Measuring operations performance

Learning objectives: -define performance measurements -identify areas in which to set performance measurements -evaluate performance

A review:

Components of OM
Procurement Product Design Location

Quality Management

OM Mission and Strategy

Layout

Schedule

Process Design Human Resources & Job Design

Reliability & Maintenance

Inventory

A measure of operational performance: Productivity

Productivity is the amount of products or services produced with the resources used
Productivity = Quantity of products or services produced Amount of resources used

Single Factor Approach to Measuring Productivity

Capital - Number of products produced divided by asset value Materials - Number of products produced divided by dollars spent on materials Direct Labor - Number of products produced divided by direct labor-hours Overhead - Number of products produced divided by dollars spent on overhead

The Balanced Scorecard provides an overall view on performance measurement and places operational performance measurements into perspective.

Performance measurements should be industry/company specific

Example: air traffic operational performance

Traffic counts for runways, airports and sectors Instantaneous sector counts, comparing aircraft density in sectors with sector capacity Reroutes, measuring the frequency and impact of in-flight reroutes Miles in trail compliance, combining data from various sources to determine the effectiveness of traffic flow management initiatives Flight time, distance and delay Air route utilization

http://www.atac.com/Services_Providers-e.html

Another example : Amtrak performance assessment

http://www.whitehouse.gov/omb/expectmore/summary/10004000.2005.html

Amtrak's purpose is ambiguous, and the program has been ineffectively managed due to this lack of clarity. Amtrak performs poorly both financially and operationally. Amtrak's annual operating losses and debt burden continue to grow, and it faces a multi-billion dollar infrastructure backlog. As its infrastructure ages, the ontime performance and reliability of its trains are deteriorating. Amtrak's flawed design contributes to its poor performance. Multiple independent studies have cited problems with the current model, including a lack of competition, little involvement by states in developing local services, and no accountability to taxpayers or corporate stakeholders.
http://www.whitehouse.gov/omb/expectmore/about.html