HOW A MANUFACTURING ORGANISATION EVALUATE EFFECTIVNESS OF PERFORMANCE MEASURES; : A Case study in cooperation with Volvo Construction Equipment in Eskilstuna

The purpose of this thesis is to point out how a company can gain a better process by using PM in an effective way. The report concludes that the existence in practice of theoretically important aspects are different, also that the most correct way of leading the aspects are through the creation of a PM process. During this thesis work the benefits with performance measurements have been analyzed. Since the genesis of the industrialisation there have been growing needs to identify ways of understanding how a company functions. One of the main events historically leading to the broad adoption of PM was the introduction of the DuPont model. The DuPont model developed by DuPont and General Motors during the beginning of the 20th century quickly became the industry standard in the US for financial analysis. The Dupont model gave PM a central role in evaluating the performance of a company. Companies are today driven towards a higher level of responsiveness and flexibility in order to remain competitive. In order to measure the advancement towards these objectives, an increasingly complex set of activities collection of PM to monitor performance satisfactorily. Often however, PM are still developed around traditional, functional metrics focusing on departmental issues, rather than on the whole value stream. There has also been analyzed how a manufacturing company can use PM in an effective way. Under this thesis it emerged that the most crucial factor affecting the companies PM was that it was hard to understand how to use it correctly. When a company use it correctly it determines where the company stands, if they want to be competitive in the future and a method to maintain a good value stream flow. The economical factors for the company are at least important because all decisions always include costly investments. At the same time a company’s PM must be as efficient as possible and generate a good investment. Also other factors have been presented in this thesis but do not affect the effectiveness of the PM. The most important factors found to a more effective PM were; does the PM fulfil its purpose, is the performance attained, to make the purpose explicit and at last boost the education around the subject. The whole research has been carried out over a twenty-week period, during that period data collection has been performed via case studies. The rest of the data collection has been collected through a literature review by examining relevant data to answer the two research questions. This thesis have led to a better understanding regarding how to use PM and the benefits of it. This are based on the collected data from the case studies and from the theoretical findings, the empirical data were analyzed in a way that the company understood what was wrong with today´s PM