Performance Objectives

Definition:  

The setting of short-term goals in various aspects (KPIs) of an operations process. 

This target serves to increase effort and attention to improve performance in that area. The more specific and measurable the target, the better.

Key Performance Indicators (KPIs) that an operations manager could target: 

• Speed: Reducing wait times, shorter lead times, faster processing speed, higher volume of production, less interruptions.

• Quality: number of defects, level of waste produced, level of conformance (compliance with standards, customer service feedback)

• Dependability: reliability of output, warranty claims, complaint levels

• Flexibility: time taken to respond to customer demands, how quickly operations can shift between functions

• Customisation: the extent to which the process can meet specific needs, time and cost targets for one-off projects

• Cost: operational costs, cost of front-end inventory from suppliers, running costs, labour costs, costs of holding back-end stock, transportation costs

Goals can motivate and inspire a team toward continuous improvement; increasing efficiency, productivity, reducing costs (and lifting profitability). 

These targets can them be used as benchmarks to measure actual performance vs projected performance. 

This is essential for the monitoring stage to be effective, and to then be able to identify areas of weakness that are ripe for corrective measures (other Operations Strategies) in the controlling stage.

These KPIs are the criteria you'll need to use to evaluate the effectiveness of an operation.

When to apply this strategy:

• When a business aims to be a cost-leader, or an industry leader in a category (customer service), or consistent underperformance in one KPI. 

• When a firm’s operational processes are sound but need tightening / oversight to make improvements. 

• When a firm has not implemented targets previously, so can begin to make significant improvements through setting performance objectives.