Performance measurement system simplicity
by Eric O. Olsen, Peter T. Ward
International Journal of Manufacturing Technology and Management (IJMTM), Vol. 8, No. 4, 2006

Abstract: Leading researchers, consultants and practitioners advocate that internal operations performance measurement (PM) systems need to be 'simple' in order to be most effective. The notion of PM system simplicity has often been expressed as the characteristic of having few versus many measures. This paper proposes a new simplicity scale based on the importance rankings of performance measures found in a large-scale survey of manufacturing firms. The PM system simplicity scale is developed and applied in the context of traditional manufacturing strategy constructs such as cost, quality, delivery and flexibility and with respect to environmental dynamism. Analysis of empirical data on 100 manufacturing firms shows that superior market performance is associated with firms that have both complex and simple PM systems, but that moderately simple systems perform less well.

Online publication date: Mon, 13-Mar-2006

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