Performance Measurements

To ensure the continuity of concepts and objectives, the leader chosen for the new team was a previous member of the committee. This also was intended to sustain an established rapport between the team and top management. Functional experts for each of the measurement types were selected as the initial team members: Scheduling for cycle and delivery, Quality Assurance for quality, Production Control for inventory and Manufacturing Budgets for total cost. It was essential that they have a working knowledge of their functional policies, procedures and automated systems, because each would be required to design, document and deploy their respective measurement process. With a heavy reliance on computers to supply data for the measures, an Information Systems (IS) representative was soon recruited onto the team. He would serve as the team's focal point for any IS questions and needs (providing requirements, estimates and advice on the future direction of the Production systems) and as the liaison with the rest of the IS organization. The remainder of the team was rounded out with two members that performed the technical integration and facilitation roles. They drafted and coordinated the team's project plans, represented the needs of the user community, and conducted the group dynamics exercises during the team meet­ings.

The charter of the team was to develop the criteria for the five measures, establish the rules necessary to define them, and then design and execute the processes that would generate the reports on a regular basis. Several different techniques were employed to formulate the criteria. These included an examination of the company's existing reporting methods, a search of professional organizations (APICS, CAM-I, SME) and the current literature, and the benchmarking of a local bank. The team settled on the following list, which captures the strengths and avoids the defi­ciencies of performance measurement that they uncovered:

Sustained and continuous improvement would be achieved only by changing the way work is performed (process), not by working harder in the same old way. But unless the business is already organized around the idea of "form follows function", depart­mental measures tend to provide only some vertical slices rather than the overall perspective of process, which spans the activities from the Assembly inputs to the outputs. This was achieved by using Cycle to set the boundaries for the other four measures.

This would be accomplished across the whole enterprise with the

use of standardized rules. The team began the evolution of rules by writing qualitative definitions that conveyed the philosophy for each measure. Next, they proceeded to quantify them by deciding the units-of-measure, calculation methods and data sources. Two guidelines surfaced at this time. One was to use only existing data (or data that could be gotten as a by-product of performing current activities), and not to create the need for any additional data collection activities. The other was to use only actual data from a completed event, and avoid in-process estimates or projected data. The rules culminated with the specifications of the display format for the graphs and lines.

All measures would have an owner. In this way, it was linked that the person who is responsible for performance also has the authority to make changes.

To be Continued

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