Page 265 - Operations Strategy

240 CHAPTER 7 • ImPRovEmEnT sTRATEgy
In reality, the improvement process is never so straightforward, sequential or simple.
This cyclical model is not prescriptive. Rather, it merely identifies the types of activity
that together contribute to operations improvement at a strategic level. Moreover, no
organisation would execute each link in the cycle in a rigorous sequential manner.
The activities of directing the overall shape of the operations resources and processes,
developing their capabilities through learning, deploying the operations contribution
and deciding on market strategy all should occur continually and simultaneously.

setting the direction

An important element in the improvement process is the influence a company’s
intended market position has on the way it manages its resources and processes. In
the view of many, it is the only important element. According to this view, operations
improvement is a constant search for better ways of supporting the company’s markets.
And although the model of operations development used here (and our view of opera-
tions strategy generally) also takes into account the influence of operations capabilities
on market position, the ‘direction’ to improvement provided by market requirements
is clearly an important element. At its simplest, it involves translating the intended
market position of the organisation into performance goals or targets for the operation.
In fact, just as the whole improvement task can be seen as a cycle, so can each stage.
In this case, the cycle involves the ongoing refinement of these targets. For example,
a company may decide that its customers place reasonable importance on its prod-
ucts being delivered on time. It therefore sets a target on-time delivery performance
of 99.5 per cent. However, it finds that some customer requirements are so complex
that manufacturing time is difficult to forecast and therefore delivery dates cannot be
met. Because of this, its overall delivery performance is only 97 per cent. However, it
emerges during discussions with those customers that they understand the inherent
difficulty in forecasting delivery times. What is important to them is not that the origi-
nal delivery date is met, but that they are given at least two weeks’ notice of what the
delivery date will actually be. Thus the failure of the operation’s performance to match
its target prompts the targets to be changed to reflect customers’ real requirements more
exactly. It is the cycle of setting targets and attempting to meet them that can lead to
a more accurate interpretation of the real requirements of the market. In this section
of the chapter we will briefly examine three approaches to managing this cycle: per-
formance measurement systems, benchmarking and ‘importance–performance’ com-
parisons (see Figure 7.3).

Figure 7.3 Directing improvement is a cycle of comparing targets with performance

Performance

Operation’s Intended
resources and DIRECT market
processes position
Targets

M07 Operations Strategy 62492.indd 240 02/03/2017 13:06