AAOM Handbook

insights into the options for adjusting scope for adjustment of these parameters, and into the interactions that occur between them.

A normal performance distribution suggests that the Process or Productive Unit is not operating with a single dominant constraint, but performance is determined by multiple independent variables. It is possible that the technical capacity limit of this process is not being reached and may not even be known with confidence. The capability of the process can be restricted by low or variable Utilisation, Throughput Rate and/or through poor process management (control systems and work management). A change to process design is not a good choice of Production strategy in this scenario. A strongly skewed distribution suggests that the Process or Productive Unit is operating with a single dominant constraint. For a left skewed distribution this will be caused by either Utilisation and/or Throughput Rate approaching a current technical limit. For a right skewed distribution this will be caused by either very low Utilisation and/or a lack of effective resources. A change to process design is not a good choice of Production strategy in this scenario. If a distribution has a wide spread then it suggests that either the flexibility demanded of the process is high, or that the execution or resourcing of the process is variable. Here, good Service strategy and process management (control systems and work management) will produce a tighter performance distribution, resulting in higher process Effectiveness and Efficiency.

Figure 1.

Output

Unit Cost

THEORY

In order to effectively evaluate potential Production strategies, and then to select the most cost effective combination, it is necessary to understand both the Performance Target distribution characteristics and the historical

© McAlear Management Consultants 2006

Operational Planning: Set Production Strategy

Updated: August 2018

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