Hapter 2 Perations Performance

2.
Chapter 2
Operations performance
Slack, Chambers and Johnston, Operations Management, 6th Edition,

2.1
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
Slack et al.’s model of operations management
2.2
Operation’s
performance
Operations Operations
strategy strategy
Operations
management
Design Improvement
Planning and
control

2.2
Key operations questions
2.3
In Chapter 2 – Operations performance – Slack et al. identify

the following key questions:
•Why is operations performance important in any

organization?
•How does the operations function incorporate all
stakeholders’ objectives?
•What does top management expect from the operations
function?
•What are the performance objectives of operations and
what are the internal and external benefits which derive
from excelling in each of them?
•How do operations performance objectives trade off
against each other?
2.3
Why is operations performance important?
2.4
•It affects profitability

•Financial performance

2.4
2.5 How does the operations function incorporate all
stakeholders’ objectives?
Lobby / interest
Shareholders ‘Society’
groups
Directors / top
management
Suppliers Staff Customers
Staff representative
bodies
Regulatory
Government bodies
At a strategic level, performance objectives

relative to the responsibility of the organization
towards its stakeholders
2.5
The five operation performance objectives
2.7
Quality Being RIGHT
Competitiveness
Speed Being FAST
Dependability Being ON TIME
Flexibility Being ABLE TO CHANGE
Cost Being PRODUCTIVE

2.7
2.8
Two common meanings of ‘Quality’
Quality
Quality as the specification of

a product or service
e.g. Lower Hurst Farm
produces organic meat raised
exclusively on its own farm.
Quality as the conformance

with which the product or Qu
service is produced a lit
e.g. Quick service restaurants
y
like McDonalds may buy less
expensive meat, but its
conformance must be high.

2.8
What does Quality mean in…
2.9
… a hospital ?
Patients receive the most appropriate treatment.
Treatment is carried out in the correct manner.
Patients are consulted and kept informed.

Staff are courteous, friendly and helpful.

2.9
What does Quality mean in… (Continued)
2.12
… a supermarket?
The store is clean and tidy.
Décor is appropriate and attractive.
Goods are in good condition.

Staff are courteous, friendly and helpful.

2.12
2.13
Benefits of having a quality product/service
Irrespective of a product or service’s specification quality, producing it in a

way that it conforms to its specification consistently brings benefits to any
operation
Externally – it enhances the product or service in the market, or at least
avoids customer complaints.
Internally – it brings other benefits to the operation.
It prevents errors slowing down
It prevents errors causing internal unreliability and low

dependability.
It prevents errors causing wasted time and effort, therefore saving

cost.

2.13
What does Speed mean in…
2.15
… a hospital ?
The time between requiring treatment and receiving

treatment is kept to a minimum.
The time for test results, X-rays, etc. to be returned

is kept to a minimum.

2.15
What does Speed mean in… (Continued)
2.16
… an automobile plant?
Time between dealers requesting a vehicle of a

particular specification and receiving it is minimized.
Time to deliver spares to service centres is minimized.

2.16
2.17
… a bus company?
The time between customer setting out on the

journey and reaching his or her destination is kept
to a minimum.

2.17
2.18
… a supermarket?
The time for the total transaction of going to the

supermarket, making the purchases and returning
is minimized.
The immediate availability of goods.

2.18
2.19
External and internal benefits of speed
Speed again has different interpretations externally and internally
Externally – it means the elapsed time between a customer asking for a

product or service and getting it (in a satisfactory condition).
It often enhances the value of the product or service to customers.
It reduces risk by forecasting better
It reduces inventory

2.19
2.20
External and internal benefits

Quality of speed (Continued)
Cost
Quick
delivery
Speed Dependability
Internal
benefits
Quality Flexibility
External
benefits

2.20
What does Dependability mean in… (Continued)
2.21
… a hospital ?
Proportion of appointments that are cancelled is

kept to a minimum.
Keeping appointment times.
Test results, X-rays, etc. are returned as promised.

2.21
2.22
On-time delivery of vehicles to dealers.
On-time delivery of spares to service centres.

2.22
2.23
… a bus company?
Keeping to the published timetable at all points on

the route.
Constant availability of seats for passengers.

2.23
2.24
… a supermarket?
Predictable opening hours

Proportion of goods out of stock kept to a minimum
Keeping to reasonable queuing times
Constant availability of parking.

2.24
2.25
External and internal benefits of Dependability
Externally – it enhances the product or service in the market, or at least

avoids customer complaints.
It prevents late delivery slowing down throughput speed.
It prevents lateness causing disruption and wasted time and effort,

thereby saving cost.
Maintains stability

2.25
Flexibility – What does it mean?
2.27
Flexibility has several distinct meanings but is always

associated with an operation’s ability it change
Change what ?
•The products and services it brings to the market –

Product/service flexibility
•The mix of products and services it produces at any one
time – Mix flexibility
•The volume of products and services it produces –

Volume flexibility
•The delivery time of its products and services – Delivery
flexibility
2.27
What does flexibility mean in…
2.28
…. a hospital ?
Introducing new treatments

A wide range of treatments
The ability to adjust the number of patients treated
The ability to reschedule appointments.

2.28
What does flexibility mean in… (Continued)
2.29
The introduction of new models

A wide range of options
The ability to adjust the number of vehicles
manufactured
The ability to reschedule manufacturing priorities.

2.29
2.30
… a bus company?
The introduction of new routes and excursions

A large number of locations served
The ability to adjust the frequency of services
The ability to reschedule trips.

2.30
2.31
… a supermarket?
The introduction of new goods
A wide range of goods stocked
The ability to adjust the number of customers served
The ability to get out-of-stock items.

