The definition of appropriate shopfloor performance measures using the theory of constraints philosophy and study of shopfloor performance measures application in New Zealand manufacturers : a thesis presented in partial fulfilment of the requirements for the degree of Master of Technology in Manufacturing and Industrial Technology at the Institute of Technology and Engineering, Massey University

Abstract

Shopfloor performance measures have significant impact on the overall performance of a manufacturing organisation. Measures are used in many ways to support the decision making function across an organisation. Many research suggest that many shopfloor measures used by manufacturers were derived when producers dominated market (Srikanth et al, 1995; Goldratt, 1988, 1990; Stein, 1994; Kaplan et al, 1992). Cost control was the major factor in ensuring profitable operations (Srikanth et al, 1995). Today cost-based measures are no longer appropriate as other critical dimensions are needed to maintain manufacturing competitiveness (Goldratt, 1990). The market condition dictates such things as faster lead times, increased variety of quality products and cost effective purchasing. Increasing competition has also forced producers to be more proactive in seizing every sales opportunity available. Cost-based measures fails because they focus too much on local improvements and short term performance that do not necessarily translate into overall improvement (Goldratt, 1992). Today manufacturing competitiveness come in three key dimensions: product, price and responsiveness (Goldratt, 1986). Shorter lead times and due date performance assist to achieve manufacturing responsiveness. In turn, these key factors rely on good shopfloor performance assisted by shopfloor measures. Theory of Constraints synchronisation principles were looked at and analysed to explore how they could be used to derive working shopfloor measures. Synchronisation of activities is important to bring about the desired performance through synergy. The step by step approaches of the Five Focusing Steps and the synchronisation mechanism offered by the DBR scheduling could be used as the benchmark whereby shopfloor measures are derived. The TOC performance measurement, Throughput, Inventory and Operating Expense measures, should be the objectives of shopfloor measures achievements.