Unit V: Monitoring and Control

Definition: Ensures strategies align with

organizational goals and adapt to changes.

Purpose: Tracks progress and implements

corrective actions for continuous
Introduction improvement.

to Strategic Importance: Drives alignment,

accountability, and responsiveness.
Monitoring
and Control Focus Areas: Key performance indicators
(KPIs), milestones, and strategic alignment.

Outcome: Enhanced organizational

performance and agility.
 Performance Metrics: Specific measures like sales
growth, market share, or customer retention rates.

Benchmarking: Comparing revenue per employee, net

promoter score (NPS), or operational efficiency with
industry standards.
Components of
Strategic Feedback Loops: Real-time updates and iterative
improvements from stakeholders.

Monitoring
Data Collection: Accurate, timely collection on
metrics such as customer satisfaction (CSAT) or
production quality rates.

Dashboards & Tools: Platforms to visualize KPIs, like

Power BI or Tableau.
 Financial Controls: KPIs like profit margins, cost variance,
and ROI.

Output Controls: Results-oriented metrics such as project

completion rate or productivity per unit.

Strategic Behavioral Controls: Employee adherence to performance

Control Types standards, participation rates in training programs.

Cultural Controls: Alignment with values measured by

employee engagement scores or ethical audit outcomes.

Hybrid Controls: Combining financial and non-financial KPIs,

such as customer churn rate paired with average revenue per
user.
 Definition: Continuous monitoring of operational
activities to ensure alignment with strategic goals.

Role of Purpose: Identify gaps, improve efficiency, and

ensure sustainable growth.

Performance Cost efficiency (e.g., cost per unit)

Tracking in Key Areas of Focus: Quality metrics (e.g., defect rates)

Delivery performance (e.g., on-time

Operations
delivery)

Strategy Benefits:
Enhanced decision-making
Improved resource allocation
Competitive advantage

Tools Used: Balanced scorecard, dashboards, and

performance management systems.
 Cost Metrics:

• Operating Cost per Unit: Total cost to produce one unit, including materials, labor, and
overhead.

Key
• Manufacturing Overhead (% of Sales): Indirect production costs as a percentage of
sales revenue.

Performance
Quality Metrics:

• First-Pass Yield (FPY): Percentage of products meeting quality standards without

rework.

Indicators
• Customer Complaint Rate: Number of complaints per period, reflecting customer
dissatisfaction.

(KPIs) for
Delivery Metrics:

• On-Time Delivery (%): Orders delivered by the promised date.

• Order Fulfillment Cycle Time: Time from order receipt to product delivery.

Operations Flexibility Metrics:

Strategy
• Time to Market: Duration from product concept to market launch.
• Product Variations: Number of new or modified products introduced.

Sustainability Metrics:

• Energy Consumption per Unit: Energy used to produce one unit.

• Waste Reduction (%): Decrease in waste compared to baseline.
 Align KPIs with strategic goals like market
Define Clear Objectives: share growth or cost leadership.

Best Implement Real-Time

Monitoring:
Use dashboards for live tracking of
production and delivery metrics.

Practices for
Tracking and
Regularly compare performance with
Benchmarking: industry standards to identify
improvement opportunities.

Improving
Performance
Collect data from customers, suppliers,
Feedback Mechanisms: and employees for actionable insights.

Lean principles to reduce waste

Continuous Improvement: Six Sigma to enhance quality
Agile operations for flexibility and speed
 Definition
• The possibility of failure or obstacles during the execution of a
strategy or project.

Key Sources of Risk:

• Operational Challenges: Inefficiencies in processes or
Understanding resource allocation.
• Cultural Resistance: Employee resistance to change or
Implementation misalignment with organizational values.
• Technical Issues: System failures, integration errors, or
Risk technological gaps.
• Financial Constraints: Budget overruns or insufficient funding.
• Market Dynamics: Changes in customer needs or competitor
actions.

Impact of Risks
• Delays, increased costs, reduced performance, or failure to
achieve objectives.
 Clearly define objectives,
timelines, and resource
Thorough Planning: requirements.
Identify potential risks during the
planning stage.

Ensure stakeholder alignment

Effective and transparency.
Communication: Regularly update teams on
progress and challenges.

Mitigating Use tools like risk matrices to

Risk Assessment and
Implementation
prioritize and address risks.
Management: Develop contingency plans for
critical issues.

Risks
Provide skill development and
resources to handle changes.
Training and Support: Foster a culture of adaptability
and collaboration.

Continuously track progress

Monitoring and against milestones.
Feedback: Collect feedback to identify and
resolve issues early.
 Definition

• The process by which organizations capitalize on knowledge gained through

experience and innovation to enhance performance and competitiveness.

