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A WEB-APPLICATION TOOL FOR MANUFACTURING SYSTEMS STRATEGIC MANAGEMENT COMPETITIVE PERFORMANCE MONITORING A Thesis presented to the Faculty of the Graduate School University of Missouri

A WEB-APPLICATION TOOL

FOR MANUFACTURING SYSTEMS STRATEGIC MANAGEMENT

COMPETITIVE PERFORMANCE MONITORING

A Thesis presented to the Faculty of the Graduate School University of Missouri-Columbia

UMI Number: 1426042

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The undersigned, appointed by the Dean of the Graduate School, have examined the thesis entitled

A WEB-APPLICATION TOOL

FOR MANUFACTURING SYSTEMS STRATEGIC MANAGEMENT

AND COMPETITIVE PERFORMANCE MONITORING

Presented by Vaibhav Agrawal

A candidate for the degree of Master of Science

And hereby certify that in their opinion it is worthy of acceptance

ACKNOWLEDGEMENTS

I extend my sincere gratitude and appreciation to all those people who made this master’s thesis possible First and foremost, I am immensely grateful and thankful to my professor and advisor Dr Bin Wu, for his continuous encouragement, guidance and

contribution to this effort Also, I would like to thank the other members of this thesis

committee: Dr Thomas J Crowe and Dr Douglas D Moesel for making helpful suggestions and supporting me during the process

I would like to thank those people in the administration team of the

Environmental Dynamics Inc., Columbia, USA, who gave their time and comments on

my research work presented to them

My deepest gratitude is to my family and friends for their love, support and patience during all this time I took to complete my education in this great foreign country

H

A WEB-APPLICATION TOOL

FOR MANUFACTURING SYSTEMS STRATEGIC MANAGEMENT

COMPETITIVE PERFORMANCE MONITORING

Vaibhav Agrawal

Dr Bin Wu, Thesis Supervisor

ABSTRACT Manufacturing industries worldwide are facing intense competition due to globalization, outsourcing, and ever increasing customer demands For achieving corporate success it is necessary to have competitive advantage and as primary objective

of a manufacturing strategy is to develop and support a lasting competitive advantage that will be crucial in achieving corporate success Manufacturing strategy formulation and execution advocates a strong emphasis on performance measurement and monitoring of various manufacturing competitive criteria Also, in the present innovation era, competitive advantage is based on knowledge and dynamic capabilities Therefore, the individual creativity and potentiality of a knowledge worker needs to be integrated more logically to the corporate strategy implementation process

This research proposes ‘A Web-Application Tool for Manufacturing Systems Strategic Management and Competitive Performance Monitoring’ It will logically present and link a number of manufacturing functional areas needed to design, regulate,

monitor, and optimize a manufacturing system strategically as it progresses through its

life cycle It is aimed to assist the employees of a company to determine and understand its long-term goals and objectives in order to ensure a common vision in the organization This way, the employees will view manufacturing performance in several functional

ill

areas simultaneously, understand the strategic course of action, implement the strategy, and analyze the impact of it on manufacturing systems

Based on six manufacturing companies, a conceptual model company is created which will illustrate a step-by-step procedure of the proposed methodology and functions

of the developed tool A generalized manufacturing system competitive performance monitoring methodology is proposed with its expected benefits illustrated, Web monitoring of manufacturing system’s competitive performance is shown, which will help all the employees focus their actions in the most potential areas of the company’s growth In the proposed methodology, customers’ perspective is given utmost importance, as they are the one who demand and purchase the company’s products by judging its overall performance

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1.3 Research Aims and Objectives

1.3.1 Benefits from the Strategic Point of View 1.3.2 Benefits from the Applications Point of View 1.3.3 Benefits from the Technical Point of View 1.3.4 Benefits from the Academic Point of View 1.4 Research Approach

1.5 = Summary of Original Contribution

Manufacturing Vision and its Priorities

Performance measurement (PM)

