Page 268 - Operations Strategy

sETTIng THE dIRECTIon 243
● Flexibility – This is a matter of being able to resource (sometimes several) jobs around
the world simultaneously, that is, volume flexibility.
● Cost – This is the total cost of keeping and using the resources (specialist labour and
specialist equipment) to perform the emergency consultations.
The company’s competitive strategy is clear: it intends to be the most responsive com-
pany at getting installations safely back to normal working conditions, while also
providing long-term effectiveness of technical solutions offered with minimum envi-
ronmental impact. It is not competing on cost. The company therefore decides that
speed and quality are the two performance objectives key to competitive success. This
translates into three key performance indicators (KPIs):
1 The time from drilling stopping to it starting safely again
2 The long-term stability of the technical solution offered
3 The environmental impact of the technical solution offered
From these KPIs several detailed performance measures were derived. For example,
some of those that related to the first KPI (the time from drilling stopping to it starting
again) were as follows:

● The time from drilling stopping to the company being formally notified that its
services were needed
● The time from formal notification to getting a team on site
● On-site time to drilling-commence time
● Time between first arrival on customer’s site to getting full technical resources on site

How to measure performance targets
The five performance objectives – quality, speed, dependability, flexibility and cost – are
really composites of many smaller measures. For example, an operation’s cost is derived
from many factors, which could include the purchasing efficiency of the operation,
the efficiency with which it converts materials, the productivity of its staff, the ratio of
direct to indirect staff and so on. All of these factors individually give a partial view of
the operation’s cost performance, and many of them overlap in terms of the informa-
tion they include. Each of them does give a perspective on the cost performance of an
operation, however, which could be useful – either to identify areas for improvement or
to monitor the extent of improvement. If an organisation regards its ‘cost’ performance
as unsatisfactory, therefore, disaggregating it into ‘purchasing efficiency’, ‘operations
efficiency’, ‘staff-productivity’ and so on, might explain the root cause of the poor per-
formance. Table 7.3 shows some of the partial measures that can be used to judge an
operation’s performance.

On what basis to compare actual against target performance
Whatever the individual measures of performance that we extract from an operation,
the meaning we derive from them will depend on how we compare them against some
kind of standard. So, in Figure 7.5 for example, one of the company’s performance meas-
ures is delivery performance (in this case defined as the proportion of orders delivered
on time, where ‘on time’ means on the promised day). The actual figure this month
has been measured at 83 per cent. However, by itself it does not mean much. Yet, as

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