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Proposed analysis of performance measurement for a production

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DOI: 10.1108/14637150410559234

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BPMJ
10,5 Proposed analysis of
performance measurement for
a production system
570
H’ng Gaik Chin
Shell Malaysia Trading, Butterworth, Penang, Malaysia
Muhamad Zameri Mat Saman
Faculty of Mechanical Engineering, Universiti Teknologi Malaysia,
Johor Bahru, Malaysia
Keywords Quantitative methods, Production methods, Performance measurement (quality),
Decision making, Manufacturing systems, Strategic planning
Abstract Hitherto, very few performance measures have been constructed for selecting the right
production system. Before a new, advanced manufacturing system (e.g. Just In Time and Flexible
Manufacturing System) is implemented in a company, it is of paramount importance that
extensive analysis should be done to ensure that the ladder is lying against the right wall. Currently,
the selection of a production system is mostly centred on perceptions or mere judgments from
experience. Hence, a quantitative form of selection would be more convincing, as it will show and
compare the degree of advantage between each manufacturing system in numbers and
percentages. This paper discusses the authors’ attempt to formulate a performance measure that
could quantitatively analyse and select the best production system for a company. A questionnaire
survey has been carried out in a multinational company in Johore, Malaysia and the results are
used to formulate the performance measure. Reliability tests on the instrument and correlation
tests on the six identified manufacturing outputs were performed. Tests of significance were also
done on the outputs used.

Business Process Management
Journal
Vol. 10 No. 5, 2004
pp. 570-583
q Emerald Group Publishing Limited
1463-7154
DOI 10.1108/14637150410559234
Introduction
The performance measurement of a company can be defined as the sum of each
strategy of its component functions such as manufacturing, finance, marketing,
service, research and development, etc (Miltenburg, 1995). In a successful firm, these
strategies interlock to provide maximum competitive advantage of which the firm is
capable.
Customers’ expectations and the level of manufacturing capability among
the competitors are increasing rapidly in today’s ever-competitive marketplace. The
company that can deliver a high quality, low cost product at the right time to the
marketplace will win the most market share. Hence, implementing the right strategy of
production system is of crucial importance in order to achieve competitive advantage.
Considering the importance of performance measure in selecting the right
production strategy, the question is there any methodology that can quantitatively
measure the selection of a production system whilst comprehending all the necessary
manufacturing outputs to boost a company’s performance? Hence, this paper will focus
on the authors’ attempt to come up with a methodology to narrow down the scope of
selection in a quantitative way before actual implementation or extensive simulation is
done on its elements. Findings and results validations were done and presented in this
paper to further strengthen the concept of methodology proposed. For example, if a
company is undecided on whether to change its current production system from a Analysis of
conventional operator-paced production system to a more advance manufacturing performance
system such as flexible manufacturing system (FMS) or lean production, then this
methodology of selection is advisable to be done beforehand. Albeit Monte Carlo measurement
simulation is mostly used currently, it takes quite some time to construct and
experiment the simulation models many times, not to mention that extensive analysis
and validation needed before a final decision is made. Hence, this simple methodology 571
revised from the Operations Research Decision Making Analysis, will pose as an initial
selection before the selected production system is narrowed down for further
simulation analysis. Besides, it will compare the advantages of each production system
in numbers or percentages before a decision is arrived.
This paper begins with a description of the methodology employed in eliciting the
relevant information needed in constructing the coefficients of the empirical formula
whereby the performance measure of the production system is the function of the six
manufacturing outputs, namely cost, quality, performance, delivery, flexibility and
innovativeness. This is followed by a summary of components of the six
manufacturing outputs that is relevant to the researched company. Following this,
the steps of deriving the formula, with its assumptions, correction factors and results
are elaborated. Reliability and validity test on the questionnaire and the test of
significance in means between the degree of importance and degree of satisfaction for
the six identified manufacturing outputs are also briefly explained. Conclusions and
some proposed future research directions culminate this paper.