Performance Criteria 2.10 Summary of the Literature Review

3.1 Introduction

Page

il ill Vill 1X

3.8 Analysis of the Illustrated Companies

3.9 Analysis of the Problems Description of all the Six Case Companies

THE PLATFORM FOR A PROPOSED WEB-APPLICATION TOOL

AND METHODOLOGY

4.1 Introduction

4.2 Overview of Manufacturing Systems Management (MSM)

4.3 Manufacturing System Life-Cycle

5.6.1 Benefits from the Strategic Point of View

5.6.2 Benefits from the Applications Point of View

5.6.3 Benefits from the Technical Point of View

5.6.4 Benefits from the Academic Point of View

THE FORMULATION OF A CONCEPTUAL MODEL COMPANY

PERFORMANCE MONITORING METHODOLOGY

The Model Company

Structure of the Model Company

Market Requirement Analysis

Competitive Criteria Definition

Current Manufacturing Performance Analysis

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28 3]

34

35

38 4]

Analysis of Illustrated Six Manufacturing Companies

Priority Ranking of Competitive Criteria

Market Requirement Analysis

Relative Customer Requirement Analysis

Competitive Criteria Definition

Current Manufacturing Performance Analysis

Main Customers Profiling

Performance Gap Analysis

Summary of Manufacturing Strategy Analysis

Average Customer Requirement and Average Manufacturing

Overall Approach of this Research

Deliberate and Emergent Strategies

Machined Parts of Case Company A

Special Appearance Rods of Case Company B

Product of Case Company C

Example Products of Case Company E

Example Products of Case Company F

Manufacturing System Life-Cycle

Overall Functional Structure of MSM Framework

The Structure of an MSM Task Document

Home Page of WAT

MS Strategy Analysis Webpage

Stage MSA 2 — Basis for Competitive Requirement

Task Document MSA 2.1

Example Products of Mizzou Plastic Containers Pvt Ltd

Scale for Assigning Relative Numerical Values

Competitive Criteria Parameter Versus Customers

Average Customer Requirement and Average Manufacturing

Performance Gap Analysis

Average Satisfaction Level of Customers

Complete Strategic Management Information Cycle

Task Document Task Links Total Quality Management Web-Application Tool Worksheet

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Chapter 1 INTRODUCTION

In today’s competitive world, manufacturing is becoming more and more complex as well as competitive Due to this, a unified approach is required for the whole organization to move in a focused direction and towards an overall goal

1.2 Problem Statement

In order to have a sound understanding of the manufacturing system’s strategic goals and objectives among the employees in the organization, a Web-Application Tool for Manufacturing Systems Strategic Management and Competitive Performance Monitoring is required This tool can guide each authorized individual in the organization towards the most critical objectives of their manufacturing system, and at the same time,

it will enable management in reducing redundant control actions needed to get things done in the strategic direction

Performance monitoring can be kept in mind right from the manufacturing system designing itself, so that key performance criteria of the manufacturing system can be identified and weight of importance be assigned to them Acceptable range of performance criteria’s can be set while designing the system so that its performance can

be measured and compared during its’ operation

Manufacturing performance needs to be shown in a simple and easy way so that every responsible person in the organization can take faster and more knowledgeable

decision Monitoring the critical performance criteria of the system will help individuals

use information that will integrate and specify dynamic targets towards the strategically oriented goal The Web Performance Monitoring approach will adapt with changing objectives (which has to be updated according to changing system environment and strategy) so as to satisfy prevailing market conditions and provide insight into how a company iS meeting its strategic goals Performance is a moving target and Web Application Tool (WAT) will enable companies to take mid course remedial actions, taking advantage of market opportunities, and impact continuous improvement programs

Incorporating WAT philosophy essentially makes every employee a business manager by linking his actions to the company’s overall business strategy A cultural change is necessary to encourage the managers to decompartmentalize their thinking and foster an atmosphere of cooperation for the overall good of the organization As a result, WAT can reveal the hidden value currently lying dormant in most manufacturing assets

