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Summary

Several accelerating trends have changed the way in which we view the management of production. Digitization has been a large transformational force connecting IT systems and devices across the world. Work is done virtually for most supporting back-end operations. Work products are, to a large extent, more informational than material in form. Teams collaborate globally though video conferencing and remote connectivity of various types. Productivity and quality are higher. Expectations for customer experience are becoming increasingly personal and seamless. Automation is also being introduced through the IoT and other applications to increase productivity. The IoT is composed of smart devices and sensors that are interconnected. These can be accessed to aid information exchange and operational management. Operations are also being positively impacted with the use of AI to aid decision making and to reduce mundane work task such as building reports or searching for information. In addition to AI, RPA is a growing field that automates routine work. Enhanced operational capabilities support these disruptive changes.

At one time, organizational size and available capital could ensure market share and enable an organization to adapt slowly to changing market conditions. Market dominance used to be determined by the ability of large organizations to set industry standards and deploy capital-intensive barriers that prevented new entrants. Prior to the advent of globalization, an organization’s operational strategy was relatively simple in that it was determined by the organization’s available technology, its logistical systems, and competitive threats on a regional or national level.

Today, competition is fierce. In fact, in some situations, smaller organizations dominate their market by neutralizing larger and historically more entrenched organizations. Effective execution requires doing the right things efficiently and according to schedule to achieve strategic and tactical goals. Competition leaves little room for poor strategic execution. The ability of an organization to adapt its organization, systems, and people to meet competitive threats is dependent on the organization’s culture, which is the driving force behind the organization’s competitiveness. Organizations will not change without a strong reason, and behaviors that made them successful are not easily abandoned without justification.

We have also changed the way we think about product and process design and their management. Understanding the voice of the customer and customer experience expectations are now an important basis from which to design products and processes and to more clearly focus development, deploy technology to align operations, and improve productivity through an efficient use of labor, materials, and capital. Operational linkage is also now carefully incorporated into strategic and operational planning. A clear line of sight between anticipated business benefits in terms of organizational productivity and ROE to the allocation of resources is an integral component of operational execution to improve financial and operational metrics. These are used to identify, define, measure, and control performance gaps. In addition to the dimensions of time, cost, and quality, metrics can be classified into dimensions of business, financial, operational, and compensating. Best-in-class metrics are differentiated by a focus on customer value and an ability to help focus attention on activities that help improve operational efficiency and organizational productivity.

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