Literature review: the six manufacturing outputs

This section reviews the importance of manufacturing outputs and how the outputs
progress through time to become more specific and detail. Six manufacturing outputs
based on Miltenburg’s (1995) work are identified and clearly defined in this section, as
these outputs will be used as the main parameters to measure the performance of a
production system. In addition, some past researches on framework and reliability
measurements of the manufacturing outputs are also reviewed. The related
measurements are then chosen from the list and tabled after some discussions with
the respondents.
In the early 1960s and 1970s, most people felt that manufacturing provided only two
outputs to their customers – cost and quality; a notable exception was Wickham
Skinner (1969). Owing to the development of advance manufacturing systems such as
the just in time (JIT) production and FMS, the list of outputs increased with the
inclusion of delivery and flexibility (Fine and Hax, 1985; Stalk, 1988; Hall and Nakane,
1990). Many organizations focus more attention to the cost, quality, delivery and
flexibility outputs while some included performance and innovativeness in the quality
and flexibility outputs. It was only during the 1990s that innovativeness and
performance emerged as important outputs (Miltenburg, 1995).
Manufacturing provides six outputs, namely cost, quality, performance, delivery,
flexibility, and innovativeness (Miltenburg, 1995). In this highly competitive,
technology-advancement manufacturing world, it is imperative to look in a deeper
and wider aspects in selecting a good manufacturing strategy via manufacturing
outputs. And to prioritize the manufacturing outputs, it is vital that the details and
measurements of the respective outputs should be clearly defined and distinguished.
BPMJ Cost
10,5 It is undeniable that each product manufactured has a cost. A low cost gives a low
price and provides a better opportunity for profit than does a high cost. Cost is of
utmost important to manufacturers’ of commodities such as structural steel shapes,
electronic devices, papers etc., which are manufactured to standard specifications and
sold under standard delivery terms.
572
Quality and performance
Many non-manufacturing people are of the general opinion that quality and
performance are from the same output. In manufacturing strategy, quality is
associated with conformance to specifications and critical customer expectations.
Performance is associated with features of the products as they affect the products
ability to do what other products cannot.
For example, when a Formula One car is said to have outstanding quality, we do not
know to what extend does the quality means. When the car is designed and
manufactured to exacting specifications, this satisfies the definition of quality.
However, when it means that the car has unique design features, such as
aerodynamism in the front and rear wing, a durable engine, chassis and tiptronic
transmission, then we have the performance output.
Tools and technologies that provide high levels of quality (such as statistical quality
control and standardization) are often different from those that provide high levels of
performance (such as concurrent engineering and highly skilled workers). Hence,
differentiating between quality and performance allows us to design one production
system for McDonald’s restaurant where quality is important; and a different
production system for a fine cuisine restaurant, where product performance is
important (Miltenburg, 1995).

Delivery
The delivery output comprises delivery time and delivery time reliability. Delivery
time is the amount of time a manufacturer requires to supply a product to a customer.
Often, especially in busy times, manufacturing cannot meet orders later than promised.
When this happens, delivery time reliability drops (Miltenburg, 1995). Nowadays,
customer expect on time delivery and in small lots. Hence, lean production systems
especially the just in time manufacturing is gaining more and more popularity in recent
years as a result of this output.

Flexibility and innovativeness

In manufacturing systems, flexibility means to what extend the volumes of the existing
products can be increased or decreased to respond quickly to the needs of the
customers. Innovativeness simply means the ability to introduce new products or make
design changes to the existing models.
Skinner (1969) developed the framework that is the basis of modern operating
strategy. This was based on the premise that there are many ways to compete, apart
from cost, and that each manufacturing unit should focus on doing those few things
well that are critical to the achievement of the corporate mission. Underlying his ideas
is the concept of strategic trade-offs: the achievement of high levels of performance on
one factor can only be obtained at the expense of performance on one or more other Analysis of
factors. performance
Many reliability measurements of the manufacturing outputs have been developed.
For instance, the Cronbach Alphas and correlations measurement from Roth and Miller measurement
(1990) suggest that 11 variables measuring manufacturing success are grouped into
five aggregate variables called dimensions. Their analysis showed that this is an
effective grouping. Besides, a simpler list measurements of the manufacturing outputs, 573
compiled by Leong et al. (1990) was another method of measuring the six
manufacturing outputs.
Some of the measurements that are related to the researched company are chosen
from the list compiled by Leong et al. (1990) and tabled after some discussions with the
respondents Table I.
The performance measure of six production system namely job shop, batch,
operator-paced, equipment paced, continuous flow, JIT and FMS using the six
manufacturing outputs are developed and illustrated in a PV-LF diagram as shown in
Figure 1.

