What is operational performance management?
Operational performance refers to the ability to efficiently leverage company resources – human, material, financial, and technological – to meet strategic and operational goals. Operational performance management, in turn, encompasses the methods and tools enabling companies to track and monitor results, compare actions with set objectives, and adjust course accordingly. It’s a structured process that aligns daily efforts with the overall strategy, and ensures optimal use of available resources to drive operational efficiency and ultimately achieve operational excellence.
Management of operational performance means defining clear objectives, setting relevant key performance indicators to measure progress, and ensuring data-driven decisions to correct variances.
This approach helps companies remain agile, proactive, and results-oriented. It ensures that business processes are aligned with strategic objectives, building the foundations of effective operational performance management.
Key roles
Operations performance management is everyone's responsibility in leadership teams, but with distinct duties at each level:
- Top management defines the vision, sets overarching strategic guidelines, and appropriately allocates necessary resources.
- Operational managers translate this vision into concrete actions (e.g., operational improvement plans, team objectives, operational KPIs, resolution of gaps).
- Frontline team leaders and supervisors monitor performance of operations in real-time, guide teams, escalate issues, and execute management routines on the shop floor.
- Support functions (Quality, Maintenance, HR) provide expertise to monitor and improve existing business processes.
Benefits
In the manufacturing business, operational performance management is crucial to:
- Increase operational efficiency and productivity by eliminating waste like waiting times and non-value-added activities.
- Improve quality by reducing non-conformities and stabilizing operational processes.
- Generate measurable cost savings by optimizing materials, time, and equipment use.
- Accelerate lead times by streamlining production flows and reducing interruptions.
- Enhance flexibility by improving an organization’s agility in the face of demand fluctuations or unforeseen supply chain disruptions.
- Increase competitiveness by improving responsiveness, reliability, and the ability to deliver on time, while consistently meeting customer expectations.
Core practices of operational performance management
Operations performance management is based on fundamental practices that ensure consistency and efficiency in daily management. Teams rely on these critical components to observe, understand, and continuously improve operational performance, ultimately achieving sustainable operational excellence.
Define SMART objectives
Setting clear operational performance objectives is the first step towards effective performance management. Without specific goals shared amongst employees, efforts are scattered, results are difficult to assess, and team motivation can wane.
A good SMART goal – Specific, Measurable, Achievable, Realistic, and Time-bound – is like a collective compass; it transforms an idea into a clear and measurable goal.
Example of SMART goal: Rather than saying "Improve quality," choose "Reduce the non-conformity rate on line 1 by 15% by the end of the quarter, by optimizing machine settings and strengthening quality controls."
Set key performance indicators (KPIs)
Before managing operational performance, you must be able to set relevant performance measurements. Key performance indicators (KPIs) make the invisible visible; they translate objectives into actionable data, which in turn enables to determine strategic priorities and effective actions.
By enabling rapid identification of gaps, clear and relevant key performance indicators make it easier to monitor overall operational performance with consistency and make informed decisions.
Examples of KPIs for measuring operational performance:
- Overall Equipment Effectiveness (OEE): It measures equipment availability, performance, and quality to ensure maximum efficiency.
- Availability rate: It indicates the time during which a machine or production line is actually in operation.
- Productivity rate: It refers to the quantity produced per unit of time or per resource used.
- First-Pass Yield (FPY): It’s the proportion of compliant products (no rework) at the end of the process.
- On-Time Delivery (OTD): It provides the quantity of orders delivered on the agreed date.
- Mean Time Between Failures (MTBF): It measures the average operating time between two failures.
Implement tools and rituals
Effective tools and structured rituals are also indispensable to drive daily operational performance, visualize progress, and engage teams.
Example of key tools and methods:
- Visual management (dashboards, KPIs displayed on production lines) makes information easy to access, understand, and visualize.
- Gemba Walks are floor tours that help leaders manage performance of various operational processes, interact with operators, and collect valuable insights on operations. They strengthen daily process management.
- Internal audits are comprehensive evaluations that allow organizations to identify areas for improvement, verify compliance with existing processes, and reinforce best practices.
- Daily meetings are short, structured rituals for communicating, monitoring progress, escalating issues, and quickly implementing corrective actions.
These practices bring high responsiveness, enhanced operational efficiency, and continuous improvement to structure daily routines in a manufacturing organization. Without the right performance management tools, KPIs remain mere numbers on a screen.
Use of a Daily Management System (DMS)
A Daily Management System (DMS) helps efficiently organize and manage daily operational performance. It creates an orderly work environment that is reassuring for leadership teams.
Such technology also fosters communication between departments and management teams, accountability from each employee and leader, and continuous improvement of business processes.
A powerful DMS is based on:
- Management meetings focused on key performance indicators and performance gaps.
- Operational dashboards updated in real time, with KPIs, variance charts, and action lists.
- A simple issue escalation process to quickly resolve identified problems and bottlenecks.
Strategies to efficiently manage operational performance
Once objectives and KPIs are set, tools deployed, and DMS implemented, many strategies can be applied for optimal operational performance management. These strategies help meet and even exceed operational goals.
1. Adopt Lean Management to identify and correct variances
Lean Management provides a strong framework for identifying waste, streamlining processes and flows, and helping the organization stay focused on value-added activities.
