Analysing operational performance

31.1 What is operational performance

Ultimately, operational performance can be measured in three ways:

• What's the total unit cost to get the right product to meet the consumer's requirements? And how does that compare with rivals.
• Does the quality of the product or service create customer delight? Or satisfaction? Or mild disappointment? Or 'I'm going to fill social media with my disgust?'
• Does the price charged create enough of a premium over the unit cost to make the business sustainable and profitable in the long term.

To understand competitiveness and unit costs, it is helpful to look at three factors: labour productivity, capacity utilisation and issues surrounding a company's total available capacity.

31.2 Labour productivity

Labour productivity measures the amount produced per worker over a given time. (Refer to chapter 27 for more).

31.3 Differences measuring productivity

Productivity is said to be output per worker, per time period. Comparing the productivity of different factories…