Page 267 - Operations Strategy

242 CHAPTER 7 • ImPRovEmEnT sTRATEgy

Figure 7.4 performance targets can involve different levels of aggregation

High strategic
Broad Overall relevance and
strategic strategic aggregation
measures objectives
Market Operations Financial
Functional strategic strategic strategic
strategic measures
objectives objectives objectives
Composite
performance Customer Agility Resilience
measures satisfaction
Generic operations
performance Quality Dependability Speed Flexibility Cost
measures
Defects per Mean time Customer Time to Transaction High
Detailed unit between query time market costs diagnostic
failures
performance Level of Lateness Order lead- Product Labour power and
productivity
time
range
customer
measures, e.g. complaints complaints Throughput Machine frequency of
Scrap level time e†ciency measurement
view of an operation’s performance, they provide, in many ways, a more descriptive
and complete picture of what should be and what is happening within the operation.
In practice, most organisations will choose to use performance targets from through-
out the range.

Which are the most important performance targets
One of the problems of devising a useful performance measurement system is trying to
achieve some balance between having a few key measures on the one hand (straight-
forward and simple, but may not reflect the full range of organisational objectives),
and, on the other, having many detailed measures (complex and difficult to manage,
but capable of conveying many nuances of performance). Broadly, a compromise is
reached by making sure that there is a clear link between competitive strategy, the key
performance indicators (KPIs) that reflect the main performance objectives and the
bundle of detailed measures that are used to ‘flesh out’ each key performance indicator.
Obviously, unless competitive strategy is well defined (not only in terms of what the
organisation intends to do but also in terms of what the organisation will not attempt
to do), it is difficult to focus on a narrow range of key performance indicators. So, for
example, an international company that responds to oil exploration companies’ prob-
lems during drilling by offering technical expertise and advice might interpret the five
operations performance objectives as follows:
● Quality – Operations quality is usually measured in terms of the environmental
impact during the period when advice is being given (oil spillage etc.) and the long-
term stability of any solution implemented.
● Speed – The speed of response is measured from the time the oil exploration company
decide that they need help to the time when the drilling starts safely again.
● Dependability – This is largely a matter of keeping promises on delivering after-the-
event checks and reports.

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