The Relationship Between Performance Measures and Overall Performance in the Manufacturing Environment

The Relationship Between Performance Measures and Overall Performance in the Manufacturing Environment

Raman Kumar (Chandigarh University, India) and Harwinder Singh (Guru Nanak Dev Engineering College, India)
DOI: 10.4018/978-1-7998-3473-1.ch027
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Abstract

The overall performance of a manufacturing organization can be enhanced by thoroughly examine and monitor the activities of all departments such as production, inventory, maintenance, etc. involved in the manufacturing system. The present study highlights the relationships between different performance measure and overall performance from the perspective of the agricultural tool manufacturing industry. A path model consists of 13 observed variables, and four performance measures (latent variables) was developed and tested using SPSS software package and AMOS 21. The outcome of the present work is reflected by the respondent of 105 valid questionnaires who are occupied with agriculture tool manufacturing firms situated in the northern region of India. The outcome of confirmatory factor analysis showed that operational performance has higher path coefficient. The limitation of this work is that the findings are applicable to the specific sector of manufacturing industry only.
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Introduction

Globalization and liberalization of today’s markets economy have posed new challenges to all manufacturing organizations to examine and improve their capabilities. Performance measurement systems are expressed as the overall set of factor used to quantify both the efficiency and accomplishment of the act. Performance evaluation and enhancement is a challenge for small scale manufacturing organizations in the competitive globalized world. Performance measurement represents the effectiveness and progress of activities involved in a manufacturing system. Performance measurement ameliorates the flow of information which avails in enhancing market position of the organization and may likewise fetch new customer (Li et al., 2006). Performance measurement helps in identifying both frail and solid key territory of the system and transmute should be possible in like manner. The overall performance of a manufacturing organization can be enhanced by thoroughly examine and monitor the activities of all departments such as production, inventory, maintenance, etc. involved in the manufacturing system (Gomes et al., 2006). The block diagram of manufacturing system is shown in Figure 1.

Figure 1.

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Key Terms in this Chapter

Process Efficiency: Value of outputs divided by the value of inputs for a business process.

Employee Skill: Ability and capacity acquired by an individual for doing job functions.

Marketing Strategy: Moving toward individuals and transforming them into clients for a business.

Delivery Correctness: Complete number of order delivery to the customer without any error.

Service After Sale: Arrangement of administration and support after deal.

Average Variance Extracted: Measure of the amount of variance that is captured by a construct in relation to the amount of variance due to measurement error.

Teamwork: Workers join their individual abilities in pursuit of a goal.

Delivery Completeness: Number of order deliver completely, that is, without any part delivery.

Competitive Strategy: Makes an entity better than opponents in order to achieve the goal.

Customer Satisfaction: Quantify the degree to which a customer is satisfied with a product, service.

Technological Capabilities: Capacity to apply information into items and procedure to work and to create technology.

Flexibility: Capacity to adjust to changing conditions and necessities.

Delivery Precision: Order reach to the customer at agreed time, that is, without any delay order.

Composite Reliability: Measures the overall reliability of a set of items loaded on a latent construct.

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