Leonard L Fortuin

Designing a performance measurement system: A case study

Performance measurement (PM) by means of local performance indicators (PIs) is developing into performance management at a company-wide scale. But how should PIs at various levels in the organization be incorporated into one system that can help managers, working at levels that range from operational to strategic? How do we convince potential users and obtain their support when starting to develop such a system? How can we aggregate PIs? How do we present results? This paper addresses these and related questions. It is based on a case study carried out at the European Operations department of Nike, a company producing and selling sportswear worldwide. The study resulted in a prototype system that basically is a balanced scorecard tailored to the needs of the company. The empirical findings differ in some ways from the literature on developing performance measurement systems (PMSs) in Operations. Discussing these differences provides new theoretical and practical insights. They relate to the role of parallel initiatives for PM, the role of standardized metrics, the continuous improvement of PMSs, and the normalization and aggregation of measures. Our findings suggest that developing PMSs should to a large extent be understood as a co-ordination effort rather than a design effort. The lessons learned cannot have universal validity, but may be helpful in similar kinds of initiatives.

Control of service parts

Service parts are needed for maintenance of industrial systems as well as for consumer products. Their logistics has an inherent difficulty: common models for inventory management are invalid, as the demand process is different and demand data scarce. The paper discusses experiences gained in case studies of practical stock control techniques. New concepts aimed to reduce the problem of slow moving parts are described, for example: suppliers leasing service parts; standardisation of parts for the group of machines in a factory or over a complete sector of industry; a “broker” between suppliers and customers who makes the service parts inventories transparent and facilitates pooling of parts.

Stocking strategy for service parts - a case study

Service part inventories cannot be managed by standard inventory control methods, as conditions for applying the underlying models are not satisfied. Nevertheless, the basic questions of inventory control have to be answered: Which parts should be stocked? Where should they be stocked? How many of them should be stocked? Presents a case study in which a pragmatic but structured approach is followed – a framework is developed and built into a spreadsheet. The resulting tool has been tested in a real‐life situation, indicating that considerable amounts of money can be saved.

End-of-life service : a case study

Philips is a company that produces electronic equipment like kitchen appliances, television sets, videorecorders, medical equipment, and so on. This equipment is sold world-wide. The central service organization of Philips, situated in Eindhoven (The Netherlands), is responsible for providing spare parts for these products during the entire service period. The length of this service period depends on the type of product. Television sets, for instance, have a service period of eight years. Since the service period is typically much longer than the production period, the service department places a large ‘final order’ for spare parts at the moment the product is taken out of production. This final order is expected to suffice, with a sufficiently large probability, until all service obligations have ended. In this paper we seek close to optimal final order quantities. Actually, this paper is a follow-up on a more theoretical paper, in which a close to optimal final order quantity, given by an explicit formula was derived. This paper presents the results of trying to apply that formula in practise.

Many steps towards zero inventory

Zero Inventory (ZI) and Just In Time (JIT) are two of the buzz words that pretend to offer entirely new concepts. Industrial and commercial companies, however, have always strived for stocks close to zero. Moreover, even JIT deliveries cannot cause stocks to disappear entirely-nor is that desirable. This paper describes how a large multinational company tried to reduce its stocks along the chain from raw materials to the distribution outlets. Zero Inventory has not been achieved, but neither was it aimed. A more realistic goal is MRI, the Minimum Reasonable Inventory.

Operational research in practice: Consultancy in industry revisited

Experiences of an OR group in a large industrial organisation, from 1981 to the middle of 1988, were described in a paper published in 1989. Much has changed since then: (1) having started as an internal staff department, the group has become an independent consultancy bureau, owing to the fact that the mother company returned to her key businesses; and (2) user-friendly software to apply OR techniques such as mathematical programming and discrete event simulation have become available on PC. In this paper 160 OR projects of the above mentioned group in the period 1988–1996 are analysed. The results are compared with those in the period 1981–1988. Differences and similarities are shown and where possible, explained. A simple conclusion can be drawn: OR still can support decision makers when they have to solve problems in complex and dynamic situations, but experts have to show them how to do it.