NONFINANCIAL MEASURES OF PERFORMANCE
(productivity
- LEADING indicators
- gives us idea of the future
- not stated in terms of pesos but are equally important with financial measures
PRODUCTIVITY
Total (2)
Partial
efficient conversion of inputs into outputs
= output/ input
- input (mat, labor, OH)
Partial Productivity
- relations between output and a SINGLE INPUT
- closely related to manufacturing efficiency variances
no. of value or value of OUTPUT manufactured /
number of units or cost of a SINGLE or PART of the INPUT resource
2 Types of total productivity
O(u).F(p).
TOTAL PRODUCTIVITY
- Operational (in Units or hours)
= output / inputs - Financial (in Peso)
= output/ inputs
TOTAL PRODUCTIVITY
Unit OR sales value of output/
total cost of input resources*
- always in pesos since you cannot combine units, hours, etc.
(3) Internal Business process performance measures
elapsed time
- Delivery Cycle Time
2. Throughput (Manufacturing Cycle) TIme
Delivery Cycle Time
remember Jollibee
- total elapsed time
- order placement and shipping to the customer
- longer than throughput time
- includes WAITING TIME synonymous to lead time
Throughput (Manufacturing Cycle) Time
clue: throughput means material
- total elapsed time
- order is put into production and shipment to the customer
- WIP to FG
Manufacturing Cycle Efficiency (MCE)
value added time * / total throughput time
*process time
Velocity
no. of units of output that can be produced in a given period of time.
Value Added (P) Non Value Added Time (WIMQ)
Value Added
- creates customer satisfaction and which customers are willing to pay
Process
Waiting
Inspection (NVA but essential)
Move
Queue
- Balance scorecard
FINANCIAL PERFORMANCE MEASURES
Revenue
- price recovery
- growth
Variable Cost
- productivity
- price recovery
- growth
Fixed cost
- productivity
- price recovery
Revenue component
price recovery
growth
SPCY x units sold CY = Sales CY
units sold CY x SPPY = Sales CY @ LY Price
SPPY x units sold PY = Sales PY
price recovery = (SPCY- SPLY) x units sold CY
growth = (units sold CY - units sold PY) x SPPY
no productivity component for revenue since it is outside the influence of efficiency
Variable Cost
Productivity
Price-recovery
Growth
Productivity VCCY x (inputs CY - (sold units @ PY efficiency rate))
Price recovery
(sold units @ PY efficiency rate) x (VCCY - VCPY)
Growth VCPY x (sold units @ PY efficiency rate- inputs PY)
Fixed cost
Productivity
Price recovery
Productivity
TFC CY - FC @ PY capacity
Price-recovery
FC @ PY capacity - TFC PY
