24. Performance Metrics


[MUSIC] Welcome back to our lecture on performance metrics. Upon completion of this lesson learners should be able to. Recognize the important role that measurement plays in supporting the attainment of manufacturing and supply chain objectives. Explain the reasons for measuring performance. And differentiate various manufacturing and supply chain measurement categories and measures. Performance measurement is an extremely important element to manufacturing and service operations. As it motivates individuals and groups to act in certain ways. And helps identify areas that are in need of improvement. It conveys data on key indicators both within an organization and to supply chain partners. It supports important quality management and communication principles. Measurement is an ideal way to convey an organization’s requirements and expectations. Both internally and across the supply chain.
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It helps managers to base their decision on objective data driven information rather than subjective impressions. And it’s an excellent way to promote continuous improvement.
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It supports objective compensation of employees through use of evaluations that are based on individual performance metrics. And or may be part of broader compensation programs that are based on team performance on metrics. Let’s dive into what performance metrics are. At a high level, they are quantifiable measures that are used by organizations to measure, track, and assess processes. They vary from company to company and are also varied between departments within an organization. And they provide insights into performance over time. Some keys to developing effective performance metrics include. Performance objectives are reviewed regularly and adjusted by management. Over time processes change and product mix changes. So the objectives need to change to reflect these changes in the processes and product mix. Metrics link to and support higher-level functional and company wide strategies and objectives. Metrics link to and support performance strategies and objectives of other functions. Customer service is a good example. Achieving a perfect order quality metric requires that the right product be in the right place at the right time, and in the right quality level. This requires all of the elements of the supply chain to be in sync and performing well. Individuals or groups are held accountable for achieving performance results. Metrics generally aren’t any good if they aren’t enforced.
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Metrics promote teamwork, continuous improvement, and cross functional cooperation.
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Metrics form the basis for reporting results to executives. They answer the key question, how are things going? Beyond good and awkward silence there are performance metrics to show. Metrics include triggers that indicate when process control tasks are necessary. Where are the problems? In working in box plants and potato chip plants, I can tell you that performance metrics were perhaps the most important tool to guide and prioritize efforts for improvement. Metrics include well-defined plans regarding how to achieve each measure. Let’s take a look at some typical metrics that are found in manufacturing and service operations. First, we will introduce the typical categories of metrics. Delivery performance addresses the timeliness of response. Quality addresses product adherence to specifications. Operations cycle time performance. And of course metrics on safety and cost performance are essential in manufacturing and service operations.
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Delivery performance addresses the timeliness of response, note this can be internal as well as external. For example, in an automotive plant, parts headed for final assembly are gathered in kits. Often in a facility adjacent to the main plant. And they’re delivered just in time to need to the assembly line. Clearly, delivery performance here is important and should be measured. As running out of stock can shutdown an assembly line. Quality, a number of metrics associated with quality. In addition to the ones noted here total cost of quality is one that I’ve been engaged with in the past. Where you sum up all of the costs caused by quality problems, reworks, refunds, etc. And measure that on a monthly basis say, the total cost of maintaining quality.
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From our prior lesson, we learned the importance of changeovers. So I think you can see how cycle time metrics may be important. As they measure the time to changeover between products as well as the overall readiness of equipment.
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Safety is a critically important consideration in operations and should be at the top of the list of performance metrics. If there are high number of accidents, there are likely process equipment and training challenges that need to be evaluated. Finally, cost, from high level metrics looking across the company. Individual plants, individual product lines, production lines, and even individual shifts. Cost is clearly an area that needs to be measured. In this lesson we’ve discussed the important role that measurement plays in supporting the attainment of manufacturing and supply chain objectives. Discussed the reasons for measuring performance. And discussed the various manufacturing and supply chain measurement categories and measures. Thank you for joining us and we’ll see you on the next lesson. [MUSIC]

Jim Rohn Sứ mệnh khởi nghiệp