Performance Measurements

"What gets measured, gets improved." We have all had personal experiences sufficient enough to appreciate the effectiveness of the psychology involved with this time-tested axiom. For instance, consider the relationship between the increased visibility that computerized income statements give the IRS and the growing thoroughness of revenue collections; or between food labeling that now has all ingredients listed and the growing availability of products with reduced salt and fat content. However, to achieve the most from measures, they must be constructed the same way each time to allow fair comparisons, and to provide accurate trend information. Also, they must be reviewed on a routine basis to assure sustained efforts to the changing of methods and behaviors. Thus, a contemporary expansion of this original axiom, which incorporates these two qualifiers in a business environment, might state that "Process Improvement requires consistent and regular performance measures." It was recognition of this reality that prompted the Production Operations division at McDonnell Doug­las Aerospace-East (MDA-E) to adopt performance measures as an integral step in their continuous improvement process.

A review of the existing Production measures revealed that they are nearly all internally focused. The predominant two are the utilization of touch labor and the +/- condition of internal schedules, both of which are calculated on an equivalent unit basis. This equivalency feature makes it possible to derive a projection for a whole unit with only a fraction of the work accomplished. These existing measures are also short-term in nature and in display format. The production of standard hours and the associated expenditure of operator hours are inputted during each work shift, and a report is distributed the next morning that presents each day's results. For a slightly longer view, a weekly report is issued that compiles the results of the current week, and provides several weeks of historical and forecasted performance on either side of it.

Management's decision to expand beyond these existing types of measures was initially linked to the MDA Vision Statement, which specifies customer satisfaction as its core objective. Clearly, if this was to be attained, a set of customer-focused measures needed to be included, and they needed to be placed on a par with traditional internal measures. The second source of direction for the new measures stemmed from the desire to have indicators that would stimulate plans and then monitor progress toward a growth strategy rooted in World-Class Manufacturing. Again, the existing measures were found to be too narrow (mostly oriented toward labor hours) and short-term (a few months or less), so the development of more encom­passing and long-term measures was deemed necessary.

To be Continued

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