1.3 Research Aim and Objectives

This research tries to provide a Web-Application Tool (WAT) that will help the organization in the following ways:

1.3.1 Benefits from the Strategic Point of View

e Recognize the strategic benefit that manufacturing can provide and adopt the systems approach to manufacturing problems in order to help continuous improvements

Provide strategic direction and common vision to all the employees in the

organization

Involve and motivate all employees in the organization by making them more informed and providing them opportunity to show their talent in the strategically important direction

Show all employees in the system the significance of their concerned area and responsibilities they hold for optimum system performance

Help employees understand the ultimate objectives of the company in an easy and friendly manner so that they expect changes in underperforming areas and are prepared for them

Monitor the system’s progress towards its strategic objectives and identifying avenues for continuous improvement with coherent organizational and operational strategies available at one place

Enable to measure relevant performance parameters in an adequate manner so that current performance of the system can be accurately estimated for the subsequent decision-making within the control loop

Provide ability to the manufacturing organization to cope with external disturbances and respond promptly to their market and environment

Develop a plan for identifying and building the capabilities that will enable it to

do certain things better than its competitors can

1.3.2 Benefits from the Applications Point of View

Provide the definition of implementation requirements for the manufacturing policies, the definition of the basic manufacturing systems and procedures, the definition of manufacturing controls, the selection of operations critical to manufacturing success, and the definition and formulation of performance measures and review procedures

Provide the manufacturing system with a method and tool to assess its current competitive position with respect to its current strategic direction, its competitors, and the demands from the market Highlighting where improvements have been made and which areas need to be improved

A MS requirements report will be generated which will be accessible online to everyone in the organization to ensure the continual communication of results within the organization and provide a high-level approval and checking mechanism with respect to the consistency of the initial system specification with the overall business and MS strategy policies and goals

Allow collaborative planning among workgroup members, project managers, and other stakeholders by providing access to project details

Reduce redundant documentation and control actions, which will help in

lessening efforts and relative costs to the organization

1.3.3

1.3.4

Benefits from the Technical Point of View

Provide a common software platform for available methodologies in manufacturing systems strategic management and competitive performance monitoring

Allow structured recording, manipulation and retrieval of design data, such as design documents, objectives, assumptions and their justification, etc., in a logical way, to have feasible, easy, and practical application of the manufacturing system management (MSM) methodology in a user-friendly manner

Provide ability to access performance information from any authorized computer

in the manufacturing company to its parent organization as well as stakeholders

Benefits from the Academic Point of View

Develop a generic model company to evaluate and validate WAT, help the instructors for teaching purposes, and serve as an example for students to understand and utilize the overall methodology proposed in this research

Provide an online tool easier to use and user friendly in comparison to books Reduce unnecessary work of making worksheets for actual utilization of the proposed methodology in case studies

Provide graphics and features which will make ‘the methodology study’ more interesting and easy to follow

Provide a platform for further development of tools and research

14 Research Approach

Wu (Wu, 2002) has done extensive research in developing a united framework of manufacturing functional domain called manufacturing systems management (MSM) for manufacturing and supply system design His work is complete in itself for system design and implementation, however lacking some details on system operation and performance monitoring Due to constraints of having Wu’s methodology on paper format, it was realized that in practice it is not feasible to implement his methodology in a user friendly manner for record keeping, retrieving, and logical linking of all the task documents and worksheets designed and developed during a manufacturing system’s life cycle An online presence of the MSM approach is also required for collaborative planning among workgroup members, project managers, and other stakeholders by providing access to project details at all places in the organization

