2.1
Chapter 2
Operations performance
2.1
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.2
Slack et al.’s model of operations management
Operation’s
performance
Operations
strategy
Design
Operations
management
Operations
strategy
Improvement
Planning and
control
2.2
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.3
Key operations questions
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
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.4
2.4
Operations management can make or break any organization
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.5
Stakeholder groups with a …’legitimate interest in the
operation’s activities’
Lobby / interest
groups
Shareholders
‘Society’
Directors / top
management
Staff
Suppliers
Customers
Staff representative
bodies
Government
2.5
Regulatory
bodies
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.6
Operations and process management contribution to strategy
Capabilities for future
innovation
Lower
costs
Opportunities for
process learning
Process
efficiency
Operations and
processes
excellence
Reduced errors,
better resilience
Lower ‘operational’ risk
2.6
Enhanced
service
Secure
revenue
Higher capacity
utilization
Lower capital
requirements
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.7
The five competitive objectives
Quality
Being RIGHT
Speed
Being FAST
Dependability
Flexibility
Cost
2.7
Being ON TIME
Being ABLE TO CHANGE
Being PRODUCTIVE
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.8
The benefits of excelling at the five objectives
Minimum price, highest value
Cost
Quick
delivery
Minimum cost,
maximum value
Speed
Fast
throughput
Internal
benefits
Error-free
processes
Quality
Error-free
products and
services
2.8
Dependable
delivery
Dependability
Reliable
operation
Ability to
change
Flexibility
Frequent new
products, maximum
choice
External
benefits
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.9
What does Quality mean in…
… 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
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.10
What does Quality mean in… (Continued)
… an automobile plant?
All assembly is to specification.
Product is reliable.
All parts are made to specification.
The product is attractive and blemish-free.
2.10
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.11
What does Quality mean in… (Continued)
… a bus company?
The buses are clean and tidy.
The buses are quiet and fume-free.
The timetable is accurate and user-friendly.
Staff are courteous, friendly and helpful.
2.11
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.12
What does Quality mean in… (Continued)
… 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
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.13
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
service is produced
e.g. Quick service restaurants
like McDonalds may buy less
expensive meat, but its
conformance must be high.
2.13
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.14
External and internal benefits of conformance quality
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 throughput speed.
It prevents errors causing internal unreliability and low
dependability.
It prevents errors causing wasted time and effort, therefore saving
cost.
2.14
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.15
External and internal benefits of conformance quality
Quality
(Continued)
Cost
Speed
Dependability
Internal
benefits
Quality
On-specification
products and
services
2.15
Flexibility
External
benefits
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.16
What does Speed mean in…
… 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.
2.16
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.17
What does Speed mean in… (Continued)
… 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.
2.17
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.18
What does Speed mean in… (Continued)
… a bus company?
The time between customer setting out on the
journey and reaching his or her destination is kept
to a minimum.
2.18
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.19
What does Speed mean in… (Continued)
… 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.
2.19
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.20
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.
Internally – it brings other benefits to the operation.
It helps to overcome internal problems by maintaining dependability.
It reduces the need to manage transformed resources as they pass
through the operation, therefore saving cost.
2.20
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.21
External and internal benefits
Quality of speed (Continued)
Cost
Quick
delivery
Speed
Dependability
Internal
benefits
Quality
Flexibility
External
benefits
2.21
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.22
What does Dependability mean in… (Continued)
… 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.
2.22
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.23
What does Dependability mean in… (Continued)
… an automobile plant?
On-time delivery of vehicles to dealers.
On-time delivery of spares to service centres.
2.23
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.24
What does Dependability mean in… (Continued)
… a bus company?
Keeping to the published timetable at all points on
the route.
Constant availability of seats for passengers.
2.24
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.25
What does Dependability mean in… (Continued)
… a supermarket?
Predictable opening hours
Proportion of goods out of stock kept to a minimum
Keeping to reasonable queuing times
Constant availability of parking.
