Main idea: A well-designed and properly applied performance measurement system is the strongest management tool available for controlling operations and fostering change. Therefore, companies that have made (or are considering making) the change to such advanced manufacturing techniques as JIT should make certain that their performance measurement systems will lead to the performance needed in an advanced manufacturing environment.

Issues:

JIT implementation should consider the following issues in the system:

1. Address the critical success factors: Optimize the whole system with a top-down approach to the development and analysis of performance measurements.
2. Develop goal congruence: Establish goals so that all levels of the organization are striving for the same end result.
3. Reinforce the desired operating environment and methods: Teamwork is emphasized, especially between functional departments.
4. Provide timely management information: Performance measurement systems should provide data more frequently. Managers must be able to measure progress as well as performance.
5. Foster a long-term perspective: Trend analysis and the performance/reward structure are two strong methods that foster a long-term perspective.

The first step toward achieving optimum results from performance measurement systems is to evaluate their effectiveness. A performance measurement system evaluation should verify that the system supports the company’s strategic goals:

• Review and confirm the strategic plan
• ID critical success factors (i.e., tactics in the strategic plan, corporate culture)
• ID and document the proposed performance measurements needed to attain the critical success factors
• Document and review the current performance measurement system
• Assess needed changes to the current performance measurement system when compared to proposed system
• Develop an implementation strategy for the required modifications.

 

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