This research tries to come up with a Web-Application Tool for system’s performance monitoring in order to fulfill the above mentioned requirements and provide detailed, generalized and integrated methodology for defining and showing “performance gap’ of critical criteria to show current status of the manufacturing system in comparison

to its strategic goal, customer requirements, and competitors performance For this, an extensive literature search will be done in addition to Wu’s work and case studies by graduate students, and on-field views will be taken by a local manufacturing organization Here, the author will integrate different methodologies available in literature and develop a generalized format and platform for manufacturing system’s performance monitoring The Web-Application Tool aims to help managers in easy

navigation to information about areas of their own concern without going through all the

unrelated information towards them

In figure 1.1, an overall approach and methodology of this thesis is shown so that

the flow and content of this research can be understood

| Six \ ol °° iq ee ee eee ae ee ee ae ee ee eee | ~ |

1.5 Summary of the Original Contribution

Original contribution within this research can be summarized as follows:

(1) Extensive literature review and analysis of six manufacturing companies with their problem descriptions (Deliverables: Chapter 2 & 3)

(2) Which methodology and why that methodology is suitable for the proposed methodology and solution (Deliverables: MIT views and Wu’s MSM methodology Chapter 4)

(3) Methodologies from literature review for manufacturing/supply strategy analysis (MSA), MSA/MSD interfacing, manufacturing/supply systems design (MSD), system implementation, manufacturing/supply system operation (MSO), and system status monitoring will be presented on a single software platform

(Deliverables: Web Based Platform Chapter 5)

(4) Logically integrate and link the available tools and methodologies in literature to make a working online application model which will be user friendly, workable, and easy to navigate (Deliverables: Approach, logic and Web-Application Tool Chapter 5)

(5) A conceptual model company will be developed and described to give the idea of how to define and collect the information about critical performance criteria in respect to customer requirements and competitors’ performance so as to direct the company in a strategically focused direction (Deliverables: A Conceptual Model Company, populating a complete set of database with worksheets filled with real companies’ data Chapter 6)

(6) An approach will be given to help the management in reducing redundant control

actions and get things done in a shorter time with motivated and better

knowledgeable workforce (Deliverables: Chapter 6 & 7)

(7) Show the importance of how online system performance monitoring can be beneficial to the organization by matching employee actions with strategically dynamic requirements from the market and customer, and have continuous improvements through benchmarking (Deliverables: Benefits gained and which can be gained in six case companies Chapter 7)

1.6 Validation Approach

Validation of this research will be carried out by showing the example of two case

studies carried out by Ellis (1999) and Jorisal (2001), and two case studies from literature

review with respect to effects of the system’s performance monitoring and how this can help the manufacturing systems in achieving its strategic objectives and goal A conceptual model company will be created based on the six manufacturing companies studied, to illustrate the working and utilization of WAT with its proposed methodology for a general manufacturing company With this process, WAT will be validated in terms

of its utility with real case companies’ data, manufacturing conditions, and environment

A presentation of the proposed idea was given to the local ‘Company A’ and got a positive response from the administration department The administrative personnel accepted the need of such a tool for a structured feedback from customers and display of critical performance criteria to its organization In addition, the author’s own experience

with a manufacturing company in India will be given and show how the lack of performance monitoring had affected the company’s policies

1.7 Organization of the Thesis

This thesis report contains seven chapters, each of which deals with a specific topic in an established sequence Chapter 1 provides a brief introduction to this research

It includes the motivation of this thesis, problem statement, aims and objectives, research

approach, summary of original contribution, and validation approach

Chapter 2 provides a brief literature review, which is relevant to this research Chapter 3 provides the analysis of the six manufacturing companies, which are of different size and market, and represent three different countries It describes the specific problems, which different manufacturing companies face and provide combined analysis

of them for general problems descriptions in manufacturing companies Chapter 4 gives

an overall view of Wu’s MSM framework, which is used as the platform for a proposed WAT and methodology This chapter will give the reason for, why Wu’s work is considered suitable for the development of WAT

Chapter 5 describes the functioning of WAT with its utility, navigation and features, facts, standards followed, benefits, and software used Chapter 6 describes the formulation of a conceptual model company to demonstrate the working and utilization

of WAT with its proposed methodology for a general manufacturing organization WAT will be validated in this process in terms of its utility with real case companies’ data, manufacturing conditions, and environment In this chapter, performance-monitoring methodology will also be proposed and explained in detail

