Performance Measurement

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Huawei, a telecommunication equipment provider has consolidated its advantaged position in Telecom Networks, and continued to create value for customer and fulfilled customer needs through its products and solutions. Even with soft economy condition in 2010, Huawei still manage to achieve sales revenue of “CNY 185.2 billion, a year-on-year increase of 24.2%.”1 Besides contribution from its customer-centric approach and dedicated employee, the major achievements actually come from continuous improvement for the respective performance target. According to Hellqvist, (2011), an effective performance management (PM) required a parent’s strategy objective which can reflect in the performance target through measuring the achievement of each target. Since Huawei is a Chinese global company, to establish a performance management to measure each performance target in different location is a difficult decision and complex process as the expectation for its target should applicable and standardize for local and worldwide. (Evans et al., 2002). In particular, the aspect of performance target included Broad Strategic Measure, Functional Strategic Measure, Composite Performance Measures, Generic Operations Performance Measures and Detail Performance Measures (Slack and Lewis, 2008).

Huawei believe operation performance measurement should broader its measurement scope from external to internal, long-term as well as short-term and “soft” as well as “hard” measure (Slack and Lewis, 2008). Implicitly, a more complex aggregation of performance target model is needed to perform a more detail and organized performance measurement. Significant effort has been established to develop criterion for each performance target which is a core assessment area for Detailed Performance Measures. The measurement for each performance target is interrelated with five generic performance objectives which included quality, speed, cost, dependability and flexibility (Slack and Lewis, 2008). In addition, this area usually requires high diagnostic, data collection and frequency of measurement , so the accuracy of measured information will influence the strategy applied to meet the goal for each performance objective toward internal and external (Srimai, S., Radford, J. and Wright, C., 2011).

In detail, for quality measurement, Huawei has set up a systematic quality control system with several divisions such as Incoming Quality Control (IQC), Manufacturing Quality Engineering team (MQE) and Suppliers Quality Engineering (SQE) to monitor and measure the quality performance from supplier such as performing sampling check and measures total defect unit from supplier’s fresh lots, determine root cause of quality issue whether the issue is caused by internal process or supplier parts and measure the frequency, seriousness and total batch involved for a quality issue. Externally, Huawei measured the total complain from customer, reject and recall from the market. In term of internal cost control, there are strict measurement target for cost reduce of material cost, manufacturing and labor cost, and operation cost. While external cost control, Huawei measured the networking operation cost and maintenance cost for its telecom operator (customer) to bring down customer overall operation cost. Besides that, supplier order processing lead time, production lead time, production capacity and buffer stock preparation is the main measurement criterion for speed. Externally, Huawei measure customer order lead time, contract completion date (COD) and product query time. For dependability, measurement for on-time delivery and lateness complaints is essential measurement for internal and external. The same measurement expectation is set for flexibility which focus on ability to change for product specification and design, timing for delivery and order quantity

Forming composite performance measure required a construction of specify composite indicator which collapses...
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