Carol J McNair

Structural limits of capacity and implications for visibility

Purpose – Two reasons are identified for studying the impact of capacity measurements on organizations. First, firms which make the best use of their resources can be expected to outperform their competitors. The second arises from the potential structuration effect of capacity metrics. Such an investigation makes capacity a visible, and hence an actionable, construct. This paper aims to address these issues.Design/methodology/approach – To explore these issues, a combination of analytics and qualitative field research methodology was used. The measurement dimensions were developed by analyzing the different reports, baseline measures, and metrics included in the various capacity models as suggested by the literature. These analytics were enriched with observations obtained from field research.Findings – Maximizing the value created within an organization starts with understanding the nature and capability of all the companys resources. The outcome is the identification of capacity systems specifically s...

SHIFTING PERSPECTIVES: ACCOUNTING, VISIBILITY, AND MANAGEMENT ACTION

The objective of the research, and paper, is to determine first whether or not the accounting abstraction appears to dominate the manager’s perceptions of the physical reality of the firm’s utilization of its physical assets, and second, whether changes in the accounting abstraction (e.g. the addition of Capacity cost management reports and measurements) lead to changes in how managers perceive, and use, their physical assets. Using a cognitive decision-making structure developed by Wagenaar et al. (1995), this study explores the interplay between the structure and nature of capacity reporting (the surface structure of the decision) and the subsequent analysis and choice of managers within the firm (the deep structure of the decision). A five-site field research methodology was used to gather data from companies across a multitude of industry contexts and situations. Results suggest that the nature of capacity measurement and reporting does shape manager’s perceptions of current and potential future performance (the cognitive surface structure), with major implications for the nature and type of decisions and trade-offs made (the deep structure). Specifically, managers appear to make decisions that are illogical when considered in light of the physical reality of their operations based on the representations of this reality (e.g. the capacity measures and reports). Analysis and interpretation of these results suggest that what accounting makes visible appears to drive decision-making and performance in organization.

Improving productive potential in the airline industry by exploring the productive limits of capacity

This paper fills the gap between defining and measuring the productive limits of a service or system and the impact of various assumptions about the productive potential of the nature and informativeness of capacity cost management systems for the service industry. The focus rests on the various ways in which multidimensional limits (for example, time, space, volume and/or value-creating ability) can be used to define productive capacity. This research suggests that the limits used in establishing the capacity cost management system restricts the amount and nature of the information the system is capable of providing to management. The methodology used was a combination of analytics and qualitative field research. The outcome is the identification of capacity systems specifically suited for service operations. Such a framework allows the organisation to develop economies, make visible the drivers of waste and productivity and to identify the primary assumptions and implications of capacity limits.