Ken Doerr and I are pleased to announce the pending publication of a new paper entitled, “A Performance Metric and Goal Setting Procedure for Deadline-Oriented Processes” in Production and Operations Management.
The context of the paper is a large internet retailer or other order fulfillment business offering overnight delivery. The key to an overnight delivery promise is to establish a “cut off time,” such that orders received before that time will make it on the last departing truck (the deadline). The retailer naturally wants that cut off time to be as late as possible, in order to garner as much overnight business as possible. How should we set this cut off time?
Along with the cut off time, the firm must establish a nightly goal for workers. Because order streams are highly variable, it will often be the case that some orders don’t make the deadline. This reality suggests that management should set a goal toward which workers should strive. Goal setting theory suggests that goals ought to be challenging enough that they are met “with difficulty,” but not so challenging that they are never met. The theory also suggests that challenging goals motivate workers, whereas goals that are too easy or too hard lack motivational force.
What seemed like a relatively straightforward task (establish a nightly cut off time) has now become pretty complicated. Setting the cut off time too early is bad for two reasons: (1) the firm misses potential overnight order revenue, and (2) workers easily accomplish the goal and so it lacks motivational force. Setting the cut off time too late is also bad for two reasons: (1) too many customers are disappointed, and (2) workers regularly perform poorly against their metric, so again it lacks motivational force.
In the paper we explore these issues using data from a large distributor. We show how to set the cut off time and set a corresponding goal in light of Goal Setting Theory. Our results show that the method performs better than an intuitive method on data from the field site. That is, more customers receive their orders sooner than they otherwise would.
If you would like a copy of the article, please email me using the form below.