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Performance measures and metrics for manufacturing

One of the most important concepts when it comes to performance management is performance measures and metrics for manufacturing. But before we can begin to talk about performance measures and metrics we must first understand what performance management is. Basically performance management is activities that a company uses to ensure that their goals are being met in an effective and efficient manner. Basically what performance management focuses on is the performance of an organization, a department, the process involved in building a product or service, etc. And one thing that you need to know about performance management is that the results must be measured, this is known as performance measures or metrics. In performance management measures and metrics mean basically the same thing; it is a way to determine what kind of progress has been made and to report the success to the company.

But when it comes to performance management there is something that you are going to need to do to be sure that the program is effective. So what you are going to have to do is use performance measures to be sure that the company is making the improvements that management feels is necessary. But what most people have a hard time determining is what should be measured in the company besides financial results. Unfortunately there is actually no easy answer to this question because what you should measure depends a lot on what your company is doing and what their overall goals are. But the good news is that there is a model that you can use to help determine what your company should measure. This model is called the Balanced Scorecard, basically this scorecard is filled with critical questions that the company must answer to see how well they are doing.

One thing that you need to realize about the balanced scorecard method is that you are still going to need a more detailed approach to operational measures if you are in the manufacturing industry. The reason for this is that the questions shown on the Balanced Scorecard leave out a few critical things. So when it comes to operational measures you are going to want to make sure that three critical areas are addressed. The three critical criteria that you need to address are: is the operations of the company logically sound, does it relate to real world processes and does it have a record of successful application.

Here is a sample of a Balanced Scorecard, on it there are some performance measures that you might find in a manufacturing company.

CUSTOMERS
- Are we satisfying our customers?
o Customer satisfaction and dissatisfaction
o Customer retention and behavior
STAKEHOLDERS
- Are we satisfying our shareholders?
o Financial returns to shareholders
- Are we satisfying our other stakeholders?
o Stakeholder satisfaction and dissatisfaction
o Stakeholder retention and behavior
STRATEGIES
- What is happening to our customer base?
o Market potential
o Market growth rate
- Is our company strategy working?
o Market share
o Customer acquisition
o Customer profitability
o Product/service profitability
o External factors that affect customers
- Are our individual strategies being properly executed?
o Strategic goals and the objectives necessary to achieve them.
OPERATIONS
- Are we serving our customers and stakeholders effectively?
o Product and service quality
- Are we operating efficiently?
o Process quality and capability
o Productivity
o Waste
o Product and service costs
STAKEHOLDER CONTRIBUTIONS
- Are stakeholders contributing what they should?
o Stakeholder resource contribution
o Stakeholder contribution quality
CAPABILITIES
- Are we developing the abilities we need to execute our strategies?
o Organizational capabilities
o Infrastructure capabilities
o Stakeholder capabilities

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