SCM300 - Module 10

SCM300 - Module 10 - SCM 300 MODULE 10 Study Packet Module...

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SCM 300 – MODULE 10 Study Packet Module 10: Performance Metrics Reading Assignments: Text: YOGA Text Reading Assignment: Pages: 107-121, 131-4, 257-61 107 Design and Development story There are 3 stories 1. A passenger is talking to a pilot of plane and he tells the passenger that he is only operating the plane with one instrument that measures speed and that he already measured altitude and he was pretty good at it and that next week he will use an instrument that will measure fuel gauge. Many companies do this today and only measure one thing at a time 2. A customer arrives at a drive-through teller line at a bank and noted that he had to wait 7min. After finishing his transaction the teller told the client that she deposited $5 into his account for having to wait more than 5min (employees are trained to do this to keep good customer service) This is a good situation where the bank teller was trained and empowered to measure waiting time and deliver excellent customer service 3. At a plant the VP of manufacturing and Director of HR told the plant and their employees that they need to develop new products in 3months versus the 18months that it usually takes or else stock options will dry up. One year later they reduced the average cycle time down to 4months and were given bonuses, but were told to still try and reach 3months. One year later they receive a memo from the CEO saying stock prices have declined over the past year because the customers absolutely hate designs they were sending them. They do not understand the problem 108 Jeff Bezos discussion He is the CEO of He believes that fact-based decisions are important and they are the best kind of decisions Unfortunately there are other types of decisions that do not boil down to a mathematical equation, this means that managers must rely on good judgment as we as data-driven analysis Questions related to measurement in operations How should we measure the performance of goods and services, processes throughout the value chain, overall organizational performance, and how does it relate to internal operations 109 Measurement at EBay The CEO, Meg Whitman, personally measures many things such as, how many people visit the website, how many register to become users, how long each user remains per visit, how long pages take to load… so on… she measures the take rate (the ratio of revenues to the value of goods traded on the site) and what days are the busiest. She also monitors noise (on eBay’s discussion boards customers can rate eBay). She says that measurements are a sign of a system that is process-oriented and the more stats the better, but there can too much (“paralysis by analysis”) 110 Figure 3.1 Performance Measurement Category Typical Organizational-Level Performance Measures Typical Operational-level Performance Measures Financial Revenue and profit, ROA, and Earning per share Labor and material costs, cost of quality, and budget variance
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This note was uploaded on 04/10/2008 for the course SCM 300 taught by Professor D during the Fall '07 term at ASU.

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SCM300 - Module 10 - SCM 300 MODULE 10 Study Packet Module...

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