AAOM Handbook

PS.02 Analyse Historic Production Distributions

Context

Within the Operating Model the term Production work is used to describe the actions directly associated with transferring, transforming or storing materials, services or information within a process. For example: a) in a mining/mineral processing environment; blasting, hoisting, stockpiling, grinding, smelting. b) in a power generation environment; transferring fuel, transforming energy (e.g. oil to heat, rotation of alternator to electricity), transforming voltage & current levels and transmitting power over lines. c) in a procurement and supply environment, placing orders, receiving, warehousing and issuing goods.. The Operating Model considers three characteristics when defining process outcome Performance Targets, and hence measures of Production work success. These are; • Effectiveness - the output delivered over time (which should include quantity, quality and time). • Efficiency - the ratio between output delivered and resources consumed over time. • Sustainability - the resources/condition(s) available to underpin the continued operation of the process (e.g. buffer stocks). The process of Setting Performance Targets undertakes the analysis and modelling needed to define the performance that each Process and Productive Unit of the Business Structure must deliver, in order for the overall Business Expectations to be met. Since all real world process show variation in their performance over time, performance targets are stated in the form of target specification, a confidence level of achieving that specification over a given time period and a margin of error (an indication of the spread of the performance distribution). These outputs from Set Performance Targets are the Process and Productive Unit Capability histograms (performance distributions) that, when modelled, produced a performance forecast that could meet the Business Expectations. The process of Setting Production Strategy will look for the most cost effective operating regime that can deliver the target performance specification for a Process or Productive Unit. The Effectiveness, Efficiency and Sustainability outcomes of a Process or Productive Unit are a function of several parameters that are directly influenced by Production and Service Strategy choices and implementation. These parameters include process; Design, Operating Time, Throughput Rate, Reliability, Quality performance, Work Management and Resourcing, Efficiency/Recovery, and Fixed and Variable Costs. The parameters for the historic performance distributions of the Process or Productive Unit can provide See Set Performance Targets for more discussion about the measuring these characteristics.

© McAlear Management Consultants 2006

Operational Planning: Set Production Strategy

Updated: August 2018

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