Breaking the Wall - Performance Measuring of a Production Line Composed of Two Business Entities

“One can improve only what one can measure” this embracing statement by Mathur, Dangayach, & Sharma (Performance measurement in automated manufacturing, 2011, p. 77) is at the core purpose of any measurement done. Having a defined metric enables the capability to distinguish if something is changing and if so in what direction. Measuring the performance of a business organization stands at the heart of several core issues such as: strategic alignment of objectives, ownership of business goals, and determining process capabilities. As the business world is moving to higher levels of partnerships and processes tend to include more than one business entities performance measuring is stretching to include parts of the business such as suppliers into the process. This paper reviews the performance measurement system (PMS) applied on a manufacturing line structured from two business entities, supplier and customer which are being addressed as one manufacturing line. The paper starts with a general review of performance measurement systems background in terms of purpose and concepts. The current PMS “tool box” of the joint manufacturing line is explored, detailing the metrics used with their impact on the process – benefits and short comings. Based on the analysis of the current PMS several recommendations are made for improving the organization’s performance.