Performance Measures in Operation Management
Performance Measures
1. Measuring and improving performance
1.1 Performance measurement
The activity of measuring and assessing the various aspects of a process or whole operation’s performance.
Performance here is defined as the degree to which an operation fulfils the five performance objectives at any point in time, in order to satisfy its customers.
A polar diagram can be used to see how well the 5 dimensions of performance of the operation meet requirements of the market.
It is unlikely that for any operation a single measure of performance will adequately reflect the whole of a performance objective. Usually operations have to collect a whole bundle of partial measures of performance.
What factors to include as performance measures?
The five generic performance objectives – quality, speed, dependability, flexibility and cost –can be broken down into more detailed measures, or they can be aggregated into ‘composite’ measures.
The more aggregated performance measures have greater strategic relevance. The more detailed performance measures are usually monitored more closely and more often. In practice, most organizations will choose to use performance targets from throughout the range.
What are the most important performance measures?
One problem to devise performance measurement system is to achieve some balance between having a few key measures on one hand, or, on the other hand, having many detailed measures.
Broadly, a compromise is reached by making sure that there is a clear link between the operation’s overall strategy, the ‘key’ performance indicators (KPIs) that reflect strategic objectives, and the bundle of detailed measures that are used to ‘flesh out’ each key performance indicator.
What detailed measures to use?
The five performance objectives – quality, speed, dependability, flexibility and cost – are really composites of many smaller measures. All of these measures individually give a partial view of the operation’s cost
1. Measuring and improving performance
1.1 Performance measurement
The activity of measuring and assessing the various aspects of a process or whole operation’s performance.
Performance here is defined as the degree to which an operation fulfils the five performance objectives at any point in time, in order to satisfy its customers.
A polar diagram can be used to see how well the 5 dimensions of performance of the operation meet requirements of the market.
It is unlikely that for any operation a single measure of performance will adequately reflect the whole of a performance objective. Usually operations have to collect a whole bundle of partial measures of performance.
What factors to include as performance measures?
The five generic performance objectives – quality, speed, dependability, flexibility and cost –can be broken down into more detailed measures, or they can be aggregated into ‘composite’ measures.
The more aggregated performance measures have greater strategic relevance. The more detailed performance measures are usually monitored more closely and more often. In practice, most organizations will choose to use performance targets from throughout the range.
What are the most important performance measures?
One problem to devise performance measurement system is to achieve some balance between having a few key measures on one hand, or, on the other hand, having many detailed measures.
Broadly, a compromise is reached by making sure that there is a clear link between the operation’s overall strategy, the ‘key’ performance indicators (KPIs) that reflect strategic objectives, and the bundle of detailed measures that are used to ‘flesh out’ each key performance indicator.
What detailed measures to use?
The five performance objectives – quality, speed, dependability, flexibility and cost – are really composites of many smaller measures. All of these measures individually give a partial view of the operation’s cost