Study methodology
In the midst of economic crisis, one company from among the numerous companies
contacted in Johore, Malaysia had indicated their willingness to participate in the
study. The company is a multinational company, which produces electrical and
electronic goods. The current production system adopted is operator-paced production
system. There are a few major departments which are grouped based on the electrical

Manufacturing output Measures

Cost Unit product cost, unit labour cost, unit material cost,
total manufacturing overhead cost, inventory
turnover (raw material, WIP, finished goods),
machine capacity, direct and indirect labor
productivity
Quality Internal failure (scrap, rework) and external failure
(field or systems failure) cost, warranty cost, quality
of incoming materials
Performance No. of standard and advance features, product resale
price, no. of engineering changes, mean time between
failures
Delivery Delivery time, Master Production Schedule
performance, inventory accuracy, average lateness,
per cent of on time delivery
Flexibility No. of products in the line, No. Of available options,
Minimum size order, Average production lot size,
Average volume fluctuations that occur over a time
period divided by the capacity limit, No. Of parts
produced by a machine, Possibility of producing Table I.
parts on different machines The measurement of the
Innovativeness No. of new products introduced per year, lead time to six manufacturing
new design, level of R&D investment, consistency of outputs related to the
investment over time researched company
BPMJ
10,5

574

Figure 1.
PV-LF diagram of
standard performance
weight for each output

goods they produced. Each major department is subdivided into several sections,
namely Engineering Section, Production Planning and Control Section, and Quality
Control Section, whereby the study is scoped to a selected major department only.
The questionnaire developed in this study consisted of five sections: the
respondent’s background; the degree of importance of each manufacturing output;
the degree of satisfaction of each manufacturing output; comments and suggestions;
and finally, explanations of each output components related to the company.
Twenty-six employees comprising of production supervisors, technicians, engineers
and managers are surveyed. As the respondents are from different background, the
first section was intended to determine the correction factor or the weight of each
respondent’s opinion. It is generally believed that the longer a professional employee
works in the company, the better he or she will understand the production system. In
addition, the degree of satisfaction, in particular from those who have extensive
experience from the company will be more reliable too. Besides, it might be appropriate
too that the opinion from a higher status employee carries more weight than a lower
one. Hence, it might be appropriate that the opinion from each employee has to be
discriminated and multiplied with a correction factor or weight as shown below:
No: of years þ Position
Weight ¼
2
All the weights assigned for the position and no. of years work in the company as
shown in Table II are determined after discussions with the managers and engineers
there. They believed that both positions in the company and no. of years of experience
in the production line are equally important. As managers and engineers have greater
exposure with the customers and suppliers than the supervisors or technicians, it is
agreed that the weight of 0.5 were given for the opinion of those in the
supervisor/technician category.
 For the second section, the respondents were asked to rank the degree of importance Analysis of
to each manufacturing output on a five-point Thurstone scale of “1” “Least Important”, performance
“2” “Average”, “3” “Important”, “4” “Very Important” and “5” “Utmost Important”. As
hitherto, no manufacturer or manufacturing systems in the world is able to provide all measurement
six manufacturing outputs at the highest level (Miltenburg, 1995), hence tradeoffs are
needed in providing a single or a few selected outputs at the highest level whilst
maintaining the other outputs at a relatively high level. Owing to this, respondents are 575
allowed to choose each scale for a maximum of twice only for this section.
For the third section, the respondents were asked to rate the degree of satisfaction to
each manufacturing output on a five-point Likert scale from “1” “Not Satisfied” to “5”
“Very Satisfied”, with the middle denoted as “Average”. However, in the calculation of
the coefficients of the degree of satisfaction for each manufacturing output, the scale
from the questionnaire for this section is reversed from “1” “Very Satisfied” to “5” “Not
Satisfied”, and the middle “Average” remains unchanged.
The last part of the questionnaire shows the components for each manufacturing
outputs that are related to the researched company. The components are selected and
discussed with some of the engineers and managers of the company to ensure that they
are related with the company. It is hoped that this section will provide the respondents
a clear view of each manufacturing output.

