Setting operational objectives

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26.1 Introduction

All organisations share common operational objectives regardless of their size and the sector in which they operate. All firms will attempt to produce goods and services that are 'fit for purpose', delivered quickly and on time. They will also aim to produce the right number of goods as cheaply as possible, bearing in mind the overall strategy.

The firm's operational objectives must be fully in line with its objectives regarding marketing and management of its people.

Finally, there needs to be enough flexibility within operations to allow activities to be varied or adapted quickly, in order to accommodate changes in demand.

26.2 Key operational objectives

Cost:

  • All firms are concerned with keeping costs down, particularly those that compete directly on price. Costs affect what is charged to the customer and therefore the profits that can be generated. During a period of economic downturn, a firm's ability to make further cost reductions can mean the difference between success and failure.
  • Costs are determined by the efficiency of a business. This can be measured by the number of ways; for example, wastage rates or the productivity of the workforce.

Quality:

  • Quality has a crucial role to play in guaranteeing customer satisfaction. Not only should firms aim to produce goods or services that are 'fit for purpose', they also need to create a sense of dependability by ensuring that products are ready when customers expect them. 
  • Failure to do so is likely to create customer dissatisfaction and encourage customers to switch to rival products. A high degree of quality and dependibility is also required within the organisation. Managers need to ensure tht quality standards are being met. They also need to synchronise production so that products pass smoothly from one stage to the next. This will help to reduce production time and costs, meaning that goods are ready for dispatch to customers sooner.

Speed of response:

  • This factor is important in many ways, both to the consumer and the producer. Many consumers are 'money-rich, time poor' as they rush from a well-paid job to pick up the kids, eat then go out. So operations that save time for the customer can be very successful. Time-based management is also important to firms in product development. The firm that is first to market is able to change higher prices than its slower rivals. Speed is also important within the business. The faster items pass through the production process, the…

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