Applied in a performance management system, Lean allows to:
- Accurately detect performance variances and identify bottlenecks using Lean tools such as Value Stream Mapping (VSM) or 5Ms.
- Prioritize corrective actions by addressing the root causes of problems (5 Whys method, Ishikawa diagram).
- Standardize best practices once process improvements have been validated.
Lean Management is an essential strategy for process optimization and highly-efficient, optimal operational performance management.
2. Use Kaizen to create a continuous improvement cycle
Kaizen complements Lean by fostering the implementation of small improvements every day. This method plays a vital role in continuous operational performance improvement:
- It transforms KPI results into targeted action plans.
- It directly involves operational teams in finding concrete solutions.
- It integrates with the Daily Management System to simplify tracking of continuous performance improvement initiatives.
While Lean Management identifies waste and supports the implementation of mid and long-term solutions, Kaizen empowers teams to act daily to improve operational processes – one step at a time.
3. Leverage predictive maintenance to secure results
Successful operations performance management isn’t just about identifying gaps; it’s also about preventing them from occurring. That’s why predictive maintenance is a critical aspect that should be integrated with existing systems.
By analyzing real-time data from machines (abnormal vibrations, temperature variations, frequency of usage cycles, etc.), it allows to:
- Anticipate breakdowns before they affect production.
- Protect equipment required for smooth production runs.
- Reduce unplanned downtime.
Predictive maintenance is part of a proactive performance management system. It helps to anticipate malfunctions and maintain operational performance over time.
4. Integrate digitalization into the operational performance management system
Digitalization provides valuable insights to improve operational performance management through faster, more accurate, and more customizable data and information.
With IoT, automation tools, connected sensors, and artificial intelligence, manufacturing companies can now:
- Rely on accurate, real-time data, directly from machines and production lines.
- Accelerate decision-making with automated predictive analytics and intelligent dashboards.
- Tailor management tools depending on each user’s role (operator, supervisor, senior management, etc.).
Digital technologies are a performance management accelerator, connecting field data, data analysis, and the resulting actions.
Tips for overcoming operational performance management challenges
Behavior in the face of change
Operations performance management often involves new habits. These changes, even when positive, can create tensions if they are not adequately supported.
- Involve teams from the start: Involving employees in decisions from the outset helps create a sense of ownership and commitment that boosts employee performance. Organize co-design sessions to facilitate acceptance.
- Communicate clearly and regularly: Explain the reasons for the change, the expected benefits, and how everyone can contribute. Transparency is essential to reduce anxiety and misunderstandings.
Continuous learning
Operational performance management requires specific skills – reading a KPI, leading a meeting, identifying a gap, solving a problem. These skills must be learned.
- Provide regular training: Offer support through targeted training aligned with tools and responsibilities (KPIs, DMS, Lean, problem-solving, etc.). Training should be an ongoing process.
- Use interactive learning tools: Workshops, simulations, e-learning modules, webinars, or role-playing exercises are all great ways to help you practice and consolidate your knowledge.
- Provide post-training follow-up: Schedule feedback and performance assessments to measure training effectiveness and adjust content or methods accordingly.
Culture of performance
A performance management system can only be sustainable if it’s based on a strong culture of discipline, engagement, and continuous improvement.
- Recognize progress: Recognizing collective and individual efforts and progress (even modest) fosters employee engagement and commitment to continuously improving.
- Encourage team accountability: Giving team members more responsibilities encourages their autonomy and involvement in core business goals, leading to increased organizational performance.
- Make performance a shared priority: Integrate performance principles in the company's vision, mission, goals, and values.
Simplify and accelerate operational performance management with UTrakk
The UTrakk Daily Management System allows you to drive and improve operational performance by setting and monitoring objectives that simplify gap identification, accelerate issue resolution, and promote continuous improvement.
- Data and KPI tracking and analysis: Personalized dashboards let you track and analyze data at a glance, measuring operational performance while supporting faster, smarter decisions.
- Structured management activities: A digital agenda helps you structure daily and weekly activities and routines for effective management.
- Regular floor tours: Regular, daily Gemba Walks help ensure team progress, KPI tracking, and the achievement of operational objectives.
- Control point monitoring: Standardized audits and checklists allow you to monitor critical control points and set priorities aligned with the organization's performance goals.
- Operational performance meetings: A meeting management tool facilitates the creation of seamless and effective communication channels through structured meetings that support KPI tracking and problem-solving.
Generate impact every day with effective performance management
Operations performance management isn’t just about tracking numbers. It’s about creating the conditions to make the right choices at the right time. It’s about revealing gaps, consistently taking actions, and empowering teams so they can improve operational performance, day after day. It’s about bringing employees together around shared operational performance objectives and inspiring them to achieve these goals.
In the high-pressure world of manufacturing, performance management provides essential direction. It connects strategy to operations, vision to action. It gives key performance indicators meaning, brings consistency to efforts, and provides visibility into results.
Many proven tools and solutions are available, but true impact comes from consistent, day-to-day implementation on the floor. That’s where operational performance truly counts – and it’s this ongoing commitment that becomes your path to achieve operational excellence.