Survey results and model development

From the survey, the mean scale of each output, percentage of rating and coefficients of
each manufacturing output for the degree of importance and degree of satisfaction can
be calculated. Table III and IV shows the calculated results of the degree of importance
and degree of satisfaction, respectively.

No. of years work Weight Position Weight

1 year or less 0.5 Supervisor/technician 0.5

2-3 years 1.0 – 1.0 Table II.
4-5 years 1.5 Engineer 1.5 Correction factor for each
Above 5 years 2.0 Manager 2.0 manufacturing output

C Q P D F I
Table III.
Mean scale, m0 (1-5) 3.87387 4.71171 3.66667 4.15315 2.99099 2.93694 The results of the degree
per cent rating 77.4775 94.2342 73.3333 83.0631 59.8198 58.7387 of importance for each
Coefficient, ko 0.17346 0.21097 0.16418 0.18596 0.13392 0.1315 output

C Q P D F I
Table IV.
Mean scale, m0 (1-5) 2.58559 2.14414 2.24324 2.36937 2.77477 2.72072 The results of the degree
per cent rating 51.7117 42.8829 44.8649 47.3874 55.4955 54.4144 of satisfaction for each
Coefficient, ko 0.17426 0.14451 0.15118 0.15968 0.18701 0.18336 output
BPMJ As Table III adequately shows, it can be seen that the company places the highest
degree of importance for the quality output, followed by delivery, cost and
10,5 performance. It came as no surprise as the company is currently using the
operator-paced production strategy, where the quality to produce identical goods with
tight specifications, reliability in delivering goods and low cost production is of
paramount importance. The company places low emphasis on the flexibility and
576 innovativeness output as their mean scale rating are well behind the other outputs.
Table IV shows that the company is quite satisfied with all their manufacturing
outputs as the mean scale of all manufacturing outputs are between 2 and 3.
On the whole the performance measure for the production system (PMPS) can be
defined as the function of the sum of six manufacturing outputs; with assumptions that
there are no significant interactions exist between the outputs or the interactions that
exists is minimal and negligible.
PMPS ¼ f {Cost; Quality; Performance; Delivery; Flexibility; Innovativeness}

¼ kC C þ kQ Q þ kP P þ kD D þ kF F þ kI I
whereby, DOI is the coefficient for degree of importance; DOS is the Coefficient for
degree of satisfaction; AC is the actual coefficient; W is the weight or correction factor;
m0 is the mean scale of single output; ko is the coefficient of single output; ao is the
actual coefficient; PMPS is the performance measurement of production system; O the
single output, C the cost; Q the quality; P the performance; D the delivery;
F the flexibility; and I the innovativeness.
P
W· O
Mean scale; m0 ¼ P
W

