Development of performance measurement systems for core plants : Final report, Master's thesis 2017

Abstract: Since the dawn of globalization, manufacturing companies around the world have been expanding their global footprint to stay competitive. International manufacturing network of a company consists of plants with different roles and responsibilities spread across different locations around the world. Due to this increasing geographical dispersion and competitiveness, effective co-ordination of these  plants has become a priority along with achieving effective and efficient operations. This led to the development of the Core plant role. Core plants are the manufacturing plants that aims to achieve competitive and effective production, generate and transfer knowledge, while leading and coordinating the other plants within the network.     However,  the core plant role varies significantly across companies and academia  due to a lack of a common understanding regarding  its responsibilities and objectives. Furthermore, the performance of core plants are being measured with the same generic KPIs  as the other plants, even though their roles and responsibilities varies significantly. As a result, it has become difficult to measure their true performance and contribution of value to the network. The purpose of this thesis is to contribute to the development of comprehensive performance  measurement system that collectively measures the true performance and value of the core plant role to its international manufacturing network. Initially, the thesis investigates and bridges the mentioned knowledge gap with a two-tier literature review, before establishing their validity and relative importance in empirical context through survey.  The survey approach is also utilized to assess the current situation of performance measurement among core plants of different manufacturing companies.   The  findings suggest that ‘attaining operational excellence’ has the highest strategic importance but  this responsibility  only extends to  individual plant level not the network level. The core plant, network level responsibility ‘knowledge generation’ has the highest relative strategic importance and ‘Capability development’ has the lowest relative  strategic importance. The findings also reveal that the performance measurement systems of network level  core plant responsibilities are either poorly developed or non-existent.  The thesis concludes with a suggestion of a conceptual framework that provides the guidelines to develop a comprehensive performance measurement system for core plants. The findings and suggestions are of practical relevance to the top management of international manufacturing companies and academia for conducting future research.