Measurement of Effectiveness

In determining the effectiveness of a production planning and control system, there are quite a few problems. The key criterion might well be whether or not shipping promises are being kept– the percentage of the order shipped on time. This, however, would not be a true criterion if excessive overtime of expediting costs were involved in getting any of these orders shipped.

The cost of the control system in relation to the value of goods shipped is another possibility. Again, however, this may not be sound: if markets slump, a bad ratio will develop. Many good production planning and control systems have been discontinued because of “high costs” under these conditions- and have never revived after business picket up. In a study of benefits and costs of computerized PPC systems, Schroeder list the following performance criteria by which production planning and control systems might be judged

• Inventory turnover
• Delivery lead time
• Percent of time meeting delivery promises
• Percent of orders requiring “splits” because of unavailable material.
• Number of expeditors
• Average unit cost.