m0 £ 100 per cent

Percentage of rating ¼
5
m0
Coefficient; ko ¼ P
m0
Hence, the total coefficients of all outputs should be totaled to 1.
It is apparent that the degree of importance (DOI) is a more dominant factor than the
degree of satisfaction (DOS). This is because the respondents are the ones who know
which output is important to them in selecting a suitable production system. By
emphasising on the most important manufacturing output(s), this will certainly give an
overall good production results. DOS only manifests which output they are dissatisfied
and needs improvement. It does not show that those dissatisfied outputs are very
important or not. Nevertheless, the emphasis on the DOS should not be undermined
too. This is because in manufacturing, every manufacturing output should be
considered important and maintained at a relatively high level. For instance, if very
high degree of importance is placed on the cost output, but the corresponding level of
satisfaction is not high, the coefficient of cost for DOS will slightly increase the actual
coefficient. However, if the corresponding level of satisfaction is high, the coefficient of
cost for DOS will slightly decrease the actual coefficient to enable the actual coefficient
of the other not as important but lesser-satisfied outputs to narrow the gap with the Analysis of
cost output. Like the Operation Research Expected Mean Value Analysis, the sum of all performance
coefficients of manufacturing outputs is equal to one. Hence, after some discussions
with the engineers and managers of the researched company, it was resolved that both measurement
the coefficients of DOI and DOS will be integrated with the weight of 0.7 given to the
coefficients of DOI and 0.3 given to coefficients of DOS.
577
Actual Coefficient; ao ¼ 0:7kDOI þ 0:3kDOS
But before the determination of whether weighted average of DOI and DOS was carried
out, hypothesis test of significance in means between the mean scale of degree of
importance and degree of satisfaction for the six manufacturing outputs were done.
This is to ensure that at least one of the factors between the two mean scale of DOI and
DOS has significant difference.
In order to conduct the tests, the following hypothesis was set-up.
H0. m12 m0 ¼ 0, i.e. there is no significant difference between the DOI and DOS
mean scale
H1. m12 m0 – 0, i.e. there is at least one significant difference between the DOI
and DOS mean scale
From Table V, it was conspicuous that there is significant difference in means between
the mean scale of DOI and DOS for all the six manufacturing outputs. As there was
more than one factor that has significant difference in means, the weighted average for
the calculation of actual coefficient should be executed.
Next, the empirical formula for performance measures of production systems for the
researched company can be derived by using the actual coefficient as shown in
Table VI.
Performance measure for production systems,

PMPS ¼ 0:1737C þ 0:1910Q þ 0:1603P þ 0:1781D þ 0:1499F þ 0:1471I

Factor Mean scale DOI Mean Scale DOS tcal ttable Results

Cost 3.874 2.438 6.064 2.011 Significant

Quality 4.712 2.074 22.435 2.011 Significant
Performance 3.667 2.049 8.103 2.011 Significant
Delivery 4.153 2080 10.059 2.011 Significant
Flexibility 2.991 2.512 2.098 2.011 Significant Table V.
Innovativeness 2.937 2.475 2.261 2.011 Significant Paired sample statistics
for mean scale of DOI and
Note: t-value at 0.05 level of significance with 50 degrees of freedom ¼ 2.011 DOS of each output

C Q P D F I
Table VI.
DOI 0.17346 0.21097 0.16418 0.18596 0.13392 0.1315 The results of the actual
DOS 0.17426 0.14451 0.15118 0.15968 0.18701 0.18336 coefficient (AC) for each
AC 0.17370 0.19103 0.16028 0.17808 0.14985 0.14706 output
BPMJ where the input values of C, Q, P, D, F and I can be obtained by using the
10,5 converted numerical values (Table VII) from the PV-LF diagram (Figure 1) of Professor
Dr John Miltenburg.
The assumptions made for the validation of this formula are as follows:
(1) there are no interactions exist between the manufacturing outputs or the
interaction between the outputs is insignificant and can be neglected;
578 (2) the information provided by each employee surveyed is correct and reliable; and
(3) the weights considered for the formulation of empirical formula is reliable.

Reliability and correlation test

Reliability tests in the questionnaire used in the survey were conducted following the
approach adopted by Yusoff and Aspinwall (2000). Spearman’s r correlations analysis
and Cronbach a model, which measures internal consistency, are used in the reliability
testing of the manufacturing outputs of DOI and DOS, respectively. The former
method is preferred in measuring DOI because the DOI scale involves the ranking of
each output. The latter method was used in measuring DOS as Likert Scale was used in
measuring DOS.

