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Performance measurement system simplicity

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  • Eric O. Olsen
  • Peter T. Ward

Abstract

Leading researchers, consultants and practitioners advocate that internal operations performance measurement (PM) systems need to be 'simple' in order to be most effective. The notion of PM system simplicity has often been expressed as the characteristic of having few versus many measures. This paper proposes a new simplicity scale based on the importance rankings of performance measures found in a large-scale survey of manufacturing firms. The PM system simplicity scale is developed and applied in the context of traditional manufacturing strategy constructs such as cost, quality, delivery and flexibility and with respect to environmental dynamism. Analysis of empirical data on 100 manufacturing firms shows that superior market performance is associated with firms that have both complex and simple PM systems, but that moderately simple systems perform less well.

Suggested Citation

  • Eric O. Olsen & Peter T. Ward, 2006. "Performance measurement system simplicity," International Journal of Manufacturing Technology and Management, Inderscience Enterprises Ltd, vol. 8(4), pages 330-354.
    • Handle: RePEc:ids:ijmtma:v:8:y:2006:i:4:p:330-354
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    Cited by:

    1. Cagno, Enrico & Accordini, Davide & Trianni, Andrea & Katic, Mile & Ferrari, Nicolò & Gambaro, Federico, 2022. "Understanding the impacts of energy efficiency measures on a Company’s operational performance: A new framework," Applied Energy, Elsevier, vol. 328(C).

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