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Performance Measures

Business Excellence performance measures to encourage, support and monitor new and better ways of working

downloadpm0You can purchase the 11 page, fully illustrated e-book on Business Excellence Performance Measures detailed below for 4.95 (about US$8 or €7) by clicking the image on the right. Along with the e-book comes a spreadsheet showing the hierarchy of 62 integrated measures with suggested targets and measurement frequency.

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Performance Measures e-Book details - This e-book guides you towards developing a set of linked performance measures (sometimes called key performance indicators or KPI) that are forward looking, outward looking and encourage team working towards the business goals. In addition, the new performance measures should encourage a continuous improvement in business performance. New performance measures make a clear distinction between causes and effects, between measuring the underlying business performance that cause change and the business results that are achieved. The new performance measures also recognise the difference between natural variation and fundamental changes in performance.

The new performance measures are particularly applicable, if not actually critical to the success of the implementation of an enterprise resource planning system or to improve the results achieved following a previously implemented system.

I must stress that new Business Excellence Performance Measures should not be layered on top of existing measures but replace them. For instance, a very common performance measure is production output measured in financial terms but this is not a good performance measure as financial output is a business result rather than a driver of performance. It is much better to have sales forecast accuracy and production schedule adherence as performance measures then it is easy for the financial department to calculate or model the financial performance of the business over the forecast horizon which should cover the current financial year and beyond.

Contents:

  1. Introduction
  2. Traditional Performance measures
  3. Linked Performance Measures
  4. Connecting Business Excellence Performance Measures to Financial Performance
  5. Setting Business Excellence Performance Measures
  6. Monitoring Business Process Performance
  7. Summary
  8. Plus spreadsheet with hierarchy of the measures.

Extract

3. Linked Performance Measures
To be able to use performance measures to harness the synergistic energy that drives the best performing companies, we have to develop a linked set of performance measures. The achievement of each measure is dependant on the co-operative action of a group of people. It is the understanding of this linkage that is key to establishing our new performance measures.

linkedpmTake for instance the flow of business through the supply chain. The first stage in the supply process is the development of a forecast of demand. We then plan material and other resources to be in place based on this forecast. When the order is received we must process the order efficiently and manufacture in the most cost effective way to the quality required. We then have to ship the product on time and collect the money. <./p>

If we are late delivering the goods or the quality is poor, it is harder to collect the money. Delivery on time is harder if resources are not properly planned which is made harder if the forecasts are inaccurate. If the forecast is incorrect we will not have the resources to meet the orders whilst if the delivery performance is poor we will not receive the orders that were forecast, and so on.

Each stage in this supply chain must be monitored but the performance of each stage is closely related to the performance of the other stages. It may not be obvious that the level of debtors is related to the accuracy of the forecast but it is the understanding of these linkages that is crucial to the working of the new performance measures. The linkage of performance measures is also the reason that we need to relate the measures to the processes rather than to the people.

Time is the most important competitive weapon in almost every industry. We need shorter lead times than the competition, our product development needs to be ahead of the competition’s, we need to be more responsive than the competition. A major change with our new performance measures is to measure our performance much more in terms of time rather than in terms of money.

We measure the velocity that inventory moves rather than the absolute value of the inventory. We monitor whether our orders were on time rather than their output value. Our new performance measures include how much we are improving our manufacturing lead time, our set-up times, our new product introduction times and our vendor lead times. These are all fundamental process measures rather than just historic results. Improvements to these time based measures can only be achieved by fundamental improvements to the business process.


You can purchase this e-book by credit card for 4.95 (about US$8 or €7) by clicking the book image at the top right of this page.


This e-book plus 10 more like it can be purchased together in the compendium book "Business Excellence - the integrated solution to manufacturing planning and control" price 24.90, about 45US$ / €37. . . more details