Operations Performance Objectives
In this lesson, you’re expected to learn about the five basic performance objectives that apply to all types of operations.
The five basic performance objectives are:
Internal & External Influences of Performance Objectives
Performance objectives have both internal and externalinfluences. Internally, cost is influenced by the other performance objectives.
• Running an organization’s operations requires a well-defined set of performance objectives.
• There are five basic performance objectives that apply to all types of operations. They are: cost, dependability, flexibility, quality, and speed.
• Each of the various performance objectives has several internal effects, but all of them affect cost.
Quality refers to consistent conformance to the customers’ expectations and has a major influence on their satisfaction or dissatisfaction.
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• When quality means consistency in product and service production, it makes life inside the company easier, reducing the need for re-work.
• Thus, quality can work for cost-reduction and increased dependability.
• Within the operation, speed is also important. Fast response to external customers is greatly helped by speedy decision-making and speedy movement of materials and information inside the operation.
Dependability means doing things on time for customers – exactly when they are needed or at least when they were promised.
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• Operations where internal dependability is high are more effective than those which are not, because dependability saves time, money, and gives stability to the operations.
Flexibility means being able to change what operations does, how it is doing it, or when it is doing it.
– Product / service flexibility: introduce new or customized products and services
– Mix flexibility: a wide range or mix of products and services
– Volume flexibility: ability to change the output level to produce different quantities of products and services over time
– Delivery flexibility: ability to change the timing of delivery
The lower the cost of producing their goods and services, the lower can be the price to their customers.
• The ways in which operations management can influence cost will depend largely on where the operation costs are incurred.