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Chapter 7 will present the validation of the proposed performance monitoring

methodology on the basis of the view of the local manufacturing company administration personnel to whom a presentation of WAT and proposed methodology was given Further validation and conclusion will be given in this chapter on the basis of analysis and experiences of the six manufacturing companies

1]

Lewis and Pun, 2003) Therefore, in the present innovation era, when competitive

advantage is based on knowledge and dynamic capabilities, the individual creativity and capabilities of a knowledge worker needs to be integrated more tightly to the corporate strategy process (Ojanen, Koivuniemi and Blomqvist, 2002) To achieve the performance goals, many organizations have to adopt the total quality management (TQM) philosophies and create a quality culture that fosters continuous improvements in everything by everyone at all the times (Lalla, Lewis and Pun, 2003)

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For assisting managers to be able to determine the long-term goals and objectives,

adopt the course of action, view performance in several areas simultaneously, implement strategy, and analyze the joint impact of different performance dimensions on organizational excellence, Wu (2002) has suggested a conceptual MSM framework This framework logically links a number of functional areas needed to design, regulate and optimize a manufacturing and supply (MS) system as it progresses through its life cycle

It is realized that emphasis need to be given on performance measurement and its’ status revelation to the whole organization to demonstrate how it can help every department and everyone in the organization to focus his/her actions in the most potential areas of growth Customers’ perspective is given utmost importance here as they are the one who will demand and purchase the product by judging the organizational performance

“Management philosophy is a ‘company culture’ defined as the set of guiding principles, driving forces and ingrained attitudes that help communicate goals, plans and policies to all employees and that are reinforced through conscious and subconscious behavior at all levels of the organization” (Wheelwright, 1984 p.78)

As per Ellis (1999), during 1980s and 1990s two different competitive areas emerged In this period, Japanese industries already benchmarked in quality and were

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competing on the basis of flexibility as a major factor for securing orders At the time

when Western manufacturers were concerned with quality, indirect cost and inventories,

the Japanese were much concerned with process yields and the impact of new technology It was observed that manufacturing organizations at that time were concentrating in different target markets to tap them on the basis of different competitive criteria The manufacturing organizations realized that they need to appear best among their competitors in order to win the customer orders This cutthroat competition, emphasized on the need of balanced approach to be adapted by manufacturing organizations to fulfill all competitive performance criteria to the level desired by the targeted customer segment

2.4 Manufacturing Strategy

A substantial amount of research and literature is present on the subject of manufacturing strategy (Wu, 2002) Ellis (1999) found that manufacturing strategy is often considered in a hierarchical sense contributing towards the goal of an overall corporate or business strategy Normally, corporate strategy relates manufacturing strategy to goals and the deployment of manufacturing resources in order to compete effectively but manufacturing strategy is not just about technology but also about people, direction, time and focus Manufacturing strategy refers to utilization of a range of interrelated resources in a way that improves a company’s position in the marketplace To

be successful in the long term, companies have to endlessly seek new ways of increasing its overall efficiency and ways of differentiating itself from competitors so as to enhance

its competitiveness (Wu, 2002)

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“Manufacturing strategy is the set of coordinated tasks and decisions which need

to be taken in order to achieve the company’s required competitive performance objectives A company’s manufacturing strategy should define its technologies, human resources, organization, capabilities, interfaces and infrastructures It is the last link which connects an organization’s overall business strategy to the actions of its individual resources and as such should follow directly from an understanding of competitive strategy” Slack (1991) source: Ellis (1999 p.12)

Crowe and Cheng (1996) found that there is a large gap between corporate and manufacturing strategy Wu (2000(b)) said that there is a gap between theory and practice

of approach, tools and techniques developed for system analysis and system design Many companies do not have properly formulated corporate strategy even though the importance of such strategies is appreciated in the literature A practical and powerful methodology is required which translate corporate and business strategy into their functional level strategies for which a systematic tool is required integrating various approaches proposed for manufacturing strategic planning It was recognized that these planning approaches needs to be based on following concepts given by Crow and Cheng