2.25
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.26
External and internal benefits of Dependability
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 late delivery slowing down throughput speed.
It prevents lateness causing disruption and wasted time and effort,
thereby saving cost.
2.26
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.27
External and internal benefits
of Dependability (Continued)
Quality
Cost
Dependable
delivery
Speed
Dependability
Internal
benefits
Quality
Flexibility
External
benefits
2.27
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.28
Flexibility – What does it mean?
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
2.28
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.29
What does flexibility mean in…
…. a hospital ?
Introducing new treatments
A wide range of treatments
The ability to adjust the number of patients treated
The ability to reschedule appointments.
2.29
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.30
What does flexibility mean in… (Continued)
… an automobile plant?
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.
2.30
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.31
What does flexibility mean in… (Continued)
… 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.
2.31
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.32
What does flexibility mean in… (Continued)
… 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.
2.32
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.33
External and internal benefits of flexibility
External and
internal benefits
Cost
Short delivery
lead-time
Dependability
Speed
Quality
On-specification
products and
services
2.33
Flexibility
Reliable
delivery
Frequent new
products/services
Wide range
Volume and delivery
changes
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.34
External and internal benefits
Qualityof flexibility (Continued)
Cost
Speed
Dependability
Internal
benefits
Quality
Flexibility
External
benefits
2.34
Frequent new
products/services
Wide range
Volume and delivery
changes
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.35
What does Cost mean in…
… a hospital ?
Bought-in
materials
and
services
Technology
and facilities
costs
Staff
costs
2.35
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.36
What does Cost mean in… (Continued)
… an automobile plant?
Bought-in
materials
and
services
Technology
and facilities
costs
Staff
costs
2.36
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.37
What does Cost mean in… (Continued)
… a bus company?
Bought-in
materials
and
services
Technology
and facilities
costs
Staff
costs
2.37
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.38
What does Cost mean in… (Continued)
… a supermarket?
Bought-in
materials
and
services
2.38
Technology
and facilities
costs
Staff
costs
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.39
Cost
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
2.39
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.40
External and internal benefits
of performance objectives
Quality
Low price, high
margin, or both
Short delivery
lead-time
Cost
Speed
Quality
On-specification
products and
services
2.40
Reliable
delivery
Dependability
Internal
benefits
External
benefits
Flexibility
Frequent new
products/services
Wide range
Volume and delivery
changes
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.41
Polar diagrams
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
Quality
2.41
Dependability
Flexibility
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.42
Polar diagrams for a taxi service versus a bus service
Taxi
service
Cost
Speed
Dependability
Quality
2.42
Bus
service
Flexibility
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.43
Polar diagrams for a proposed police performance method
Required performance
Actual
performance
Reassurance
Crime
reduction
Efficiency
Working with
Criminal justice
agencies
2.43
Crime
detection
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.44
Polar diagrams for newspaper collection and general
recycling services
General recycling
service
Newspaper collection
service
Cost
Dependability
Speed
Quality
2.44
Flexibility
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.45
Trade-offs
‘Do you want it good, or do you want it Tuesday?’
‘No such thing as a free lunch’.
‘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’.
2.45
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
A
X
B
The ‘efficient
frontier’
A
X
C
D
Cost efficiency
2.46
Variety
The ‘efficient frontier’ view of trade-offs
Variety
2.46
The new ‘efficient
frontier’
B1
B
C
D
Cost efficiency
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
2.47
The ‘efficient frontier’ view of trade-offs (Continued)
Variety
Improvement through focus…
…or improvement through overcoming trade-offs
Improvement
through increasing
‘focus’ on variety
P1
P
Improvement through
overcoming the tradeoff between variety
and cost efficiency
Q
Improvement through
increasing ‘focus’ on
Q1 cost efficiency
Cost efficiency
2.47
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
The ‘efficient frontier’ view of trade-offs (Continued)
Variety
2.48
Focus strategies can
change the trade-off
curve from convex to
concave
Cost efficiency
2.48
Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010