Operations Strategy and Performance Management
This domain examines how operations deliver strategy and how performance is measured, cascaded, and reviewed. Questions often test competitive priorities, the balanced scorecard, KPI design, and the difference between output and outcome.
Core rules
- Operations strategy must align with market requirements: cost, quality, speed, flexibility, and dependability.
- The balanced scorecard looks beyond financial results to customer, internal process, and learning and growth perspectives.
- A usable KPI has an owner, formula, data source, frequency, target, and threshold. Without these it is a slogan.
- Distinguish leading indicators (training completion, dispatch cycle time) from lagging indicators (customer complaints, revenue).
- Productivity is output divided by input; capacity utilisation and bottleneck analysis explain why performance varies.
- Reviews should diagnose causes, not merely report variance.
Worked example
A logistics firm reports 92% on-time delivery against a 95% target. A weak response is 'improve delivery'. Better: break down by route and customer; check whether dispatch scheduling, driver availability, or warehouse picking is the constraint; set a leading KPI such as 'orders dispatched within two hours of cut-off'; assign an owner; review weekly. If the target is unrealistic, reset it against customer expectations and cost-to-serve.
Traps
- Measuring only financial results.
- Using vanity metrics with no decision rights.
- Confusing activity (training hours) with outcome (error reduction).
- Cascading targets without resources or authority.
- Changing the target instead of diagnosing the process.