A recent article in Wired magazine (The Feedback Loop) discusses the power of feedback in influencing behavior. The example cited is the speed monitoring signs now installed along many city and neighborhood streets that display a driver’s current speed along with the speed limit. Even though there is no enforcement associated with these signs – the police do not monitor them – they are remarkably effective. In one test, the signs had the effect of reducing average speeds by 14-percent and in some cases reducing the average to below the posted limit.
Essentially, the signs measure for desired behavior. They encourage self-directed behavioral change.
ERP for Performance Measurement
Modern ERP systems for manufacturers can help keep everyone in the company focused on performance. A comprehensive system should track the components of OEE (overall equipment effectiveness) in real time, and also monitor on-time shipping completion percentage, inventory accuracy, quality achievements, production measures, and more.
In addition to providing a context for individual activities, these visible, real-time measurements enable a feedback loop that encourages workers to focus on the tasks, accomplishments and targets that organization has chosen to highlight.
Usually, the simple posting of measurements on a regular basis (along with the desired or expected “target”) is effective in getting improved results without any additional incentives.
Measurements on the Shop Floor
Leading ERP systems offer dashboard features that help track and measure key data, which can include downtime monitoring, production rates, maintenance needs and other real-time reporting. Shop floor workers can see in an instant, via an easy to read color-coded dashboard, key metrics related to productivity, overall equipment effectiveness, and other performance indicators.
As an example, an automotive supplier uses their ERP system to track and record all physical events in real-time (receiving, production, inventory status changes, scrap, subcontract, shipping, etc.). Easy-to-read dashboards monitor key metrics like production levels, on time shipments, scrap levels and more.
Tying Measurements to Business Value
The company is careful to make the measurements reflect real value to the business. As in the case with the speed monitoring sign, this company is aware that its workers will adjust behavior in response to the measurements.
Real-time performance tracking and measurement is critical to any manufacturer. Just note that the desired behavior must be tied to corporate goals and customer value. Each employee must have influence on the measurement.
Setting targets that the employee can influence will result in better outcomes.
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