Operations Management Metrics
Operations Management Process is the central arteries within the organization because it produces the planning process for goods and services, which are its reason for existent. Operations management is linked to all organizations as every organization is producing either a product or a service. However, it cannot be said to be the most important function since there are other functional areas and boundaries within an organization. In today's fast changing world, organizations have to have a tendency towards being efficient, effective and innovative to the changing environment to succeed. Operations Management has to use metrics in order for them to accomplish their task and be successful with minimal interruptions within the organization.
Metrics are very important in Operations Management within an organization because it provides functions such as control, reporting, communication, opportunities for improvement and expectations. It is a certifiable measure stated in either quantitative or qualitative terms types of measurements. In addition, metrics has different types of categories in the organizations. One of which is “Organizational Focus”, that have four different types of level within the organization or firm. 1. Organizational Metrics – this type of measure, capture and describe the performance of an organization (i.e.…market share and rate of return). 2. Product Metric – it measures cost per unit, contribution margin per unit, or growth in sales.
3. Functionality – it can measure the performance of a group such as purchasing or services or manufacturing. 4. Activity/Individual metrics – metrics that are specific to a person or activity (Vickery 1999).
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...ution of problems can only be the way to project profits within an organization. The effectiveness of the metrics is a measure of how well the output meets the needs of its customers and their expectations are met. Metrics is an important measure that monitors its effectiveness of an organizations operations process.
References
Barnard, W., De Feo, J. (2004). Juran Institute’s Six Sigma Breakthrough and Beyond. New York, NY: The McGraw-Hill Companies
Gray, C., Larson, E. (2008). Project Management: The managerial Process. New York, NY: The McGraw-Hill Companies Inc.
Melnyk, S., Stewart, D., & Swink, M. (2004). Metrics and performance measurement in operations management; Dealing with the metrics maze. Journal of Operations Mangement, Retrieved 2 May 2011. http://mldc.whs.mil/download/documents/Readings/metrics%20maze.pdf
Kerzner, H. (2013). Project Management: A Systems Approach to Planning, Scheduling and Controlling. Hoboken, NJ: Wiley.
Balanced Scorecard: During 1980s, executives across organizations were convinced that traditional measures of financial performance didn’t let them manage effectively and wanted to replace them with operational measures. Arguing that executives should track both financial and operational metrics, Robert Kaplan and David Norton suggested four sets of parameters.
Almost every company that exists utilizes a type of performance measure to evaluate and gauge the company’s overall effectiveness. However, over the years there has been many questions raised regarding performance measures and how it affects an organization. Theoretical questions were raised, for example, companies were not sure of what to measure or how to measure performance effectiveness. In addition, questions were raised on how to define different job elements and how to connect those job elements in with the company’s overall assessment process, which included the company’s goals, objectives, and functions (Matthews, 2011).
Establish and drive performance measures for the operation (including a consideration of efficiency versus effectiveness), often in the form of dashboards convenient for review of high level key indicators.
Performance indicators (sales/goods reports) – The final stage of evaluating the results of an training event can be done by comparing figures from the company sales report, goods production report, to see if there had been an increase since the training took place. This will give an indication of how effective the training session has been. The advantage of using performance indicators is that the performance can be compared using various different outcomes from goods/sales reports, quality ratings, increased customer satisfaction, etc. The disadvantages are: it is most costly and time consuming, it is difficult to identify which outcomes, benefits and final results are actually linked to the training.
Before enrolling in the operations management course this fall, my first impression of operations management was that this style of management deals with the processes and ideas managers use to help solve work issues. These work issues could range from measuring customer satisfaction to organizing a work room layout that would be most beneficial to the workers at a specific time. After further research on operations management, I was able to conclude that operations management entails much more than I had originally thought. Operations management is formally defined by William J. Stevenson’s (2012) as “the management if systems or processes that create goods and/or provide services” in an earlier edition of Operations Management (p. 4).
A business needs to develop a strong operations management team to survive in modern times. A business must have an operations management team set up so that the employees can perform effectively. Communication between management and employees can affect the behavior and relations among employees within the business. An effective manager understands that organization structure and performance to achieve revenue success is built on human relations and effective business behavior that will drive the business in a competitive market. In today 's technology age, operations management is the area concerned with the efficiency and effectiveness of the operation in support and development of the firm 's strategic goals. Other areas of concern to operations
In first developing metrics, we focus on what to measure, not how measurement is going to happen. There are several reasons for this: First, the decision about whether to create a given metric is more important at first than determining exactly how the data might be tracked, reported, archived, and so on. While measurement can be costly and sometimes not worth the effort, we have watched some teams talk themselves out of a potentially valuable metric just because they weren’t exactly sure at first how to collect the data. Usually, you have choices as to what to collect and report – for example, maybe you focus only on exceptions, or only reporting quarterly – that can reduce t...
Measurements of Success: When identifying the measurements of success, focus on the client/customer needs and identify measurements that address those needs. At this point, focus on what you should measure, not how you will measure it. Save the "how" for later (step 7 of the 10 steps). If you spend time at the beginning of a process improvement project on how to measure something, the project team will get sidetracked worrying about the difficulty of the metric itself.
Business firms may seem to be similar, relying on guide of organizational models. However, in practice, all business is unique, functioning as a distinct arrangement of organizational models, designs and practices. Adoptation of any plan is all to support ‘’inimitable’’ business strategy. Performance measurement is critical in assessing organization overall performance and results are used for strategic planning to develop range of strategies (Tapinos & Dyson, 2005) for achievement of sustainable business success. Without this information and understanding, organizational strategies will not be in configuration with or effective in the business environment. Performance measurement is a multifaceted management tool that centres on how a business generates value. Performance measurement systems are used to reinforce the behaviours required for business success as well as for achieving organizational direction.
The perspectives can be measured by the Baldridge Criteria for Performance Excellence. According to the textbook, Managing for Quality and Performance Excellence; there are five types of measures:
Metrics designed to track and encourage progress towards critical goals of the organization. They are effective at exposing and quantifying waste.
Operations Management is the term we use for the management of the resources necessary to produce and deliver the products and services required by customers. These resources include labor, materials and also capital equipment. Operations management include inventory management, quality control, production scheduling, and follow-up services. For example in clothing factories they transform raw materials, fabric, thread, and other resources into pants, shirts, skirts, and dresses in order for people to have clothing (Bethel University, 2011). This is called the process of fabrication and assembly.
Performance measurement systems and target setting will give an organization vital information about the market and which way to direct its attention and company. It will also provide a starting point for a system of target-setting that will help the owner or manager implement strategies for growth. A manager must be aware of...
Performance measurement and control are very important for any organization either government or business to measure the success of the organization and it is one of the most difficult parts of strategic management (Wheelen & Hunger, 2012). According to Crosson & Needles (2014), Performance measures are “quantitative tools that gauge an organization’s performance in relation to a specific goal or an expected outcome” (p 302). Many studies have suggested that organizations need to use both financial and nonfinancial performance measures to assess their strategies and operations (Milost, 2013). The financial performance measures might include net earnings, return on investment (ROI), net income as a percentage of sales, the costs of poor quality as a percentage of sales and earnings per share (EPS) (Milost, 2013; Wheelen & Hunger, 2012). The nonfinancial performance measures might include number of customer complaints, customer satisfaction, job satisfaction, management control system (Milost, 2013), economic value added (EVA), market value added (MVA) and a balanced scorecard (Wheelen & Hunger, 2012). It is suggested that organizations use multiple performance measures of 20% of the factors that determine 80% of meaningful and reliable results (Wheelen & Hunger, 2012).