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Important manufacturing attributes need to be decomposed into more specific

characteristics, which should be coherent in understanding to the whole organization, suppliers, and customers

Establish strategic plan, identify cause and effect relationship between strategy and operations, define implementation requirements, check feasibility for all possible scenarios and check consistency with capabilities and available resources

Online monitoring of the current system status to determine the tasks to be implemented, fitness for purpose, measure performance, get feedback to gauge progress and make proper revision

“In competitive business environments, the competitive priorities are more dynamic For example, the importance rating of business competitive advantages may change rapidly, requiring the results, which are manufacturing strategy or tactical policies, to be flexible enough to be modified according to the dynamic nature of the competitive environment” (Crow and Cheng, 1996 p.37)

2.5 Manufacturing Strategy Formulation

Some of the important characteristics of strategy, which were defined by Wheelwright (1984), are:

The concept of strategy usually implies concentrating one’s activity, effort, or attention on a fairly narrow range or dimension of pursuits Implicitly, focusing

on certain activities means that one must reduce the effort in other directions Although some companies need to make only a few major decisions in order to implement an entire strategy, most strategies require a pattern of decisions across

a variety of sub-areas Certain type of decisions must be repeated over time, and a

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number of secondary or supporting decisions are needed to implement the strategy

e An organization’s strategy embraces a wide breadth of resources allocation processes and day-to-day operations In addition, the need for depth requires that all levels of an organization act instinctively in ways that reinforce the strategy

As per Wheelwright (1984), business strategy clarifying the scope of the business involves specifying the product/market/service sub segments to be addressed by the business unit This specification is important if the corporation is to prevent direct competition among its own business units It is also important because it focuses the efforts of each business unit on a basis of which, if appropriate enhances the competitive position of the unit for the customer sub segments being served, complementing the desired competitive advantage Examples of such desired competitive advantage would include ‘low cost/high volume’, ‘product innovation and unique features’, and ‘custom service in selected niches’ (Porter, 1980 source: Wheelwright, 1984)

An effective manufacturing operation is not necessarily one that promises the maximum efficiency, or engineering perfection, but rather one that fits the business, that

is, one that strives for consistency between its capabilities and policies and the business’s competitive advantage To be really effective, management must work towards the development of a culture, a set of ingrained attitudes, that help to communicate its goals, plans, and policies to all the employees and that reinforce these policies with everybody’s subconscious behavior As per Wheelwright (1984), a statement of manufacturing strategy is needed that reflects the true priorities of the business strategy, and one that

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allows the manufacturing organization to be a major contributor to that competitive

advantage

As per Acur and Bititci (2003), literature review demonstrated that almost all approaches to strategy management process have three stages, which are inputs, formulation, and implementation However, addition of one other stage, i.e learning and

reviewing, was deemed necessary due to the following reason In some cases, actual

implemented strategy can be very different from what it was initially intended In such cases, actual strategy can be described as an emergent strategy (Mintzberg et al, 1999

source: Acur and Bititci, 2003) Mintzberg (1998, source: Ellis, 1999) expresses that

strategies can emerge as a result of variety of factors As per Ellis (1999), emergent strategies can arise outside the intended plan but can form a valuable contribution to realized strategies Figure 2.1 shows an illustration of these strategies

Deliberate Strategy

a closed loop control system.” Acur and Bititci (2003 p.312)

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2.6 Involvement and Motivation

“Tt is not sufficient that top management alone know the desired strategic direction of the company Every employee of the organization should have a shared vision of what is important for the company and where it is heading.” Riis

and Johansen (2003 p.328)

