Page 113 - Operations Strategy

88 CHAPTER 2 • OPERATiOns PERfORmAnCE
competitiveness; it is also its ability to develop the capabilities that will keep it ahead of
competitors in the future. And for operations strategy to be effective, its performance
must be assessed in terms of all its stakeholders. All operations have stakeholders; they
are the people and groups who have a legitimate interest in the operation’s strategy.
Strongly related to the stakeholder perspective of operations performance is that of
corporate social responsibility (generally known as CSR).

how is operations performance judged at a societal level?
Operations should be judged in terms of how they satisfy the various (and varied)
objectives of their stakeholders. Stakeholders are the people and groups who have a
legitimate interest in the operation’s activities. One idea that tries to capture the idea
of a broader approach to assessing an organisation’s performance is the ‘triple bottom
line’ (TBL, or 3BL), also known as ‘people’, plant and profit’. It holds that organisations
should measure themselves not just on the traditional economic profit, but also on
the impact their operations have on society broadly, and their ecological impact on
the environment.

how is operations performance judged at a strategic level?
At the strategic level, operations measures tend to be aggregated from, and strongly
influenced by, the operational measures. These aggregated measures are cost, revenue,
the use of capital, risk and the operations ability to build capabilities.

how is operations performance judged at an operational level?
Because operations strategy is always concerned with addressing customers’ needs, at
the operational level the focus is primarily on the five generic performance objectives
of quality, speed, dependability, flexibility and cost. Each of these performance objec-
tives has both internal and external effects. Externally, their relative importance will
differ depending on the nature of the markets served by the operation and/or its prod-
ucts and services. Internally, these objectives can be mutually dependent. One way of
distinguishing between the relative importance of each performance objective is by
classifying them as order-winners and qualifiers, and, more recently, as ‘delights’.
Do the role and key performance objectives of operations stay constant or vary
over time?
Both are true. Markets change, and the capabilities of operations resources develop
over time. Therefore, not only does operations strategy change, but also the relative
importance of its performance objectives will change. In fact, over the long term, the
operations strategies of most enterprises can be seen to vary, either in response to delib-
erate attempts to change overall strategic direction or in a more emergent sense, where
a consensus of the most appropriate strategic direction forms through accumulated
operational experience.

are trade-offs between operations performance objectives inevitable, or can they
be overcome?
Again, both are true. Yes, trade-offs are always, to some extent, inevitable in that
pushing an operation to extremes in one aspect of performance will inevitably mean
some sacrifice in other aspects of performance. Yet trade-offs can, at the margin,

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