Exploring the Potential Use of Key Performance Indicators A Case Study in Operations with Outsourced Production

Examensarbete för masterexamen
Master's Thesis
Quality and operations management (MPQOM), MSc
Palalija, Arnes
Appel Jonsson, Sar
Although outsourcing has been providing many benefits to organisations since its inception, the issues with limited control and insight still remain. One resource that can be used to overcome these issues is by the help of metrics such as key performance indicators (KPIs), that allow a company to monitor the performance of its subcontractors. A company that has been experiencing obstacles with limited control and insight in its subcontractors’ performance, is CPAC Systems AB. The company only uses a few metrics to evaluate the performance of their subcontractors and these metrics are only collected once a month. CPAC reached out the authors of this thesis, for help with developing and implementing new KPIs to mitigate the issues. Therefore, with the assistance of the case organisation, the thesis aims to answer the questions: firstly, how the operational needs of an organisation with outsourced production remain unsatisfied, and secondly, what KPIs are suitable to enable operational improvement aligned with these needs. To answer the questions, the thesis combines a hybrid approach of qualitative and quantitative elements. The qualitative part entailed exploring literature on the subject of KPIs, visual management, and outsourcing to get acquainted with the subject. Then interviews were conducted with the case organisation to find the needs of the Operations function at CPAC, from which the KPIs should derive. As for the quantitative part of the thesis, a KPI dashboard was constructed that could act as a proof of concept for how a visual display of KPIs might be implemented. The thesis found multiple needs present at the departments of the Operations function that could be linked to the outsourcing dilemma. Also, the thesis presents multiple KPIs that could be valuable to CPAC, and discusses whether these are suitable to implement. Furthermore, the process of creating the dashboard is explained and discussed in detail. Finally, the thesis ends with concluding remarks about recommending the case organisation to look into a database solution, and addressing the gap between what is learned in university versus the reality of industry.
Key performance indicators , Critical success factors , Outsourcing , Visual management , KPI-visualisation
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