Operational effectiveness, in general, refers to the way an organization sees the importance of operations in achieving strategic objectives and economic success. There are four stages of operational effectiveness, i.e. coming to a realization that processes are the key to high levels of performance and competitiveness. Organizations in stage 1 are known as internally neutral. It means that they do not believe in a strategic significance of operations in achieving success.
Instead, they see processes as the source of a company’s problems, that is why all activities are aimed at minimizing negative outcomes of the processes. Stage 2, labeled as externally neutral companies, still ignore the value of operations, however, they tend to follow the standards and practices of the industry they are involved in.
Stage 3, internally supportive, is the phase of an organization’s development at which it sees processes as a tool for achieving overall strategic objectives, however, does not consider them in developing a strategy. Finally, organizations in stage 4 stamped as externally supportive depend on operations in accomplishing goals and gaining competitive advantages. Assessing the stage of an organization’s operational effectiveness may be a complicated task as different parts of a company may be at different stages. In this case, the general rule is that the stage of operational effectiveness is determined by the balance of its organizational practices (Meredith & Shafer, 2013).
General Motors (GM) focuses on operations in designing its strategies and sees operations as a key to success. That means that while carrying out new projects, senior management of the company looks for ways of “improving operational effectiveness through process improvements” (Owen, VanderVeen, & Frost, 2013, p. 23).
What is more, the company realizes that operations are the foundation of its future competitiveness and long-term profitability (General Motors Company, 2015). That said, current stage of GM operational effectiveness can be assessed as stage 4, externally supportive. It is so because the company focuses on improving processes and sees them as the foundation of competitiveness and successful performance.
The Use of a Balanced Scorecard Approach to Controlling Processes
The balanced scorecard approach is used to controlling processes and their effectiveness. It helps assess a company’s performance in four primary fields of performance: customer, financial, learning and growth, and internal business processes (Kaplan & Northon, 2015). Customer performance is the level of customer’s satisfaction with the company’s goods. Financial performance is the level of an organization’s profitability. Learning and growth is about developing the infrastructure necessary for reaching high levels of competitiveness. Finally, internal business processes performance is the ratio of time for carrying out different operations to general throughput time (Meredith & Shafer, 2013).
General Motors, nowadays, does not exercise an overall balanced scoreboard approach to controlling processes. There were attempts for implementing one for the European branch of GM, however, their results were less than optimal because the company did not have a strategy for transmitting it to such a massive scale (Kaplan & Northon, 2015). GM has chosen traditional balance sheets as the method of controlling operations (General Motors Company, 2015a) even though they are one-sided since the focus is made only on financial performance.
Developing a balanced scoreboard might have sense for an organization like General Motors. However, its design and implementation should be based on thorough planning of every step as the previous attempt has shown that the company did not have the strategy. In the case of GM, it might have sense to start with drawing up the strategy maps that will focus on the same aspects of performance as the balanced scoreboard. Designing strategy maps will by itself imply the need for implementing a tool for controlling achievement of strategic goals that is what a balanced scoreboard is.
ISO 9000 and ISO 14000 Standards and The Activities of General Motors
ISO 9000 and ISO 14000 Standards can help organizations improve their performance. ISO 9000 was developed as a benchmark for the company’s design, production, selling, and servicing activities. ISO 14000, on the other hand, covers environmental aspects of operations such as management, auditing, labeling, etc. (Meredith & Shafer, 2013). These standards for manufacturing and environmental maintenance if used together add to controlling performance of an organization.
General Motors is certified to ISO 9001, a subset of ISO 9000 Standard (General Motors Company, 2015b). As of ISO 14000, GM is not certified to it. However, the company demands that all suppliers of automobile parts working with the organizations are certified to it (Bosso, 2010). It might have sense for GM to obtain ISO 14000 certification because green management and environmental issues have become one of the companies challenges and it works hard on meeting the ecological standards. As of ISO 9000, there is no point in being certified to it because this standard is just a list of recommendations on production and management rather than the requirement to take specific actions.
The Overall View for the Use of Statistical Process Control in General Motors and the Ways to Exercise It in Improving the Organization’s Performance
Statistical process control is a set of inspections aimed at defining whether the processes exploited by an organization need to be adjusted. There are two kinds of inspections that help determine the quality of the operations. The first inspection is for variables, and it is measuring such determinants as weight, height, width, temperature, etc., i.e. every parameter that can be physically evaluated. The second inspection is determining the existence of certain characteristics. It is used in the case if physical measures are unnecessary because the only thing that matters is whether the operation has some particular specifications, not what are its volumes (Meredith & Shafer, 2013).
Statistical process control method is a tool for determining whether a process can go out of control and, in the case of extraordinary situations, it may help define the cause that led to them and the ways of fixing problems through adjusting the operations. Control charts are constructed based on normal distribution. So, to prevent emergency cases, managers should check the mean of the distribution, so that if the value is too high or too low, the process has gone out of control, so an organization is recommended to think about adjusting it.
Having an opportunity to monitor processes improves the organization’s performance. What is more, it is possible to define the possibility of losing long-time customers by using the same control charts approach towards providing services. The ways to exercise this method in making a company more productive is paying attention to the level of skills of professionals working at developing these charts and defining what are the highest and the lowest levels of the mean of the distribution.
References
Bosso, C. J. (2010). Governing uncertainty: Environmental regulation in the age of nanotechnology. Washington, DC: RFF Press.
General Motors Company. (2015a). Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. Web.
General Motors Company. (2015b). General Motors global purchasing and supply chain global supplier quality. Web.
Kaplan, R., & Norton, D. P. (2015). Balanced scorecard success: The Kaplan-Norton Collection. Boston, MA: Harvard Business Review Press.
Meredith, J. R., & Shafer, S. M. (2013). Operations management for MBAs (5th ed.). Hoboken, NJ: John Wiley & Sons.
Owen, J. H., VanderVeen, D. J., & Frost, L. L. (2013). General Motors: Using O. R. to meet auto industry challenges and provide value to customers and the company. INFORMS Journal 40(6), 22-24.