Operations Management Performance Objectives
Any organization must be concerned with how to keep customers satisfied and achieve higher levels of success in the market industry. The common answers to these questions or the features that customers seek in any product/service are the quick delivery system, improved quality of services and products, and reasonable prices. It is important for the organizations to consider operational performance objectives to improve efficiency and make customers satisfied.
Operational performance objectives are the guidelines or standards followed by the management to achieve the set corporate strategies. The organizations define measures that are used to determine if performance objectives are met with the corporate strategy of the company. In addition, the company also configures operating environment that helps in accomplishing one, two, or even five operational performance objectives that are quality, dependability, costs, flexibility, and speed. This paper will discuss five operational performance objectives and relate them with the products and services of two industries; one from the manufacturing industry and the other from services industry. Considering the requirements of the paper, Toyota Company is selected as the manufacturing and McDonalds as services organization .
Quality Performance Objectives
Quality performance objectives refers to doing things in a correct manner, providing error free services, and goods that satisfy customers. It is also defined as the degree of excellence of any product or service when measured against other offerings of the same nature. The quality of the product or service is usually measured in terms of durability, reliability, and performance. By using methods of quality management, products and services can be proved superior that would lead to improved customer satisfaction, improved company reputation, and increased sales. Consumers usually focus on the quality of the products or services and therefore, they compare them with competitors’ offerings.
Toyota vehicles are ranked among the top vehicles of the market. They have achieved high customer satisfaction level. Many market researches and surveys show Toyota as one having the most successful record worldwide. Toyota always maintain high quality of cars and so is the reason, why it is constantly growing. In addition, Toyota has introduced various technologies to improve passengers’ safety and promote environmental friendly system. In recent times, Toyota has introduced more than 40 emission control systems to reduce the emissions of unpleasant fumes.
McDonald’s provide high quality food and services without error and thus, conforming the standards of quality. They use fresh ingredients to prepare their tasty burgers. It has a well-trained staff who deliver orders to customers in good condition at their doorstep. Hygiene is among the priority list of the high quality standards; therefore, McDonald’s keep good care of the hygiene in their kitchen, storage, and serving area. These quality standards help McDonald’s achieving high level of customer satisfaction and improvement in demands.
Speed Performance Objectives
Speed refers to the time between the start and the end of the operations process. It is the elapsed time. This can be related to the externally obvious events like the time when the customer places an order for the product or service and the time when he/she receives the order. The time between the two events is called as the external processing time. Similarly, time when the production starts and time when it ends is called as the internal processing time. Shorter elapsed time of processing bring in several benefits for the organization like dependability is maintained easily, costs are reduced as with shorter processing time, the requirements of transformed resources are also decreased. Similarly, the demand of the customers are also increased with the shorter time processing .
In case of Toyota, the operations management focuses on deploying simple and small machines that reduce complexities and are robust and flexible. The rearrangement of layouts and flow can enhance simplicity and increase the production speed. Toyota has greatly improved its operations by reducing the burden on workers and speeding up processes. In the late 1980s, output per worker was two to three times higher than European or US plants. However, the human efforts have been highly reduced now.
McDonald’s mainly focuses on the speed and aims to drive-thru within 90 seconds. Speed is the core competence of McDonald’s; therefore, it must maintain the speed of services delivery to customers. If they fail to maintain the quick delivery of services during busy hours, then it may bear the loss of losing customers. There are several fast food restaurants offering similar food and home delivery services, but McDonald’s claim for the quick delivery is keeping it popular among the customers. Therefore, it is important for the company to improve or maintain the system of delivery. It should modify the system that is used to serve the customers so services can be improved. For example, sequencing regulation should be implemented to increase the speed of services that includes first in first out sequencing and varying queues based on the size of orders. In case of McDonald’s, the organization must primarily focus on the speed because it is its core competence.
Dependability Performance Objectives
Dependability means doing things in time for customers so they can receive their goods and services as they are promised. Dependability may also be defined as the means of keeping promises, delivery time, and honor to the customer. It is considered as the other part of total delivery performance along with the speed of delivery. These two performance objectives are linked with each other as like others. Therefore, changing one would affect the other. For example, if the management takes long delivery times then the dependability would be higher. To ensure least dependability, internal customers judge each other’s performances to assess how reliable others perform in delivering orders to customers on time. Dependability help organizations in saving time and money, and stabilize the operational systems. Organizations with high dependability usually have slow speed and lack efficiency. To improve speed and dependability, organizations introduce to different systems to speed up processing and reduce dependability.
Toyota has deployed “Just in time” or JIT production system with multitalented workforce team. Just in time production system only manufactures when order is received. By this method, the inventory and carrying costs are reduced. Moreover, the speed of delivery is improved and efficiency is increased. Toyota’s Kanban control system help the management in delivering the order right on time to the customers as promised. Kanban control system has proved to be an excellent process of promoting improvement. In addition, Toyota’s entire work team strive to improve quality and efficiency of the system; thus, providing dependability advantage to customers .