Spearman’s rho correlations analysis

All the DOI data were divided into two groups, then by using the statistical package
for social science (SPSS) bivariate correlation procedure, the Spearman’s r correlation
coefficient for each output were performed. The following Table VIII shows the values

C Q P D F I

Batch 2 3 7.5 2.5 9 9

Table VII. Operator-paced 3 7.5 9.5 4 6.5 3.5
Performance weight for FMS 8 8 7.5 4 7.5 3
each manufacturing JIT 9 9 7 7 7 7
output (1-10) Equipment-paced 9 9.5 3.5 7.5 1 1

Factors Results

DOI cost Correlation coefficient 0.952

Sig. (2 tailed) 0.000
DOI quality Correlation coefficient 0.838
Sig. (2 tailed) 0.000
DOI performance Correlation coefficient 0.890
Sig. (2 tailed) 0.000
DOI delivery Correlation coefficient 0.824
Sig. (2 tailed) 0.000
Table VIII. DOI flexibility Correlation coefficient 0.894
Spearman’s rho Sig. (2 tailed) 0.000
correlation coefficient DOI innovativeness Correlation coefficient 0.938
results Sig. (2 tailed) 0.000
of the coefficient for each factor, of which all the factors are significant at 95 per cent Analysis of
confidence interval. This shows that the instrument used is reliable. performance
measurement
Internal consistency analysis
Using the SPSS reliability analysis procedure, an internal consistency analysis was
performed on the DOS of each manufacturing output. Table IX below shows the results 579
of the analysis. From the a value of 0.9250, it can be concluded that this instrument has
high DOS internal consistency and is therefore reliable.

Correlation test
Correlation test is done to ensure that all the factors do not inter-correlate with each
other as stated in the assumption. The Spearman’s rho (for DOI) and Pearson (for DOS)
product moment correlation coefficients test is carried out to find if there are any
strong correlations between each manufacturing outputs for the test. For 99 per cent
confidence interval, there is only one pair of factors that are significant in DOI
(Delivery and Flexibility) as shown in Table X and DOS (Flexibility and
Innovativeness) as shown in Table XI, respectively. However, as the correlation
values of the factors of DOI and DOS are generally not significant, and only one pair

Scale mean Scale variance Corrected item

Factors if item deleted if item deleted total correlation a if item deleted

DOS cost 11.3846 10.0062 0.6875 0.9237

DOS quality 11.6923 10.5415 0.7759 0.9162
DOS performance 11.8077 9.7615 0.8158 0.9078
DOS delivery 11.6538 9.7554 0.7702 0.9131
DOS flexibility 11.3077 8.4615 0.8752 0.8995
DOS innovativeness 11.3846 8.8862 0.8332 0.9050 Table IX.
Internal consistency
Note: Reliability coefficients; a ¼ 0.9250 results

