Page 87 - Operations Strategy

62 CHAPTER 2 • OPERATiOns PERfORmAnCE
table 2.4 Internal and external benefits of excelling at each performance objective

Operations resources – potential Market requirements – potential
internal benefits include … Performance objective external benefits include …
Error-free processes Quality High-specification products and
Less disruption and complexity services
More internal reliability Error-free products and services
Lower processing costs Reliable products and services
Faster throughput times Speed Short delivery/queuing times
Less queuing and/or inventory Fast response to requests
Lower overheads
Lower processing costs

Higher confidence in the operation Dependability On-time delivery/arrival of products
Fewer contingencies needed and services
More internal stability Knowledge of delivery times
Lower processing costs
Better response to unpredicted Flexibility Frequent new products and services
events Wide range of products and services
Better response to variety of Volume adjustments
activities Delivery adjustments
Lower processing costs
Productive processes Cost Low prices
Higher margins

If an operation competes on speed of delivery, then it will need to develop the speed
objective inside its operations. Internally, fast throughput time will presumably help
it to achieve short delivery times to its external customers. However, there are other
benefits that may come through fast throughput times inside the operation. Materials,
information or customers moving rapidly through an operation can mean less queu-
ing, lower inventory levels, a lower need for materials, information or customers to be
organised and tracked through the process. All this adds up to lower processing costs
in general. This gives operations strategy one of its more intriguing paradoxes. Even if
a performance objective has little value externally in terms of helping the company to
achieve its desired market position, the operation may still value high performance in
that objective because of the internal benefits it brings.

the relative priority of performance objectives differs between businesses

Not every operation will apply the same priorities to its performance objectives. Busi-
nesses that compete in different ways should want different things from their opera-
tions functions. So, a business that competes primarily on low prices and ‘value for
money’ should be placing emphasis on operations objectives such as cost, productivity
and efficiency; one that competes on a high degree of customisation of its services
or products should be placing an emphasis on flexibility; and so on. Many success-
ful companies understand the importance of making this connection between their
message to customers and the operations performance objectives that they emphasise.
For example, 6

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