McDonald’s has high dependability. Customer orders are delivered right on time so, in the case, the organization depends on production process and delivery system. If anything goes wrong with these systems then bottleneck would be created. It will reduce its productivity and thus, affect the demand by customers. Therefore, it is important for the McDonald’s to create alternatives in problematic scenarios.
Flexibility Performance Objectives
Flexibility in the organization’s operations refers to the tendency of change in some way. Organizations can only respond to the dynamic environment if their products and services are flexible. They should have the tendency to be changed as according to their business operations. There are four main types of flexibility including product/service flexibility, mix flexibility, volume flexibility, and delivery flexibility. Organization with all types of flexibilities speeds up response, saves time, and helps maintaining dependability. Flexibility can ensured if organizations offer different things for different customers. In another type of flexibility, high variety products are manufactured in mass manners that helps in minimizing costs and called as mass customization .
In case of Toyota manufacturing plant, it means that it should have the ability to adopt manufacturing resources and launch new models. The history of Toyota reveals that the organization has always focused on deploying the machines that are flexible enough and can be used for later models. Toyota has provided various options over the years to customers to choose from the large range of vehicles; thus, reducing the dependability of cars on operations.
McDonalds has low flexibility since, there is only limited range of products or meals available. Fast food only has small variety of meals like burgers, rolls, drinks, and ice creams. McDonald’s should focus on increasing the range of products offered to customers so, they have better options when visiting the café or restaurant; because, McDonald’s competition is rapidly increasing and would give an organization much tough time in future. Therefore, it is important to introduce new line of products; else, it would lose its market share.
Costs Performance Objectives
Cost is one of the major operations objective for which organizations compete with each other. Every organization tries to reduce manufacturing or services cost as low as possible so prices can be reduced and profits may be increased. Customers seek for the good quality products or services at low prices that is only possible if the cost of products can be reduced. Organizations introduce various methods to minimize the cost of products and services like manufacturing of bulk orders, hiring low cost labors, and making contract with the low cost supplier, and various others .
Toyota seeks to lower down the prices of the vehicles by decreasing the manufacturing cost. For purpose of decreasing cost of goods, and services, Toyota plans to shift their production plants to various countries of the world so, transport cost, office expenses, and other costs can be reduced and so the price of Toyota cars. In most countries like Argentina and South Africa, low cost production of vehicles has been introduced that is also building up the demand of the Toyota vehicles in these countries.
McDonald’s is maintaining costs performance objectives in perfect manner. Most other organizations are in fact following the same strategy as that of McDonald’s. Cost performance objective is the primary element of the organization that keeps it at the higher level of success. Only few organizations in the same industry have been successful in providing the high quality burgers at low cost. Due to its low cost, the growth of the organization gets probable. McDonald’s does not require hiring new staff members from time to time; since, repeatable recipes are followed for burgers and other side orders. Moreover, they follow easy recipes that anyone can carry on. Thus, by hiring unskilled workers, McDonald’s can save cost to be incurred on the cars and other issues.
It is important for Toyota to keep improving all five operational performance objectives that are quality, speed, dependability, flexibility, and cost. Toyota has been maintaining these factors quite well for long and that is the reason of its high growth, customer satisfaction, and leading position around the world. Toyota is also a team leader in supply chain management; therefore, to maintain its position, it is important to keep the quality of production higher, maintaining maximum speed, flexibility, on-time delivery, and lowest cost offer. It must position itself as the best supplier in the industry and since, Toyota has already expanded its operations in several countries so, its supply chain has been improved. Now, the organization must keep its position higher, and customers satisfied. For this purpose, Toyota operations needs to balance all performance objectives.
McDonald’s operations must also focus on balancing all five objectives. The quick service delivery, low cost, and high quality are the core competence of the McDonald’s. However, flexibility and dependability are the concerns that must be considered. To compete in the market and maintain the top position, the operations management needs to introduce new systems and variety of products/services that can ensure maximum flexibility and least dependability. For this purpose, McDonald’s has already recruited skilled staff members. They are trained as according to the existing trends in the market so that they can help in achieving the competitive advantage; reduce dependability, and improving the flexibility.
Organization following the five operational performance objectives excel in the market industry in different ways.
- The high quality of the products/services ensure error-free processes
These five processes are linked with each other; for example, the high flexibility improves speed. Therefore, to ensure the success of the operations as a whole is based on how smoothly each of these operational objectives are retained. If the management focus on improving the performance of any of these five objectives then others would also be potentially enhanced. Similarly, reduction in the performance of any of these objectives also affect others. Therefore, it is important for all organizations focusing on improving the performance would have to consider balancing all five operational objectives.
References
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Slack, N., 2001. Operations Management. s.l.:s.n.
Slack, N. & Lewis, M., 2011. Operations Strategy. 3rd ed. s.l.:Prentice Hall.
Toyota, 2014. Just-in-Time. [Online] Available at: http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html
