Operational objectives should include:
Meeting quality
Do you remember the difference between quality control and quality assurance.
Cost and volume targets
Click on the picture. How many pizzas?
Innovation
Efficiency (including time)
Environmental targets
Assessing internal and external influences on operational objectives:
Internal - Corporate objectives
As with all the functional areas, corporate objectives are the most important internal influence. An operations objective (e.g. higher production capacity) should not conflict with a corporate objective (e.g. lowest unit costs)
External - Economic environment
Crucial for operations. Sudden or short-term changes in demand impact on capacity utilisation, productivity etc. Changes in interest rates impact on the cost of financing capital investment in operations
Internal - Finance
Operations decisions often involve significant investment and cost The financial position of the business (profitability, cash flow, liquidity) directly affects the choices available
External - Competitor efficiency & flexibility
Quicker, more efficient or better quality competitors will place pressure on operations to deliver at least comparable performance
Internal - Human resources
For a services business in particular, the quality and capacity of the workforce is a key factor in affecting operational objectives. Targets for productivity, for example, will be affected by the investment in training and the effectiveness of workforce planning
External - Technological change
Also very significant – especially in markets where product life cycles are short, innovation is rife and production processes are costly.
Internal - Marketing issues
The nature of the product determines the operational set-up. Regular changes to the marketing mix – particularly product – may place strains on operations, particularly if production is relatively inflexible
External - Legal & environmental change
Great regulation and legislation of the environment places new challenges for operations objectives.
