Case Study: Performance Measurement

The Orthotic Group case study demonstrates how performance management is important to continuously improve. As you read the case, think about the balanced scorecard approach and how you would set metrics for your team to generate the results needed to remain competitive.

The Orthotic Group, located in Ontario, Canada, prides itself on providing superior service to healthcare professionals globally. A custom manufacturer of orthotics that can be inserted into footwear, the company also supplies compression hosiery and footwear. Healthcare professionals can order online through the website, through two technological options, Gaitscan or OHI1Scan or by sending foot impression forms through the postal service. With a strong customer base, The Orthotic Group is considered a leader in the industry as a result of their quality, order cycle time, and problem resolution process.

In 2017, after a competitive analysis, it was determined that delivery times from order placement to delivery in the industry had become more competitive. Along with this new competitive requirement, performance metrics for the past 6 months had been slipping from their previous norms. While there had been some minor turnover amongst the production staff, the turnover was no more than previous years. A new manager had been hired who had been making changes. Some of these changes were popular with the production workers, while others were not. Work-in-Process (WIP) inventory began to pile up in key areas of the production line. The new manager left the organization 3 months prior to the busy fall season. The Vice-President Operations thought it would be a good opportunity to embark upon a Lean Process Improvement initiative with the employees. The goal was to reduce the turn-around-time (TAT) and work-in-process inventory (WIP), while maintaining and improving the quality of their orthotics.

The Production Supervisor compiled a team of workers from production to gain their insights into what was slowing the team down. Through observations and collaboration with the team it was noted that the following conditions were preventing The Orthotic Group from achieving their targets:

• While the company had a metric board on the T.V. screen posted above the production line, the first production step, the Technician cell, did not know how many orthotics they produced as a team. Results were provided the next day as a component of the daily stand-up,
• Workers were processing orders in batches of 10 or more,
• There was a high degree of variability in worker productivity,
• First-in-First-Out (FIFO) priority system was not being maintained as workers would work on "easy" orders first instead of higher difficulty orders to push the orders through.

At this point the Production Supervisor is preparing a report to discuss priorities with the Vice President - Operations.

Questions:

1. Develop 5-6 key metrics the company should measure in the manufacturing environment as a result of a lean Improvement initiative. Why are these important? What purpose do they serve? Try to look beyond the textbook for key ideas of what will influence
2. Your group represents the team that has been operating the Lean Improvement Process and you are writing a short executive summary to the VP Operations so the VP can show the executive group the recommendations. Based on questions 1-4, and the problems they have identified, write up the executive summary with your conclusions and supporting rationale for these improvements.