An integrated dynamic performance measurement system for improving manufacturing competitiveness

Abstract

Until the 1980s manufacturing companies relied solely on performance measurement systems based on traditional cost accounting systems to control, monitor, and improve their operations. However, it has been shown that these systems do not capture the relevant performance issues for today's manufacturing environment. Rather, they focus on monitoring and controlling versus supporting process improvement, promoting overall system optimization, and addressing the dynamics of changing systems. In order to overcome the limitations of the traditional performance measurement systems a variety of integrated systems have been proposed. However, these systems have not yet fully addressed the requirements of a performance measurement system for today's manufacturing environment. This paper presents an integrated dynamic performance measurement system (IDPMS) developed in conjunction with the Missouri Plant of Square D Company. The IDPMS integrates three main areas of the company: management, process improvement team, and factory shop floor. To achieve an integrated system, the three areas are linked through the specification, reporting and dynamic updating of the defined areas of success, performance measures, and performance standards. Three tools are incorporated to support and enhance the integration within the IDPMS. An example is given that illustrates how the IDPMS addresses the current requirements of a performance measurement system.