AAOM Handbook

within the element) of each element of the model. Raw measurements of the performance of an element in a connected series of elements will, unless there is significant storages that effectively isolate an element from its pre/proceeding elements, also contain dependent variation (i.e. arising from causes in the pre/proceeding elements). If the model is calibrated using data that contains dependent variation the model outputs will be unreliable. The Operating Model TA Quantify Common Causes of Variation provides a technique for isolating the dependent and independent components of variation.

Figure 1.

PERFORMANCE / EFFORT RELATIONSHIP

The relationship between performance and effort is not linear – it follows the law of diminishing returns. The shape of the curve is determined by; DESIGN STRATEGY The operating point on the curve is determined by effort; EXECUTION RESOURCING

PERFORMANCE (VOLUME)

EFFORT (COST)

Copyright © McAlear Management Consultants 1995.

Purpose

To obtain historical performance data that is representative of the performance of a Business Structure element.

Quantity

• One set of historical data for stable, independent performance in a nominated operating range. • One specification for the characteristics defining the distribution of historical, independent performance in a nominated operating range.

Quality

The historical performance losses for which performance distributions are to be obtained may include; • effectiveness (units output per time period),

© McAlear Management Consultants 2006

Operational Planning: Set Performance Targets

Updated: August 2018

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