Kasetsart University,1,Topic: Performance Management,Kongkiti Phusavat, Ph.D. Associate Professor International Graduate Program in Industrial Engineering Kasetsart University Bangkok, Thailand,Kasetsart University,2,Overview,Management,Functions: planning, coordinating, and controlling,Processes: measurement, analysis/ evaluation, and improvement,Emphasis on the organizational and functional level,Kasetsart University,3,Overview,Measurement: understanding of the term KPI or performance measures, identification of the KPI, application of MFPMM, audit to improve KPI by linking with policies, objectives, database, etc., ratio networking, and target setting,Analysis: trend/ variation understanding with MCPMT, benchmarking process, and scorecard and root-cause analysis,Improvement: outsourcing, development of manufacturing strategies, integration of knowledge learned on logistics and supplier partnership,Kasetsart University,4,Overview,What reflects or represents the term performance?,Kaplan and Norton (1992): Financial, customer, internal business, and innovation/ learning,Sink and Tuttle (1989): Profitability, productivity, quality, quality of work life, innovation, effectiveness, and efficiency,Harper (1984): Productivity, unit cost, price, factor proportion, cost proportion, product mix, and input allocation,Kasetsart University,5,Introduction,Multi-national, national, and industrial levels,Organizational, functional, program, and project levels,Team and individual levels,Individual level,Management,Workforces,Knowledge and white-collar,Blue-collar,Kasetsart University,6,Introduction,Measuring productivity/ performance requires a system view of an organization or a unit of analysis. Measuring productivity/ performance is common. Understanding of impacts from low productivity is critical for management (competitiveness). Understanding of unit dimensions and definitions are essential for measurement.,Kasetsart University,7,Introduction,Ongoing Issues for “Productivity” Management Total-, multi-, and single-factor productivity consideration Combination of various input factors (consideration into weight of each input, data collected such as intangible assets, unit dimensions, reporting and information format on tabular and/or graphical forms, etc.) as well as output factors,Kasetsart University,8,Introduction,System View of an Organization,Downstream,Upstream,Kasetsart University,9,Purposes of performance measurement: To identify whether we are meeting customer requirements To help use understand our processes To ensure decisions are based on facts, not on emotion To show where improvements need to be made To show if improvements actually happened To identify whether our contractors or suppliers are meeting our requirements (Department of Energy, USA),Introduction,Kasetsart University,10,Performance measurement should be used and integrated into a management system and process, based on the following reasons. Control: Performance measurement helps reduce process variation. Continuous improvement: Performance measurement helps identify defect resources, process trends, and defect prevention as well as opportunities for improvement. Need to have feedback by management: Performance measurement helps mangers and administrators realize what is to be done, what is being done, when to take corrective and preventive actions, and when to change the expectation. (Department of Energy, USA),Introduction,Kasetsart University,11,Introduction,Downstream or outcomes: customers, users, consumers, buyers, and stakeholders (impacts, reaction, satisfaction, financial growth, sales, return, replacement, recall, survival, etc.),Upstream: providers, suppliers, contractors, and vendors (relationships, partnerships, contractual agreements, etc.),Kasetsart University,12,Introduction,Outputs,Intangible,Tangible,Outcomes Satisfaction, Expectation, Desirable Impacts, etc.,Kasetsart University,13,Basics on Measurement,Deming “You cannot manage what you cannot measure.” “You cannot measure what you cannot define.” “You cannot define what you do not understand.”,Kasetsart University,14,Basics on Measurement,Mandated by the Government Performance and Results Act (GPRA) of 1993 Federal agencies must be accountable and focus on improving service quality and customer satisfaction. Coupled with the Government Management Reform Act of 1994 which emphasizes performance improvement and openness for annual financial audit (i.e., PART, activity-based management, performance-based contract, adaptive process for planning and budgeting, ownership cost, etc.),Kasetsart University,15,Basics on Measurement,The 1993 Government Performance and Results Act (GPRA) requires the following: (1) Establishing top-level agencys policies and objectives as well as annual program goals (2) Defining how the agency intends to achieve these objectives and goals (3) Demonstrate how the agency will measure its own performance, including the programs,K