Factors DOIC DOIQ DOIP DOID DOIF DOII

DOI cost Correlation coefficient 1.000 2 0.148 0.021 2 0.451 20.473 0.147
Sig. (2-tailed) – 0.472 0.920 0.021 0.015 0.474
DOI quality Correlation coefficient 20.148 1.000 2 0.188 2 0.258 20.161 0.146
Sig. (2-tailed) 0.472 – 0.357 0.203 0.431 0.477
DOI performance Correlation coefficient 0.021 2 0.188 1.000 2 0.201 20.049 20.105
Sig. (2-tailed) 0.920 0.357 – 0.326 0.813 0.609
DOI delivery Correlation coefficient 20.451 2 0.258 2 0.201 1.000 0.593 0.159
Sig. (2-tailed) 0.021 0.203 0.326 – 0.001 0.439
DOI flexibility Correlation coefficient 20.473 2 0.161 2 0.049 0.593 1.000 0.013
Sig. (2-tailed) 0.015 0.431 0.813 0.001 – 0.949
DOI innovativeness Correlation coefficient 0.147 0.146 2 0.105 0.159 0.013 1.000
Sig. (2-tailed) 0.474 0.477 0.609 0.439 0.949 – Table X.
Spearman’s rho
Note: The pair of bolded values is correlated at 99 per cent confidence interval correlation results
BPMJ Factors DOSC DOSQ DOSP DOSD DOSF DOSI
10,5
DOS cost Correlation 1.000 0.068 0.089 0.057 0.167 0.032
Sig. (2-tailed) – 0.743 0.667 0.784 0.414 0.876
DOS quality Correlation 0.068 1.000 0.199 0.159 2 0.146 2 0.132
Sig. (2-tailed) 0.743 – 0.329 0.438 0.477 0.519
DOS performance Correlation 0.089 0.199 1.000 0.386 0.062 0.149
580 Sig. (2-tailed) 0.667 0.329 – 0.051 0.762 0.468
DOS delivery Correlation 0.057 0.159 0.386 1.000 0.222 0.404
Sig. (2-tailed) 0.784 0.438 0.051 – 0.276 0.040
DOS flexibility Correlation 0.167 20.146 0.062 0.222 1.000 0.660
Sig. (2-tailed) 0.414 0.477 0.762 0.276 – 0.000
DOS innovativeness Correlation 0.032 20.132 0.149 0.404 0.660 1.000
Table XI. Sig. (2-tailed) 0.876 0.519 0.468 0.040 0.000 –
Pearson correlation
results Note: The pair of bolded values is correlated at 99 per cent confidence interval

from each DOI and DOS is significant, it can be assumed that the interactions between
the outputs is minimal and can be neglected.

Results, findings and discussions

Table XII shows the performance measure of each production system from a scale of 1
to 10. Job shop and continuous flow production system is omitted from this selection
because the features of those systems are unsuitable for the researched company’s
current production system, that is operator-paced production.
Referring again to Table XII or the comparison graph on Figure 2, the JIT
production yields the highest performance measures percentage rating (77.25 per cent)
followed by FMS (63.91 per cent) and its status quo, that is the operator-paced
production system (56.67 per cent).
It can be seen from Table XII that almost all the manufacturing outputs (except
performance) of JIT production system outperform the corresponding outputs of its
status quo, the operator-paced production system. The performance output from
the operator-paced has 4 per cent of rating more than JIT. Nevertheless, since the
performance output was only ranked by the respondents as the fourth most
important output after delivery, quality and cost, it showed that JIT is clearly a
better choice.
One interesting finding than should be considered is that the two most
important manufacturing outputs (quality and delivery) were slightly better
produced by the equipment-paced than the JIT production system. However, the
overall production performance rating for equipment-paced production system was

C Q P D F I PMPS Per cent rating

Batch 0.3474 0.5730 1.2023 0.4453 1.3491 1.3239 5.2605 52.61

Table XII. Operator-paced 0.5211 1.4325 1.5229 0.7124 0.9744 0.5149 5.6687 56.67
The value of expected FMS 1.3896 1.5280 1.2023 0.7124 1.1243 0.4413 6.3909 63.91
performance measure of JIT 1.5633 1.7190 1.1221 1.2467 1.0493 1.0297 7.7252 77.25
each production system Equipment-paced 1.5633 1.8145 0.5611 1.3358 0.1499 0.1471 5.5446 55.45
 Analysis of
performance
measurement

581

Figure 2.
Comparison results of
performance measures for
each production system

pulled down by low performance in flexibility and innovativeness. If the

management reconsider its strategies by placing a very low emphasis in flexibility
and innovativeness, equipment-paced production system should be taken into
consideration too.
As a whole, the results clearly compared the manufacturing outputs for each
production system in numbers or percentages before a final selection is reached. It also
tells us that the production system that has the highest PMPS (overall rating) does not
mean to be the best selection as it also depends on the company’s policies and emphasis
in the output.
With that, it answered the research question mentioned earlier of developing a
methodology that can quantitatively measure the selection of a production system
whilst comprehending all the necessary manufacturing outputs to boost a company’s
performance.