2.31
External and internal benefits of flexibility
2.32
Externally – it enhances the product or service in the market, improves

image
It results in fast response
It maintains dependability

2.32
What does Cost mean in…
2.34
… a hospital ?
Technology
Bought-in and facilities
materials costs
and
services
Staff
costs

2.34
What does Cost mean in… (Continued)
2.35
Bought-in Technology
materials and facilities
and costs
services
Staff
costs

2.35
2.36
… a bus company?
Bought-in Technology
materials and facilities
and costs
services
Staff
costs

2.36
2.37
… a supermarket?
Technology
Bought-in and facilities
materials costs
and
services
Staff
costs

2.37
Cost
2.38
The cost of producing products and services is obviously

influenced by many factors such as input costs, but two
important sets are
The 4 V’s–volume
– variety
– variation
– visibility
The internal performance of the operation at
– quality
– speed
– dependability
– flexibility

2.38
Cost
2.39
Measuring Cost
• Productivity= Output/ Input

• Single factor Productivity= Output/One input
• Multi factor Productivity= Output/All input

2.39
The benefits of excelling at the five objectives
2.40
Minimum price, highest value
Cost
Quick Dependable
delivery delivery
Minimum cost,
Speed maximum value Dependability
Fast Reliable
Internal
throughput operation
benefits
Error-free Ability to
processes change
Quality Flexibility
Error-free Frequent new
products and products, maximum
services choice
External
benefits

2.40
Polar diagrams
2.42
Polar diagrams are used to indicate the relative

importance of each performance objective to an operation
or process.
They can also be used to indicate the difference between

different products and services produced by an operation or
process. Cost
Speed Dependa-
bility
Quality Flexibility

2.42
Polar diagrams for a taxi service versus a bus service
2.43
Taxi Bus
service service
Cost
Speed Dependability
Quality Flexibility

2.43
Polar diagrams for a proposed police performance method
2.44
Required performance
Actual
performance
Reassurance
Efficiency Crime
reduction
Crime
Working with detection
Criminal justice
agencies

2.44
2.45 Polar diagrams for newspaper collection and general
recycling services
General recycling
Newspaper collection service
service Cost
Speed Dependability
Quality Flexibility

2.45
Trade-offs
2.46
‘Do you want it good, or do you want it Tuesday?’
You cannot have

‘No such thing as a free lunch’. it all
‘You can’t have an aircraft which flies at the speed of sound,

carries 400 passengers and lands on an aircraft carrier.
Operations are just the same’. (Skinner)
‘Trade-offs in operations are the way we are willing to

sacrifice one performance objective to achieve excellence in
another’.

2.46
The ‘efficient frontier’ view of trade-offs
2.47
Variety
The new ‘efficient
The ‘efficient
Variety
frontier’
A frontier’ B1
B A
B
X C X C
D D
Cost efficiency Cost efficiency
e ext ent,
i v es, t o som
e o bjec t
m anc
All perfor ainst each other
ag
trade-off
2.47
The ‘efficient frontier’ view of trade-offs (Continued)
2.48
Improvement through focus…

…or improvement through overcoming trade-offs
in c ip le–
c es s pr ( o r a
Improvement Pro n on e
in g o
through increasing Focus set of)
narrow ance
‘focus’ on variety
Variety
o r m n a b l e
P1 Improvement through perf can e
e (s ) e in
overcoming the trade- objectiv o rm a nc
P rp e r f s
off between variety
up e ri o e c t iv e
s e ob j
and cost efficiency o s
that/th
Improvement through
Q increasing ‘focus’ on
Q1 cost efficiency
Cost efficiency
2.48

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2.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Slack, Chambers and Johnston, Operations Management, 6th Edition,

In Chapter 2 – Operations performance – Slack et al. identify

•Why is operations performance important in any

•It affects profitability

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Suppliers Staff Customers

At a strategic level, performance objectives

Quality Being RIGHT

Dependability Being ON TIME

Flexibility Being ABLE TO CHANGE

Cost Being PRODUCTIVE

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Quality as the specification of

Quality as the conformance

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Patients receive the most appropriate treatment.

Treatment is carried out in the correct manner.

Patients are consulted and kept informed.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

The store is clean and tidy.

Décor is appropriate and attractive.

Goods are in good condition.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Irrespective of a product or service’s specification quality, producing it in a

It prevents errors slowing down

It prevents errors causing internal unreliability and low

It prevents errors causing wasted time and effort, therefore saving

Slack, Chambers and Johnston, Operations Management, 6th Edition,

The time between requiring treatment and receiving

The time for test results, X-rays, etc. to be returned

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Time between dealers requesting a vehicle of a

Time to deliver spares to service centres is minimized.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

The time between customer setting out on the

Slack, Chambers and Johnston, Operations Management, 6th Edition,

The time for the total transaction of going to the

Slack, Chambers and Johnston, Operations Management, 6th Edition,

External and internal benefits of speed

Speed again has different interpretations externally and internally

Externally – it means the elapsed time between a customer asking for a

Internally – it brings other benefits to the operation.

It reduces risk by forecasting better

Slack, Chambers and Johnston, Operations Management, 6th Edition,

External and internal benefits

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Proportion of appointments that are cancelled is

Test results, X-rays, etc. are returned as promised.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

On-time delivery of vehicles to dealers.

On-time delivery of spares to service centres.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Keeping to the published timetable at all points on

Constant availability of seats for passengers.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Predictable opening hours

Keeping to reasonable queuing times

Constant availability of parking.

Slack, Chambers and Johnston, Operations Management, 6th Edition,

External and internal benefits of Dependability

Externally – it enhances the product or service in the market, or at least