ABSTRACT
With Total Manufacturing Assurance (TMA), improving organizational profitability comes from identifying and understanding areas of improvement. Establishing and implementing performance metrics begins that process. The performance measures, or “metrics,” provide insight to operational performance relative to defined strategic objectives and goals. An essential feature of each metric is in the information it provides regarding the organization’s “ability to control” and “how the business reacts.” “Control” is the amount of control the company has in directly influencing the metric’s value. The greater the control, the greater the ability to impact the performance issue reflected by the metric. The “business reaction” of interest is typically in the impact on cost of goods sold (COGS) and gross profit since these are controllable by the business operation. To get the best overall understanding of operational performance, it is critical to look at all the key metrics in parallel. Often, what is happening in one metric is linked to what is happening in another. Monitoring operational performance from many different perspectives leads to making strategically correct decisions.
