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You don’t have a real-time, enterprise performance management system with integrated business intelligence and a drill-down capable executive dashboard?
September 6th, 2006 - by Mark Edmondson
Here’s a dirty little truth that software companies and system integration consultants don’t want to come out: Few companies have an effective performance measurement system. And the few companies that do have good performance measures throughout their business generally have a simple, straight-forward measurement process that doesn’t use an elaborate, expensive software solution.
But if you Google “Enterprise Performance Management”, the search results include all the major business software companies: Oracle, PeopleSoft, SAS, SAP, Microsoft, Business Objects, Infor, Lawson and more. These are nice looking sites, so I’m thinking they must have real products with a lot of real customers. But after working with hundreds of companies over the years, our Affiliate team just has not seen an “enterprise performance management system” from a software company that is used effectively by a manufacturing company. What we do see is:
- Most companies have a traditional financial reporting process in place, with Operations Management spinning their wheels trying to understand and explain their monthly financial “variances”.
- Many companies have a few selected operational measurements in place, which often train plant management to sub-optimize - indeed warp - their operations based on a particular metric (we often see direct labor or machine utilization used this way). See the article, “Goal Obsession“, for an example of this.
- A very few companies have a simple, straight-forward measurement process with metrics carefully selected to complement business objectives. The process is sometimes based on Hoshin Kanri or an A3 planning system adopted from Toyota’s model.
So if your company doesn’t have an operational performance measurement system you’re not alone. But you don’t need to be with the general crowd for long. Instead, there is a simple, straight forward performance management process your company can use to effectively align your people’s activities with your business objectives.
Want to get started? Read Bill Waddell’s post, Manufacturing’s 5 Golden Metrics , and then feel free to contact us.
