Implementation and impact of performance measures in two SMEs in Central Scotland

Abstract

This paper describes how performance measures were selected and then implemented in two small to medium size enterprises (SMEs) in Central Scotland. It then goes on to consider the impact of these measures on the performance of those businesses using data generated from an action research approach. A review of academic literature on the barriers to implementation of performance measurement systems in general, and those specifically relating to SMEs, suggested that considerable difficulties can be found in implementing performance measures. These perceived difficulties are considered and discussed in relation to the SMEs in question and the approaches used to minimize and overcome them are described. A systematic approach that is well resourced and focused on measuring variation in performance of entire ‘operate’ processes during execution is found to enable business improvement activity. The impact of using this approach on operations management strategy in each SME is reported. The research suggests that implementation of performance measures in an SME will have considerable impact on business performance if the process for implementation is well structured, resourced and focused on improving the capability of ‘operate’ processes.

Keywords:

• Performance measures
• Implementation
• SMEs

Acknowledgments

Trevor Turner worked for ICI for 27 years in a variety of operations roles before joining the University of Strathclyde in Glasgow in 1996. He is now a senior research fellow in the Centre for Strategic Manufacturing and has research interests in improving business performance by developing and testing business improvement and sustainability models. These models are developed and tested by working with small, medium and large manufacturing companies engaged in Knowledge Transfer Programmes.

Umit Bititci , MSc, PhD, CEng, MIEE, FIOM, MILT is a Professor at the University of Strathclyde and also the Director of the Centre for Strategic Manufacturing (CSM). He is the current Chairman of IFIP WG5.7, specializing in Integrated Production Management, and a past Vice Chairman of the Institute of Operations Management. As a management professional, consultant and an academic, he has over 20 years, experience working with a wide spectrum of UK, European and Asian companies on Strategy Management, Performance Measurement, Value Development, Supply-chain Management and Business Process Improvement. As the Director of the CSM, he has been responsible for a number of European and UK-funded research and development programmes. To date, Umit has published three edited books and over 100 papers in international journals and conferences.

Sai Nudurupati is a KTP Associate working with Mastclimbers Ltd and at the University of Strathclyde. Sai completed a PhD degree in management implications of IT-supported performance measurement systems by working with several SMEs in Scotland. Sai also did a placement in Daks Simpson Ltd, a textile manufacturing company as a part of his Masters course in Management of Competitive Manufacturing. Sai did his undergraduation in Mechanical, Production and Industrial Engineering and graduated with distinction.