"Maintain your competitive edge" Newsletter Phase 113 Feb 2014 14:49
During the first phase of the project "maintaining your competitive edge" research was done in the area of performance management and process optimization within the participating companies.
The purpose of this was to give insight on the performance level of each participating company. In which performance level means; to what extend does a company deal with process optimization and performance management methods. In order to visualize this the company performance is compared to an ideal organization that results from a literature study. The literature used was specifically focused on process optimization and performance management in Small and Medium Enterprises (SMEs) and the Maintenance Repair and Overhaul (MROs). When we reflect the measured performance of the participation companies on this ideal organization it is able to display a their performance level. The result is illustrated in the figure below (figure 1).
The idealistic organization from literature for both performance management and process optimization is described by the use of hypotheses. Each company is reviewed on how it scores on these hypotheses. The score runs in five steps, from zero to four and is visually displayed by using "Harvey Balls" (figure 2).
Nine hypotheses are formulated for performance management and are divided into three main categories: (1) "The mission, vision and strategy are in line with the objectives and measured KPIs", (2) "The KPIs are balanced, measureable and are maintained in a clear manner" and (3) "The company is aware of possible improvement potential". Six main hypotheses are formed for process optimization from the six steps from the improvement process. A distinction is made in the structural and systematic execution of the named steps.
The average score of the participating companies is 1,79 on a scale of 0 to 4. The various companies have diverse scores: [high, low, modal]. Illustrated is that most companies are not far in the field of performance management and at this point much improvement can be made. This also applies for process optimization, with an average score of 2,0.
A reason why the participating companies have a lower score in comparison to the score of the benchmarks is because the mission, vision and strategy are not in line with the objectives and KPIs. According to literature, for an ideal organization, this must be in line. Another reason is that most of the participants usually only have defined objectives on the business level (top level). Within the benchmarks goals/objectives are found in all departments and therefor defined for employees individually (or group of employees).
Usually the KPIs are not balanced or even maintained at all. Smaller companies usually measure turnaround time and worked hours, as the worked hours must be justified to the client. Many companies do measure a number of performances, but not in a KPI format. The performances are mostly used to review the current state of the affairs. Performances that are tracked are: turnaround time, worked hours, productivity, absenteeism, on-time delivery and quality. One company measures many KPIs which are defined with the use of the BSC. However, it lacks of control and direction.
In general, the participating companies are currently working to improve their processes, but only in the department of quality and safety. The purpose of the improvement is to preserve the EASA part 145 or ISO 9001 certificates. The optimization is not aimed to structurally improve process performance or customer based performances. According to interviews the middle management is leading the daily operations, and do not control the long-term objectives. Due to the above mentioned, the staff in the workplace is hardly involved in the guidance, and lacks the link between the execution of tasks and the feedback of it on performance and objectives.
Process optimization is active in the participating companies on higher management level and reaches the workplace verbally, which will eventually deal with the problem reactively, instead of dealing with the problem on a proactive level. This causes a miscommunication between middle management and the workplace.
Two typical characteristics for a SME MRO organization are: (1) the products must go through external organizations for maintenance and (2) the organization is mostly dependent on one client. Clearly, the organizations that do not depend on both of these characteristics score better. Other links between characteristics and performances were not found. After comparing the characteristics of the organizations with the NWAA* table, it is clear that the SME MROs are located at the learner/developer side. This method of classification validates the room for improvement.
At the end, the companies are aware of the improvement potential. However, the initiative is difficult to achieve. If the initiative is set up, it will eventually be neglected during the improvement process. We would like to guide the participants through the Roadmap, which is founded on the theory of performance management and process optimization. Read more about this in the next newsletter.