaps Makes accomplishments visible to workforce, stock market, and other stakeholders Scope of Business and Operations Performance Management Performance Measurement Typical Organizational-Level Performance Typical Operational- level performance measures Category Measures Financial Revenue and profit, Labor and material costs Return on assets Cost of quality Earning per share Budget variance Customer and market Customer satisfaction Customer claims and complaints Customer retention Type of warrant failure/upset Market Share Sales forecast accuracy Quality Customer ratings of goods and services Defects/unit or error/opportunity Product recalls Service representative courtesy Time Speed Flow processing or cycle time Reliability Percent of time meeting promised due date Flexibility Design flexibility Number of engineering changes Volume flexibility Assembly-line changeover time Innovation and learning New product development rates Number of patent applications Employee satisfaction Number of improvement suggestions implemented Employee turnover Percent of workers trained on statistical process control Productivity and operational Labor productivity Manufacturing yield efficiency Equipment utilization Order fulfillment time Sustainability Environmental and regulatory compliance Toxic waste discharge rate Product-related litigation Workplace safety violations Financial audits Percent of employees with emergency preparedness training Customer Satisfaction Measurement System Provides a company with customer ratings of specific goods and service features Indicates the relationship between customer ratings and a customer’s likely future buying behavior It tracks trends and reveals patterns of customer behavior Quality Measures the degree to which the output of a process meets customer requirements Goods quality: Physical performance and characteristics of a good Service quality Consistently meeting or exceeding customer expectations and service-delivery system performance for services Quality Service Quality assessed by measuring: 1.Tangibles—Physical facilities, uniforms, equipment, vehicles, and appearance of employees (i.e., the physical evidence). 2.Reliability—Ability to perform the promised service dependably and accurately. 3.Responsiveness—Willingness to help customers and provide prompt recovery to service upsets. 4.Assurance—Knowledge and courtesy of the service providers and their ability to inspire trust and confidence in customers. 5.Empathy—Caring attitude and individualized attention provided to customers. Time Performance measures - Speed of performing a task Measured by processing time and queue/wait time Ex : Pizza Business Variability of processes Measured using standard deviation or mean absolute deviation Speed Flexibility Ability to adapt quickly and effectively to changing requirements Goods and service design flexibility Ability to develop a wide range of customized goods or services to meet different or changing customer needs Volume flexibility: Ability to respond quickly to changes in the volume and type of demand Innovation and Learning Productivity and Operational Efficiency Example : Productivity Example : Productivity Triple Bottom Line Measurement of sustainability related to: Environmental factors - Energy consumption, recycling, resource conservation activities, air emissions, solid and hazardous waste rates, etc. Social factors - Consumer and workplace safety, community relations, and corporate ethics and governance Economic factors - Auditing, regulatory compliance, sanctions, donations, fines, etc. Business Analytics Helps operations managers analyze data effectively and make better decisions Applications Visualizing data to examine performance trends Calculating basic statistical measures Comparing results relative to other business units, competitors, or best-in-class benchmarks Using correlation and regression analysis Sample Manufacturing Dashboard Source : https://elisaindustriq.com/manufacturing-dashboards-that-help-optimize-production/ Designing Measurement Systems - Actionable Measures Provide the basis for decisions at the level at which they are applied Levels include value chain, organization, process, department, workstation, job, and service encounters What would be some good measurements for a university? Models of Organizational Performance Baldrige Performance Excellence Framework Helps in the process of self-assessment to understand an organization’s strengths and weaknesses Self-assessment: Helps improve quality, productivity, and overall competitiveness Encourages development of high-performance management practices Baldrige Model of Organizational Performance 1. Leadership: How upper management leads the organization, and how the organization leads within the community. 2. Strategy: How the organization establishes and plans to implement strategic directions. 3. Customers: How the organization builds and maintains strong, lasting relationships with customers. 4. Measurement, analysis, and knowledge management: How the organization uses data to support key processes and manage performance. 5. Workforce: How the organization empowers and involves its workforce. 6. Operations: How the organization designs, manages, and improves key processes. 7. Results: Performance of organization Balanced Scorecard Model Financial Perspective: Measures the ultimate value that the business provides to its shareholders. This includes profitability, revenue growth, stock price, cash flows, return on investment etc. Customer Perspective: Focuses on customer wants and needs and satisfaction as well as market share and growth in market share. This includes safety, service levels, satisfaction ratings etc. Balanced Scorecard Model Innovation and Learning Perspective: Directs attention to the basis of a future success—the organization’s people and infrastructure. Key measures might include intellectual and research assets, time to develop new goods and services etc. Internal Perspective: Focuses attention on the performance of the key internal processes that drive the business. This includes such measures as goods- and service-quality levels, productivity etc. Value Chain Model Evaluates performance throughout the value chain by identifying measures associated with: Suppliers Inputs Value creation processes Goods and service outputs and outcomes Customers and market segments Supporting and general management processes Service-Profit Chain Model States that employees create customer value and drive profitability through a service-delivery system Based on a set of cause-and-effect linkages between internal and external performance Helps define key performance measurements on which service-based firms should focus Service-Profit Chain Model