Manufacturing Performance Evaluation Tool for Malaysian Automotive Small and Medium-Sized Enterprises

By Amrina, Elita; Yusof, Sha'ri Mohd | International Journal of Business and Management Science, January 1, 2010 | Go to article overview

Manufacturing Performance Evaluation Tool for Malaysian Automotive Small and Medium-Sized Enterprises


Amrina, Elita, Yusof, Sha'ri Mohd, International Journal of Business and Management Science


Abstract: This study is aimed to develop a manufacturing performance evaluation tool for Malaysian automotive SMEs. The performance criteria were identified and adapted from literature study. A survey was conducted to Malaysia automotive SMEs in matching the criteria with the industry practices. Finally, five factors with a total of 25 dimensions are proposed as the manufacturing performance criteria. Analytical Hierarchy Process (AHP) approach was applied in developing manufacturing performance evaluation tool for Malaysian automotive SMEs. A software-based tool is subsequently developed using PHP and MySQL. Two case studies were conducted to validate the tool. The tool hopefully will enable and assist Malaysian automotive SMEs in their efforts to continually improve their manufacturing performance so as to become more effective and competitive. The tool could also identify the strengths and weaknesses that indicate where and how improvements need to be made. It provides the direction to practice continuous improvement towards achieving excellence.

Keywords: Automotive suppliers, competitive, evaluation tool, manufacturing performance, small and medium-sized enterprises

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

The globalization of markets, growing inter-diffusion of economies, and increased inter-dependence of economic agents are reshaping national and international competitive environment and economic performance (Ghobadian and Gallear, 1996). To be competitive, all companies have to re-examine and modify their competitive strategies. Small and medium sized enterprises (SMEs) can not be separated from these pressures. They have to pay more attention to the changes in manufacturing performance system including the measures used. They need to have a set of manufacturing performance measure to gauge their level of achievement.

Hudson, Smart and Bourne (2001) suggested that there are numerous barriers to strategic performance measurement system implementation in SMEs. The failure of the implementation was attributed primarily to the development process being: too resource intensive and too strategically oriented. This is due to limited resources and a dynamic style strategy of SMEs. These issues are acutely problematic because developing a strategic performance measurement system is necessarily long term and it explicitly requires the resulting measures to be strategically focused. These differences of SME's characteristics indicate a need to asses their performance measurement differently.

The manufacturing performance measurement literatures have shown the financial measures such as profits and return on investment were criticized by many authors because of their many shortcomings. They are short-term rather than long-term focus, measuring the past rather than future (McNair, Lynch and Cross, 1990). Financial measures tend to be obsolete and easily manipulated by managers (Jusoh and Parnell, 2008). To deal with those criticisms then non financial measures such as quality, delivery, time, and flexibility have been suggested as better performance measures. Non-financial measures are timelier than financial ones, very measurable and precise, meaningful to the workforce so aiding continual improvement, consistent with company goals and strategies, they change and vary over time as market needs change, and so tend to be flexible (Medori and Steeple, 2000). This study focused only on the non-financial manufacturing performance measures. In performance measurement, numerous non-financial measures can be used by organizations. The problem is which of the measures from the ones that are available in an organization should be used (Medori and Steeple, 2000). It usually depends on the characteristics of the organization and the nature of its business industry and environment.

In the performance measurement literature, there are also different models or approaches on analytical techniques and quantification of performance. …

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