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Operational performance management is defined as an ordering of different units or departments in an organization with the aim of enabling them work together in achieving the goals and objectives of the organization. Operations performance in any organization forms a very important part because it can either make or break the business (Stack, Chambers and Johnston 2007, p.4). It then follows that an organization can only be deemed successful if its operations are well managed. This is because Proper operational management reduces the costs an organization incurs in its day to day activities (Barnes 2008, p.3). This paper seeks to discuss the operations performance in detail, stating how operations performance can be measured, its objectives, operation processes and operational sustainability and its impact on the planet, people and profit.
This paper bases its discussion on the London eye which has in the recent time become one of London’s main attractions. It receives a wide range of visitors that vary from students to tourists both domestic and from outside the country. Its location, however, is highly competitive hence the needs to come with new products and services that will enable the customers have a memorable experience. This has been done by coming together with partners and joining forces to create more products and services that will go for a competitive price (e-business watch, 2003).
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The London eye operates a webpage that provides information about its attraction and other attractions in London. Customers are able to book and buy tickets online and get offers such as food vouchers and tickets reduction. Apart from that, the Eye has e-partnered with restaurants; museums, theaters and other attractions to provide e-services and products that can be purchased through the internet (e-business watch, 2003). It then follows that The London eye strives to achieve customer satisfaction through offering of quality and unrivalled products at a competitive price thereby ensuring that customers are satisfied and that they always come back.
Operations performance has five main objectives in any organizations. These objectives focus on quality, speed, dependability, flexibility and costs. It is also important to note that the manner in which operations and processes are made and implemented in any organization plays a key role in determining its success. It determines whether it will successfully deliver goods and service to its customers or not. Optimization of operations and processes thus enables an organization make profits through process enhancement and capacity building (Grae, 2013).
Following the importance of operations performance to any organization, top managers always hold high expectations of operation to steer the organization to success. (Stack, Chambers and Johnston 2007, p.4).
Performance Objectives of Operations in relation to the London Eye Operations
As earlier mentioned in the introduction, there are five operation performance objectives. These are quality, speed, dependability and flexibility. It is impossible for an organization to focus on all these objectives as it might result to confusion. Excelling in different operational objectives will give an organization a competitive edge over others in the same field (Barnes 2008, p.24). In addition, an effective operations management will focus on cost reduction in producing goods and services, ensuring customer satisfaction and also minimizing risks of operational failure. Apart from that, effective operations will also focus on innovation and provision of opportunities for future innovation thus ensuring continued capacity building. (Stack, Chambers and Johnson 2009, p.35). Each of the five objectives will be discussed in terms of how they make the business competitive and how they are measured.
Though it means different things on different operations, quality can be defined as “doing things “right” or event to which products and services are delivered to specification” (Kossmann 2006, p.48). It thus follows that performance based on quality focuses on things such as the number of defect products produced and the cost quality production incurs (Neely 2007,p.70). In The London Eye case, they strive to provide quality services and products to their customers thus ensuring that the customers get the value of their money always come back.
Feignbaum (1961) suggests that the real cost of quality entails three types of costs on quality. First there is prevention cost, which is that one incurred in the process of preventing product errors through events such as training programs, quality surveys and quality planning. Secondly, there is the appraisal cost which is that one incurred in the process of quality evaluation and detecting of errors in such ways as product tests, calibration control and inspection. Lastly, there are failure costs that come up as a result of errors on products both internally before delivery to customers and externally after delivery (Neely 2007, p.70). It is also important to note that error free goods and services give an organization a competitive edge on quality over other organizations. Good quality would mean a positive customer response and consequently extra revenue. It is because customers will continue buying the product over and over with little or no complains about its quality. Internally, conforming to good quality would mean very few mistakes are made hence saving on costs and increasing speed of response to customer grievances if any. (Stack, Chambers and Johnston 2009, p.40).
Speed in operations can be defined as the ability to respond as faster as possible to demands of customers thus ensuring a short time elapses between the time when a customer make an order and when he/she receives the product (Barness 2008, p.24). Faster response to customer demands may increase the likelihood of the product being bought and at even a higher price. In addition to that, speed reduces costs through reducing inventories and risks that may arise due to slow delivery (Stack, Chambers and Johnston 2007, p.42). It is also important to note that externally, faster delivery results to customer satisfaction hence increased revenue while internally it results to increased productivity via fast throughput (Kossmann 2006, p.48). The e-partnerships between The Eye and other business is made casual to ensure that the eye rapidly responds to its customer demands thus ensuring a speedy operation.(e-business watch, 2003)
This can be defined as the ability of an organization to deliver products and services to customers as per the promises made to them in terms of time and place or any other agreement (Barness 2008, p.24). This has an effect to the organization both internally and externally. Externally, it instills more trust in customers on the organizations operations and also increases their satisfaction in the services provided. Internally, dependability leads to saving of time, money and also ensures stability thereby increasing the efficiencies of the organization (Kossmann 2006, p.48). By offering online booking and purchasing, The Eye is able to deliver to its customers as promised and as per what the customer expects.
Flexibility in operations can be defined as the ability to alter operations in some way. It is also important to note that as, an objective, it is made up of four aspects that include the ability to change in volume of production, ability to change production time, ability to innovate and come up with new ideas and lastly the ability to improve or change the various products produced (Barnes 2008, p.24). Externally, flexibility allows room for development and production of new products and services that may please the customers. Flexibility in volume and delivery will also enable the organization cope with changes that may arise due to shifts in demand patterns. On the other hand, flexibility internally speeds up response, saves time and helps in maintaining dependability thus saving costs in the long run (Stack, chambers & Johnson 2009, p.135). The eye has been able to alter its operations and bring in new products by offering new services in partnership with other players. This has enabled customers enjoy new services and products at a reasonable rate (e-business watch, 2003)
Areas where coast are incurred affect the influence of operational management on cost of final products and services. Operations will spend money on facilities, equipment, technology, staff and materials (Stack, Chambers and Johnston 2007, p.49). High costs in operational management will result to a high cost in the final product hence the need to produce goods and services at a low price (Barnes 2008, p. 24).Offering of differentiated products by The Eye through e-partnership has led to increased sales. Apart from that, the costs incurred in selling of services have been reduced since the services and products are now sold online. It is also important to note that personnel costs have been reduced.
Most organizations will strive to excel in one or two or several of the above objectives, but it is important to note that for any strategy by an organization employed to be successful, it will all depend on operations ability to be efficient and effective in the objectives. The success will also depend on whether or not customers will appreciate the selected competitive factor on which the organizational strategies are based (Barnes, 2008, p. 24).
Quality gaps show the difference between what consumers expect and what they perceive. It is important to note that there exist two broad types of gaps, the customer and the provider gaps. The customer gaps come about when there is a difference in a customer’s expectation and what he/she perceives while the provider gaps are the internal gaps within the organization (Slack, Chambers and Johnston, 2010, p. 34). Quality gaps within an organization can be termed into four groups. The first one is the difference between what customers expect and the managerial perception of these expectations. Secondly, there is the difference of the management perception of customer’s expectations and the translation of what have been perceived into quality services (Slack, Chambers and Johnston, 2010, p. 54). Thirdly is the difference between the service quality specification and the actual service delivered to the customers. Lastly is the difference between the services offered to customers and services that the firm had promised to deliver (Nguyen, 2005). The quality gaps in The London eye are not so much evident because the customers seem to love the services and product offered. The customers perceive what they expected, and the firm strives to meet all the customers’ expectations while maintaining quality services and products.