Performance Management for Operations
Winning at the Margins
Operations is the delivery mechanism of the business, providing both what the business sells and how that product gets to market. For Operations to win at the margins, it must balance the need to reduce costs while staying agile enough to respond to customer demands.
Operations must have accurate, timely information about product demand from the frontline functions of the business—Sales, Marketing, and Finance. Without it, the business stands to lose operational efficiency and profit margin. At the same time, the organization must identify and eliminate process time-wasters. The more steps in the process, the higher the bottleneck and downtime risks as well as costs.
Information sweet spots can improve Operations decision-making and performance in six core areas of performance management:
- Purchasing and Procurement
Ensuring timely and cost-effective input of resources. - Production and Capacity
Generating timely output in the face of uncertain demand, complicated processes, and variances in input - Inventory Management
Understanding the balance between holding cash and delivering on customer service requirements. - Distribution and Logistics
Achieving efficient distribution and delivery. - Cost and Quality Management
Balancing the need to reduce costs with the equal requirement to delivery quality output. - Process Efficiency
Designing a process to monitor and analyze performance benchmarks to find opportunities for greater efficiency.
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