As per Ghalayini and Noble (1996) and Riis and Johansen (2003), The nature of work in an industrial enterprise today requires that each employee use not only his hands but also in particular, his brain It is essential that each employee in the organization is involved, motivated and competent to carry out his job Furthermore, increased attention

is required to stimulate employees to take initiatives to improve operations A major prerequisite for achieving motivated people is that they know the context in which they operate The creativity and capability of each employee in the organization should not be

undermined as he is the one, closest to his work and he knows the most about the current

procedures under his supervision It is in the organization benefit itself to utilize this talent and improve operations, under direct supervision of the employee, much faster as desired in the suitable strategic direction Manufacturing strategy is implemented when everybody in the organization knows its implications for his or her own job

2.7 Manufacturing Vision and its Priorities

As per Neely and Wilson (1992), key objective of many researches in early 1990s

was “the development of a methodology which can be used to assess the level of

congruence between the firm’s manufacturing mission, as defined by the manufacturing Strategy, and its institutionalized signaling systems, such as goal setting, performance measurement, information feedback and reward” A study was conducted by Neely and

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Wilson (1992) in this respect in a company, in which due to the lack of clear communication and discussion amongst the senior management team, considerable differences were found in their views as to what is important for their company This study also showed that in one manufacturing company, manufacturing mission of keeping

to ‘budgeted cost’ and ‘delivery on time’ was widely understood by managers, but considerable difference of opinion was found about what is more important This showed that different manufacturing managers in this respective firm would have made different decisions when faced with the trade-off of incrementally increasing ‘costs’ to ensure

‘delivery on time’ or keeping to the ‘budgeted costs’ and delivering late It was understood by the study that an institutionalized signaling system 1s required, which send clear signal to employees to induce certain actions, which the firm can control and manipulate by changing the system design All employees in the company need to know

‘Why do their customer will buy their product?’ and “What is important to the company?’

2.8 Performance measurement (PM)

To ensure achievement of their goals and objectives, companies use performance measures to evaluate, control and improve production processes (Ghalayini and Noble, 1996) Performance measures are also used to compare the performance of different

organizations, plants, departments, teams and individuals, and to assess employees

Ghalayini and Noble (1996 p.63) quoted the following words of Lord Kelvin (1824-

1907):

“When you can measure what you are speaking about and express it in numbers, you know something about it (Otherwise) your knowledge is a meager and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely

in thought advanced to the stage of science”

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Ghalayini and Noble have given a very good description about the trends and

changing basis of performance measurement, some points of which will be discussed here along with other author’s views

Financial performance measurement (i.e return on investment, return on sales, price variances, sales per employee, productivity and profit per unit production) has long been criticized for failing to help the organizations in its entire sense to cope with the pressures of today’s competitive environment (Ghalayini and Noble, 1996; Hudson, Lean

and Smart, 2001; Kennerley and Neely, 2003; Lalla, Lewis and Pun, 2003) This

dissatisfaction has led to the development of a number of new approaches to performance measurement, which integrate financial measures, operational measures, incorporate the needs of various stakeholders, and align these with company strategy (Hudson, Lean and Smart, 2001)

As per Bourne and Neely (2003), few organizations appear to have systematic processes in place to ensure that their performance measurement systems continue to reflect their dynamic and rapidly changing environment and constantly modify strategies and operation to reflect these changing circumstances Well rehearsed adage such as

“What gets measured gets done” and “You get what you measure” suggest that implementing an appropriate performance measurement system will ensure that actions are aligned to strategies and objectives

A customer is the main influencer for every activity in the organization A measurement approach with customer perspective is needed for the manufacturing organization to match with dynamic requirements of today’s environment It was realized that to remain competitive strategically, manufacturing need its own set of performance

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measures to provide managers, supervisors, and operators with information required for

daily decision making, simplicity in measures so that shop floor operators can easily use and understand them Performance measures need to be dynamic and provide common understanding between all of employees in the organization to move in a focused direction and towards an overall goal

2.9 Performance Criteria

The process of deciding which measures of business performance criteria to adopt

is a valuable one, not least because it forces management team to be very explicit about their performance priorities and the relationship between them, thereby exposing, and offering an opportunity to resolve, any hidden differences of opinion (Neely, Bourne and Kennerly, 2000) There are two basic types of performance measures in any organization,

those that relate to results (competitiveness, financial performance), and those that focus

on the determinants of the results (quality, flexibility, resource utilization and innovation) This division highlights the fact that the results obtained are a function of past business performance with regard to specific determinants, i.e results are lagging indicators, whereas determinants are leading indicators (Neely, Bourne and Kennerly, 2000)

