Key Performance Areas in Production Systems
1. Adaptive Production
The ability of the production system to effectively and efficiently respond to changing situations, including:
- Changes in products
- Changes in machinery
- Changes in processes
- Changes in transport and storage of materials
- Changes in the organizational structure and in the role of HR
2. Operating Cost Effectiveness
The ability of the production system to leverage HR talent and maintain competitive salary levels. An organization can achieve operating cost effectiveness through:
- A low productive contribution complemented by salary levels aligned with and competitive within the sector.
- A high productive contribution supplemented by salary levels which are competitive in the sector, considering the level of the contribution.
3. Capacity to Respond to Orders
The ability of the production system to quickly deliver orders made by customers and assess the speed at which the production system reacts and responds to the needs being considered. This area involves two time-related aspects:
- Fast deliveries: The goal is to achieve the fastest delivery time possible.
- Shipment on time: The goal is to fulfill 100% of the commitments acquired for the delivery.
4. Achieving Economies of Scale
The ability of the production system to reduce unit costs through the efficient distribution of fixed costs as sales volume increases. Strategies to reduce costs without decreasing quality include:
- Improving how resources are used, which will be supported by indicators of efficiency or productivity.
- Technological innovation by making new investments, which can be done by automating current systems and by introducing new, more efficient systems.
5. Logistics Management
The ability of the production system to effectively and efficiently manage the flow of materials, semi-finished products, and finished products inside and outside the facilities. The strategic impact of logistics includes:
Location Strategies
This refers to the location of warehouses and production plants. Two factors must be considered: Logistics Effectiveness and Logistics Efficiency.
Configuration of Production Processes
Strategies for the configuration of production processes, plant, or production layout, based on the structural decisions made in relation to the production facilities.
Distribution Strategies
Based on the importance of proximity to the market, considering aspects related to delivery and all those derived from post-sales service.
6. Technology and Technical Capacity
The ability of the production system to employ its knowledge of technology. The technical capacity of the organization relates to the following elements of the production system:
- The facilities, machines, and equipment.
- The productive processes and their degree of automation.
- The materials.
- The people.
- The information.
7. Quality Performance
The ability of the production system to launch and manufacture long-lasting, high-quality products. Key application areas:
Offered vs. Demanded Quality
The goal is to measure and minimize the differences between the characteristics demanded by the customer and the ones reflected in the product.
Specified vs. Supplied Quality
The goal is to measure and minimize the differences between the specified characteristics in the design and the characteristics achieved by the product.
8. Total Time for Production Flow
The ability of the production system to identify and use the critical points where the effectiveness of the production cycle lies, reducing the amount of work-in-progress (WIP).
This involves:
- Identifying the points that delay production and the points where materials are accumulated in the process.
- Managing bottlenecks effectively.
- Developing planning and control methods for manufacturing, JIT (Just-in-Time) manufacturing methods, and maintenance methods.
9. Vertical Integration Strategy
The ability of the production system to exercise a high control over the supply sources or the distribution channels. As a result, the organization integrates new activities into its production system, increasing its participation in the value chain. To benefit from this performance area, it is necessary to:
- Analyze where the organization is on the value chain.
- Identify and evaluate the agents that are close to our position on that value chain.