Research constraints and future work

A few research constraints are highlighted in this paper in order for improvements and
future research.
(1) The weight for DOI and DOS for the calculation of actual coefficient should be
given in a quantitative way. The weight of 0.7 and 0.3 assigned to DOI and DOS
in this paper are merely discussions with the engineers and managers there and
may be perhaps, too subjective.
(2) The input values for the empirical formula are based on the numerical values of
Professor Dr Miltenburg’s PV-LF matrix. It is assumed that the weight given
for each manufacturing output for the corresponding manufacturing system is
reliable.
(3) The evaluations of the manufacturing outputs were done internally, that is
within the employees of the researched company itself. The respondents may
BPMJ say that their delivery is very reliable but in reality, it may not be. Hence, it will
10,5 be more holistic if the evaluation also involves the ideas from outsiders,
particularly from the suppliers and the customers of the researched company.
(4) The evaluations on each of the manufacturing outputs are done as a whole, with
the assistance of Table VII, which consists of the elements of each output. It will
be more thorough if the respondent is told to evaluate each element listed in the
582 table separately, rather than evaluate the output as a whole.

Conclusion
The methodology on authors’ attempt to quantitatively analyse and select a production
system has been presented in this paper. A reliability analysis on the survey
instrument was conducted and concluded that it was fairly reliable and valid measure.
Correlation analysis was also conducted to ensure there were minimal interactions
between the manufacturing outputs. The correlation results showed that there is only
one pair that is slightly above the 99 per cent confidence interval significant level.
Hypothesis t-testing was also performed to investigate any difference in means
between the DOI and DOS for the six manufacturing outputs. The results showed that
there is significant difference between them. Hence, different weights were assigned to
the coefficients of DOI and DOS of each output.
The analysis from the survey revealed that the JIT production system topped the
list of production system with a expected performance rating of 77.25 per cent. This is
followed by FMS (63.91 per cent) and operator-paced production system (56.69 per
cent), which is also the status quo production system of the company. However, it
cannot be concluded that JIT strategy should be finalised. The detailed performance of
every manufacturing output should be taken into considerations too. The equipment
paced production, although ranked fourth overall, should be considered too as it is
expected to produce better quality and delivery outputs than JIT, as both of the outputs
are ranked as the most important. Further discussions among the managements should
be done before the selection of the production system can be finalised.
Future research can concentrate on refining and further validating the instrument
developed in this study by exploding each output to its specific elements and by
involving the participation of suppliers and customers of the researched company.
Further analysis and validations on the numerical inputs of the PV-LF matrix are
recommendable.

References
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Further reading
Dumond, E.J. (1994), “Making best use of performance measures and information”, International
Journal of Operations & Production Management, Vol. 14 No. 9, pp. 16-31.
Halley, F. and Babbie, E. (1995), Data Analysis Using SPSS for Windows, Pine Forge Press, CA.
Jonsson, P. and Lesshammar, M. (1999), “Evaluation and improvement of manufacturing
performance measurement systems-the role of OEE”, International Journal of Operations
& Production Management, Vol. 19 No. 1, pp. 55-78.
Mapes, J., New, C. and Szwejczewski, M. (1997), “Performance trade-offs in manufacturing
plants”, International Journal of Operations and Production Management, Vol. 17 No. 10,
pp. 1020-33.
Neely, A., Gregory, M. and Platts, K. (1996), “Performance measurement system design: a
literature review and research agenda”, International Journal of Operations & Production
Management, Vol. 15 No. 4, pp. 80-116.
Price, J.L. (1997), “Handbook of organizational measurement”, International Journal of
Manpower, Vol. 18 Nos 4/6, pp. 305-558.
SPSS 10.0.5 For Windows (1999), SPSS Inc., USA.
Sweeney, M.T. and Szwejczewski, M. (1996), “Manufacturing strategy and performance”,
International Journal of Operations & Production Management, Vol. 16 No. 5, pp. 25-40.
Upton, D. (1998), “Just in time and performance measurement systems”, International Journal of
Operations & Production Management, Vol. 18 No. 11, pp. 1101-10.

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