Performance management is undoubtedly a technique to help a company accomplish its objectives through the planning of vital performance targets and the measurement of progress towards those targets. It is usually applied at each and every level of the business enterprise. Performance management assists an organization to make decisions and then execute them.
It is challenging to fairly evaluate manufacturing performance. Financial measures, like Return on investment, profitability etc., usually are plant level measures which are susceptible to numerous variables beyond the scope of manufacturing operations. An effort to separate the performance of the operations function is to make use of methods where the management of operations performs a vital part, i.e. operational performance measures. Manufacturing performance dimensions utilized below are the typical group of competitive priorities, i.e. delivery, flexibility, quality, and cost performance.
Types of External and Internal Manufacturing Performance Measures
Internal Manufacturing Performance Measures
- Quality: Rework cost, % of passed quality inspection, expense of quality control.
- Delivery: Production lead time, accuracy and reliability of stock status, trustworthiness of internal lead times
- Cost: Unit cost of manufacturing, inventory turnover, capacity utilisation, yield
- Flexibility: Set up time, set up cost, period of fixed production schedule, volume of operating capacity.
External Manufacturing Performance Measures
- Quality: Conformance to decided upon specification, product performance.
- Delivery: Delivery lead time, on-time deliveries, inventory availability.
- Cost: Product selling price, market price
- Flexibility: Range of products, variety of products offered, capacity to deal with volume and product mix changes
Each and every dimension listed above is important to some degree, which one is the most critical is simply a matter of competitive positioning. Practically all dimensions could be assessed from an internal and external point of view. The internal perspective signifies measures which are helpful for the internal monitoring and management of the manufacturing process. To the contrary, external measures are the ones evaluated by the consumers.