Key Features:

• Knowledge Capture: Gathering insights from operations, customer

feedback, and innovation.
• Retention: Storing valuable knowledge in systems or culture for future use.
• Application: Leveraging knowledge to improve efficiency, quality, and

Learning
adaptability.

Importance:

Appropriation • Drives continuous improvement and innovation.

• Reduces the cost and time of future projects.

Challenges:

• Ensuring knowledge is transferable across teams or generations.

• Avoiding loss of critical knowledge during turnover.

Example

• Toyota’s Kaizen approach continuously improves production processes

based on frontline employee insights.
 Definition

• The tendency of decisions and strategies to be influenced or

constrained by past choices and historical circumstances.

Characteristics:

• Irreversibility: Investments in systems or processes create a

commitment to existing paths.
• Self-Reinforcement: Success in a current path encourages further
commitment, reducing flexibility.
• Lock-In Effect: Organizations may become stuck in outdated or

Path suboptimal approaches.

Dependency
Impact on Strategy:

• Limits innovation and adaptability.

• May prevent the adoption of newer, more efficient technologies.

Strategies to Address:

• Periodically evaluate the relevance of existing processes.

• Encourage flexibility by diversifying investments and skills.

Example

• A company sticking to legacy software despite modern alternatives

due to high switching costs.
Building Improvement
Strategies and
Operations Capabilities
for Sustainable
Alignment (Using Tesla
as a Case)
 Company Context
• Tesla focuses on sustainable energy solutions and electric
vehicles (EVs).
Key Challenge

Overview of • Balancing rapid innovation with long-term sustainability.

Improvement Strategies
Tesla’s • Vertical integration of supply chain.

Strategic • Continuous innovation in battery technology.

• Expansion of global production facilities (e.g., Gigafactories).

Alignment Sustainable Alignment

• Integrating environmental goals with business growth.

Outcome
• Tesla remains a leader in the EV market while driving
industry-wide sustainability.
 Agility: Rapidly adapting to technological
advancements and market demands.

Innovation: Pioneering autonomous driving and

Capabilities renewable energy solutions.

Driving Global Reach: Establishing manufacturing hubs

Tesla’s in strategic locations (e.g., China, Germany).

Success Customer Focus: Providing cutting-edge products

(e.g., Tesla Model Y, Powerwall).

Digital Integration: Leveraging software for over-

the-air updates and real-time monitoring.
 Focus: Streamlined battery
production to lower costs.

Improvement Use of renewable energy to

power facilities.

Strategy Initiatives: Modular factory design for

scalability.
Automation and robotics in

Example –
production.

Gigafactory Results: Reduced production costs

Operations and enhanced sustainability.

Key Lesson: Continuous investment

in operational capabilities creates
long-term alignment.
 How does Tesla’s focus on
sustainability impact its operations
strategy?

What role does vertical integration

play in Tesla’s global alignment?
Case
Questions How can other companies replicate
Tesla’s balance between innovation
and sustainability?

What risks might arise from Tesla’s

strategy, and how can they be
mitigated?
Use of Predictive
Analytics in
Transforming
Business
Operations (Using
Amazon as a Case)
Amazon’s Use of Predictive Analytics

Company Context: Global leader in e-commerce and cloud computing.

Key Challenge: Managing massive operations while maintaining efficiency and

customer satisfaction.

Inventory management.
Predictive Analytics Focus Areas: Customer behavior prediction.
Delivery optimization.

Technology Integration: Machine learning and AI-driven forecasting models.

Outcome: Improved customer experience and operational efficiency.

Key Applications of Predictive Analytics in
Amazon
Demand Forecasting: Anticipating product demand to optimize inventory levels.

Personalized Recommendations: Recommending products based on browsing and

purchase history.

Delivery Optimization: Real-time route planning to reduce delivery times.

Fraud Detection: Identifying suspicious transactions using predictive models.

Warehouse Automation: Enhancing fulfillment through AI-powered robotics.

 Prime Delivery
Focus
• Meeting the "two-day delivery" promise using predictive models.

Initiatives:
• Predicting high-demand periods (e.g., holidays, promotions).
• Optimizing inventory placement across warehouses.
• Reducing delivery times with real-time traffic and weather
analytics.

Results
• Increased customer satisfaction and reduced operational costs.

Key Lesson
• Predictive analytics enables proactive decision-making and
efficiency.
Case Questions
How does Amazon leverage predictive analytics to manage inventory across
its global network?

What are the potential limitations or risks of relying on predictive analytics in

operations?

How does predictive analytics contribute to customer loyalty (e.g., Prime

memberships)?

What lessons can smaller businesses learn from Amazon’s use of analytics?