Evaluation for Operations Management

The operations function of a business is the key to successful performance because it produces what the business sells. In many companies, operations consume a large part of the company resources and generate most of the revenue. The strategic importance of operations means that an evaluation of the operations strategy is critical. The operations strategy must support the overall company goals, supply operational targets that are realistic, and propose a plan that the company can implement to achieve the goals and reach the targets. As the company carries out the plan, it must continually evaluate the operations strategy in terms of performance. If operations don’t meet its performance goals, the strategy has to be updated with corrective action to put it back on track.

Determine whether the operations strategy is internally consistent. Check the different elements of the strategy to make sure they match and reinforce each other. Check that the cost structure specified by the strategy supports the level of quality it requires. Make sure that production targets are realistic in terms of past performance. Verify that the company can meet the projected manpower needs. Compare the operations strategy targets to company goals in terms of sales, profit and investment to make sure they are consistent.
Evaluate the operations strategy in terms of external consonance. Check that operations has plans to offer the products and services demanded by the market. Verify that planned company pricing can cover projected production costs. Make sure that demand projections for the various products and services match production targets. If there are trends or expected disruptions in the target markets served by the company, look for operations strategy contingency plans to address such events. Check that the operations strategy has taken into account company projections for supplier or material cost increases and for changes in demand.
Verify the feasibility of the operations strategy. Make sure the company can satisfy the financing and resource requirements for any capacity increases. Verify supplier pricing estimates and hourly wage projections to see that they are in line with reasonable expectations. Check that operations has the expertise to carry out any new development that the strategy specifies and that it has the required personnel for coordination and execution.
Look for advantages for the business that the operations strategy creates. Check for new, low-cost initiatives or new procedures that will improve quality. Check whether the strategy creates any new competitive advantages or whether it leverages existing unique qualities to increase product differentiation. Verify that it maintains existing strategic marketing propositions and strengthens them. Make sure that overall product and service characteristics clearly reflect the company marketing strategy.
Check performance. Compare the strategic goals and targets with actual results at regular intervals during implementation of the operations strategy and the corresponding plans. If there are continuing discrepancies, institute corrective action to bring the performance back to planned levels. Keep track of corrective actions to incorporate them into future versions of the operations strategy.

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