StudyCorgi Business & Economics

Metrics and Performance Measurement in Operations Management

Introduction

Metrics is indeed a powerful management tool in aligning company strategies and objectives and ensuring people are working towards a common direction. Going beyond metrics practice in trying to improve processes and products, managers should strive to fulfill predictable requirements in designing and managing metrics to ensure they are up to date with the realm of possibilities in ever changing demands.

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By simply redefining the company’s mission throughout departments and supply chains into a set of goals and overall performance against company objectives, metrics ensure consistency with management and customer expectations. Narrowing down our definition of performance in relation to a company’s objectives, a quote from Melnyk et al (2004) suggested that metrics and strategy are interlinked and one would not function without the other and “you get what you inspect but not what you expect” (1).

Manager’s Responsibility

Research in the manager’s responsibility in regard to the use of metrics begins with the work of Melnyk and his colleagues (2004) which concentrates on the proclaimed relationship between metrics and strategic outcomes. Arguably, satisfaction and profitability are not mathematically derived but inherently intertwined in the strategy and execution of metrics in an organization. Characterized by innovation and agility, metrics are a fundamental tool that assists managers in making rational decisions both at strategic and operational levels to ensure alignment with the organization’s strategic goals and objectives. By doing so, a company can well adjust to competitive markets and provide overall direction towards set goals and objectives throughout the organization.

In response to Chambers et al (2007) statements that argued that metrics help managers in monitoring and measuring company progress, and propose amendments where needed, Forester Consulting (2007) affirms the importance of metrics application in any given organization by stating “without metrics, key functions like portfolio management, process improvement, and management of relationships within business customers are nearly impossible to perform successfully” (p.3).

To illustrate the relationship between managers and metrics application, Chambers and his colleagues (2007) compared the benefits of metrics both at operational and strategic levels using the approach of innovation and agility. Their analysis urged managers to use metrics in enhancing performance and utilizing resources to ensure consistency with company goals and objectives. Often metrics concurrently involve the organization’s projects and plans which requires the ability of managers to develop and utilize performance metrics that align with primary drivers of the organization. In a broader sense, Melnyk et al (2004) defines metrics as one that

fulfills fundamental activities of measuring (Evaluating how we are doing), educating (since what we measure is what is important; what we measure indicates how we intend to deliver our customers), and directing (potential problems are flagged by the size of the gaps between the metrics and the standard) (p.2).

In achieving the organization’s overall objectives, managers should integrate metrics in the company’s day to day activities by evaluating and measuring employee performances against a set of objectives. In doing so, gaps between employee performance against given project expectations are identified and proposed. Providing information and feedback regarding a given task and encouraging collective participation in proposing adjustments ensure weak areas are identified and corrected well in advance.

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Melnyk et al (2004) studies regard metrics as a valuable underlying framework in which an organization must operate. Melnyk et al (2004) also mention effective accountability in operation efficiency on the manager’s side to ensure improved productivity, timely delivery, and reduce unit costs. In essence, providing infrastructure that assesses an organization’s current performances against set goals and objectives will ensure improved processes and product delivery in the customer context.

Conclusion

Melnyk et al (2004) studies define metrics as a self-evaluation tool that aids managers in operation and strategic levels in achieving the organization’s overall objective. They emphasize the inclusion of metrics in day-to-day activities such as assignments allocations and budgeting to ensure company objectives are driven by common objectives.

List of References

Chambers, S. Slack, N. & Johnston, R., 2007. Operations Management. 6th ed. Prentice-Hall: Pearson.

Forester Consulting., 2007. Changing the cost/benefit equation for application development metrics: a commissioned study conducted by forrester consulting on behalf of borland software. Journal of Operations Management, 45, 1-14.

Melnyk, S., Stewart, D., & Swink, M., 2004. Metrics and performance measurement in operations management: dealing with the metrics maze. Journal of Operations Management, 22 (3), pp. 1-9.

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StudyCorgi. (2021, February 12). Metrics and Performance Measurement in Operations Management. Retrieved from https://studycorgi.com/metrics-and-performance-measurement-in-operations-management/

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"Metrics and Performance Measurement in Operations Management." StudyCorgi, 12 Feb. 2021, studycorgi.com/metrics-and-performance-measurement-in-operations-management/.

1. StudyCorgi. "Metrics and Performance Measurement in Operations Management." February 12, 2021. https://studycorgi.com/metrics-and-performance-measurement-in-operations-management/.


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StudyCorgi. "Metrics and Performance Measurement in Operations Management." February 12, 2021. https://studycorgi.com/metrics-and-performance-measurement-in-operations-management/.

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StudyCorgi. 2021. "Metrics and Performance Measurement in Operations Management." February 12, 2021. https://studycorgi.com/metrics-and-performance-measurement-in-operations-management/.

References

StudyCorgi. (2021) 'Metrics and Performance Measurement in Operations Management'. 12 February.

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