It was realized that if you know what your customer wants, you could concentrate more on improvement and corrective actions, which will give you instant benefits in terms of increase in sales and improved customer relations As per McAdam and Alan

(2001), performance measurement in modern business environment has to reflect a

certain level of consistency both internally and externally to all organizations There has

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to be a need to measure internally for establishing a standard of effectiveness reflecting the organizations strengths and an external standard, which reflects ability to compete

Malcolm Baldrige National Quality Award Program (2004) places more focus on customer than anything else It is clear that there is a need to change emphasis in measuring performance from manager centered to a customer center approach

Traditional measures such as purchase price, machine efficiency, ratios of indirect to

direct are unable to track progress and focus on aspects, which are not of great value to end customer They are aimed at quantifying short-term economic results to the detriment

of the long-term health of the businesses concerned and without any attempt to understand how processes could be better managed in order to deliver consistently higher quality goods and services to the end customer Leading measures such as time, consistency in delivery, flexibility to deal with varying demands and cost reduction for

the benefit of the end customer are ones, which track real progress and reflect the external

capability of organization in meeting customer requirements TQM based performance measures provide immediate long term but providing immediate, operational feedback, allowing actions to be taken to solve problems, in order that set targets can be achieved

In combination with economic measures, they provide powerful information for effective decision-making

2.10 Summary of the Literature Review

In the reviewed literature, many authors have emphasized the importance of manufacturing strategy, performance measurement, involvement and motivation of employees, manufacturing vision and its priorities, and deciding performance criteria and

assigning importance to it It has been seen that no generalized methodology or integrated

tool, considering all the discussed issues, have been proposed in the literature for an implementation purpose Some of the authors have proposed specific solutions for the specific companies, but as such, no author has proposed a generalized approach with an application tool It was consistent in all the recently published articles that the focus on the customers’ needs is to be given utmost importance for the long-term success of a manufacturing organization

The authors in the reviewed literature have highlighted the gap between corporate and manufacturing strategies In order to fill this gap, a practical and powerful approach with a dynamic application tool is required, which can translate corporate and business strategy into their functional level strategies by integrating various methods proposed for manufacturing strategic planning Importance has to be given for all the employees in the organization to have a shared vision of what is important for the company and where it is heading

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This chapter will follow the following pattern:

1 If the company is large or medium in size then its corporate view will be given first and then its target branch case company will be highlighted, otherwise directly case company will be highlighted

2 Description of each case company with its respective problem description will be given, which is relevant to this research

3 After description of all the case companies, comparison and similarity between them will be shown in the form of a table

4 Analysis of Problems Description of all the Six Case Companies together will be given

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Figure 3.1: Machined Parts of Case Company A (source: Wu, 2002 p.38)

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Manufacturing Facility:

Manufacturing at ‘Company A’ Engineering is carried out using computer controlled machine tools, these include flexible machining systems which are capable of working unmanned and which produce machined parts to close tolerances 24 hours per day

Markets:

As a world class supplier the components this company manufacture are used world wide in a range of different industries, including Aerospace, Telecommunications, Medical, Formula One Racing, Nuclear and Power distribution Company approval includes ISO 9002 and is a Rolls Royce preferred supplier, and was awarded Investor in People for its internal training efforts in 1997

Description of the Target Case Company:

The main company site at Dartford operates from a modern purpose built factory employing around sixty-five staff operating a double shift system Besides offering machining services, the company offers services for assembly, welding and fabrication, metal finishing and silver-plating services, and subcontract inspection services It offers a service from prototype to production batches

Problem Description:

e Identify and devise a suitable manufacturing strategy analysis technique to understand and analyze the market position This considers customer

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