Operational Performance Measurement: Increasing Total Productivity

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CRC Press, Aug 31, 1998 - Business & Economics - 264 pages
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Mention the phrase "bottom line," and the immediate thought tends to focus on a company's financial performance. Think again! There's an equally important factor that carries tremendous impact on that final total: operational performance measures.

Implementation of a performance improvement program can significantly improve a company's bottom line. Operational Performance Measurement: Increasing Total Productivity shows the way-featuring a new integrated theory of performance measurement, with a never-before-published measurement model that's applicable to any business activity.

Practical procedures and guidelines directly identify the variables that should be measured; guidelines to develop measurement systems; and how to analyze, interpret, and use performance methods effectively. Numerous diagrams, tables and examples make the principles and procedures easy to understand and implement.

While this performance measurement approach is simplicity itself, be prepared for powerful results!
Managers can put the theory into action right away- giving them better control, improved performance, increased personal productivity-and an easier day at work!

Operations, finance, administration and quality managers alike will find there's so much to gain when they're Operational Performance Measurement: Increasing Total Productivity ... and a better bottom line is just the beginning!
 

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Contents

WHY MEASURE PERFORMANCE?
1
Clear Responsibilities and Objectives
2
Understanding Business Processes
3
Knowing What a Process Can Do Its Capability
4
Improved Quality and Productivity
5
More Efficient Allocation of Resources
7
Better Planning and Forecasting
10
Changing a Companys Culture
11
Interpreting Performance Measures Context
128
Quality and Productivity
129
The Importance of Market Share
132
Relating Operational and Financial Measures
133
Determining Priorities
135
Comparing Results Against a Forecast
136
Team Consensus
137
SUMMARY
138

BENEFITS FOR EMPLOYEES
12
Seeing Accomplishments and Receiving Recognition
13
More Empowerment
14
WHAT IS MEASUREMENT?
15
Measurement Standards
16
Measurement Techniques
17
Measuring the Unmeasurable
19
SUMMARY
20
MEASURING PRODUCTION PROCESSES
23
MEASURING SERVICES VERSUS MANUFACTURING
31
Applying the Measurement Model An Example
32
LOGICAL RELATIONSHIPS AMONG MEASURES
35
The Customer Perspective
37
The Company Perspective
38
The Strategic Perspective
41
The Perspective From the Nth Dimension
43
SUMMARY
44
OPERATIONAL REQUIREMENTS FOR EFFECTIVE MEASUREMENT SYSTEMS
45
Explain the Performance Gap
47
Accuracy
51
Timeliness
52
The Learning Cycle
53
Systematic Operation
55
Financial Measures Versus Operational Requirements
56
Absence of Fear
57
Validity
60
Easily Understood and Relevant to the User
61
SUMMARY
62
DETERMINING WHAT TO MEASURE
63
Determining What Customers Want
64
Key Performance Factors
69
Deploying Key Performance Factors
71
Deployment Flowcharts
72
CauseEffect Analysis
73
Strategic Deployment Analysis
74
RealTime Quality Survey
78
Interviews
80
Work Input and Product Output Analysis
82
Composite Measures
84
Measuring Productivity
85
Waste Analysis
86
Determining Relative Importance
87
Measuring Variables the Right Way
89
Measuring the Unmeasurable
91
SUMMARY
92
IMPLEMENTING PERFORMANCE MEASURES
95
Laying the Foundation
97
Determining What to Measure
99
Designing the Data Collection System
100
Developing the Data Processing System
102
Developing the System
103
Refinement
105
Use a Rifle Not a Shotgun to Hit The Target
106
Decentralize the Measurement System
107
Level of Detail
108
Combining Measures to Create a Single Composite Index
109
Security of Confidential Information
110
SUMMARY
111
ANALYZING AND INTERPRETING MEASURES
113
Identifying Relationships
115
Determining Process Capability
119
Determining Production Capacity
120
Making Comparisons
121
Departmental and Process Perspectives
124
Zooming In and Out
126
Looking for Opportunities as Well as Problems
127
USING PERFORMANCE MEASURES EFFECTIVELY
139
Establish Performance Goals
140
Regular Review and Analysis
142
Use Performance Measures For More Than Just Keeping Score
143
Communicating Performance Information
144
Making Performance Visible
146
Establishing Priorities
147
Feedback Feedback Feedback
148
Reward and Recognition
149
Performance Measures and Total Quality Management
150
Making Sure the Measures Result in Action
151
INSURING YOUR MEASURES ARE SHOWING AN ACCURATE PICTURE
153
Warning Signs
156
Differences Between Financial and Operations Measures
157
Keeping Up With Changes To Processes
158
Improving the Measurement System
159
SUMMARY
160
WHAT SOME LEADING COMPANIES ARE MEASURING
163
General Categories of Measurements
164
Customer Satisfaction and Dissatisfaction
165
Employee Satisfaction
166
Environmental Impact
167
Maintenance
168
Purchasing
169
Quality Leadership
170
Schedule Effectiveness
171
IMPLEMENTING MANUFACTURING PERFORMANCE MEASURES A CASE STUDY
173
The Organization
174
Determining What To Measure
176
Diagnostic Measures
178
System Implementation and Development
179
Distinguishing Rejects From Rework
183
System Output
184
Impact On Performance
187
Costs
189
FireFighting Reduced
190
Possible System Improvements
191
An Important Note
192
IMPLEMENTING A FORMAL SELLING PROCESS AND PERFORMANCE MEASURES IN A SALES ORGANIZATION
193
THE TRADITIONAL SALES MANAGEMENT APPROACH
194
Operationally Passing the Buck to Salespeople
195
Traditional Sales Forecasting Inaccuracy
196
Hockey Stick Quarterly Revenue Performance
197
The Situation and the New Sales Operating Vision
199
The Organization
200
New Operating Vision
201
The Selling Process and Performance Measures
204
Sales Operating Performance Measures
205
Producing 100 or More of the Quarterly Revenue Targets
206
Developing a Continuous Adequate Pipeline Flow
208
Improving Quarterly Forecast Accuracy
209
Impact On Operating Performance
211
Impact on the Organization
214
Potential System Improvements
216
Conclusions
217
GLOBAL WARMING?
219
MEASURING AN INVENTORY TRANSACTION REPORTING PROCESS
223
Determining What to Measure
224
Implementation
225
Using the Performance Measurement Information
226
Results
228
Conclusions
229
REFERENCES AND SUGGESTED READING
231
ENDNOTES
233
INDEX
235
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