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Procedia CIRP 120 (2023) 189–194
56th CIRP Conference on Manufacturing Systems, CIRP CMS ‘23, South Africa
Abstract
Manufacturing companies have to deal with an increasingly turbulent environment, characterized by shorter product life and innovation cycles
with a growing number of variants, high volatility in demand and increasing globalization. Extremely short-term and significant changes such as
the COVID-19 pandemic (2019), global economic recession (2018) or the global financial crisis (2008), represent a new perspective of
circumstances. To be able to react quickly to unforeseen external influences, manufacturing companies are looking for ways to deal with sudden
changes. Resilience is the ability of a company to withstand external social, economic or political changes and to adjust quickly to new conditions.
The central element for companies to maintain productivity in their value creation is the ability to act – not to react. This can be done, for example,
by fundamentally redesigning structures and processes. In this context, resilience encompasses all the tasks required to manage the essential
adjustments in the company or supply chain. This includes early identification, planning, implementation and control of appropriate measures as
well as the time for recovery after internal and external disruptions. The paper focuses on the identification and characterization of objectives for
resilience to enable a process to implement bouncing forward abilities in contrast of the common bouncing back abilities. A value-focused
thinking approach is used to create a multi-level system of objectives for resilience and enabling bouncing forward. For measuring and evaluating
resilience this system of objectives integrates key performance indicators. On this basis, a Resilience Balanced Scorecard is developed. On the
one hand, this enables a balanced view of financial and non-financial aspects. On the other hand, the Resilience Balanced Scorecard serves as a
strategic management tool for the objective-driven rethinking and redesign of manufacturing companies.
© 2023 The Authors. Published by Elsevier B.V.
This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0)
Peer-review under responsibility of the scientific committee of the 56th CIRP International Conference on Manufacturing Systems 2023
are often accompanied by reduced safety stocks. These Balanced Scorecard originally arose in the early 1990s from a
correlations are significantly more vulnerable to disruptions research project by KAPLAN and NORTON in collaboration with
and can cause major consequences downstream in the process, twelve companies, including General Electrics, Apple and
which leads to the increasing importance of resilient Hewlett Packard. [2] The authors compare managing a
manufacturing processes. company to piloting an airplane and the ability of a pilot to
To achieve resilient manufacturing processes, the value successfully keep a plane on course with a combination of
creation should be aligned with objectives and its quantitative appropriate display devices, such as an altimeter and speed
measurability. To identify appropriate objectives and indicators indicator. In the case of a company, the management is
creatively, value-focused thinking offers a systematic approach practically the pilot that is responsible for long-term success.
to derive operational decisions [4,5]. However, this can only be achieved by objectives and
Those decisions should be made frequently based on high- monitoring. [2,8] Nowadays, companies use the Balanced
quality advice [6]. A performance measurement and Scorecard as a strategic management cockpit to track their
management system aiming at balancing financial and objectives over a long-term period [2,19]. The Balanced
non-financial as well as short and long-term measures is the Scorecard allows managers to look at the company from four
Balanced Scorecard [7]. Balanced Scorecard assists different perspectives and it provides answers to the four basic
manufacturing companies in effective organizational questions [2]:
performance measurement, the rise of intangible assets, and the “How do we look to shareholders?” (Financial perspective)
challenge of implementing strategy [8]. This low-threshold “How do customers see us?” (Customer perspective)
support is particularly important for small and medium-sized “What do we need to excel at?” (Internal process
enterprises [9,10]. However, there is still a lack of knowledge perspective)
in terms of applying Balanced Scorecards when it comes to “Can we continue to improve and create value?”
identify measures for addressing resilience. (Innovation and learning perspective)
Therefore, in this paper, an approach, which enables a
reflection of resilience in manufacturing companies through the Fig. 1 shows the basic structure of the Balanced Scorecard.
identification and characterization of resilience indicators and The core of the Balanced Scorecard defines the vision and
objectives is described. Value-focused thinking is used to strategy of the company. The four perspectives contain
identify objectives and create a multi-level system of objectives individual and company-specific objectives and key
for resilience. The resulting key performance indicators serve performance indicators, target values and actions. The links
as a basis for extending the Balanced Scorecard to include a between the perspectives show the cause-effect relationships
further perspective on resilience. within the Balanced Scorecard. For example, the qualification
of employees (Innovation and learning perspective) can
2. State of the Art positively influence the quality and costs of processes (Internal
process perspective). Better processes can have an impact on
customer satisfaction (Customer perspective) and finally on
2.1. Resilience of Manufacturing Companies profit (Financial perspective). [2] The Balanced Scorecard is
not a static model, but rather a framework for the individual
MCASLAN describes the concept of resilience as the ability development of company-specific objectives and performance
to recover and return to normality, after confronting an indicators. Also additional perspectives, such as an
abnormal, alarming and often unexpected threat [11]. The environmental or social perspective, can be integrated.
concept of resilience has been investigated in various fields of
research, as a result of which it has adopted different Financial
perspectives: technical, organizational, social and economic
[11–13].
The increasing complexity in manufacturing companies is
induced, among other things, by an increased number of
product variants [14]. Similar to the cross-company situation in
an increasingly tightly coupled and interactive complex world, Customer Internal processes
this also impacts their manufacturing processes. The resulting Vision &
vulnerability carries the risk of having negative effects on the Strategy
entire existence of the company [15–18]. In these increasingly
challenging environments, the consideration of resilience in
strategic and operational production planning processes is an
Innovation & learning
essential factor for long-term manufacturing stability and
competitiveness.
manufacturing companies
In this way, all relevant objectives can be identified.
Fig. 2. Approach and Methodology for Measuring Resilience of Manufacturing
Companies. (Based on [20,21])
4.2. Structuring of Objectives at Multiple Levels
4. Value-Focused Thinking Approach for Measuring
Resilience in a Balanced Scorecard After the identification of all objectives, it is helpful to
structure them systematically. A suitable way of structuring
objectives is to present them in a system of objectives at
4.1. Identification of Objectives multiple levels. The value-focused thinking approach
distinguishes between instrumental and fundamental objectives
As a starting point, the initial identification of objectives for as well as objective-means networks.
resilience should be based on the vision and strategy as well as Instrumental objectives serve as an instrument to achieve
on a wish list derived from existing practical and scientific other objectives and are pursued to achieve higher-level
indicators. In a bibliometric analysis, BIEDERMANN ET AL. objectives. Fundamental objectives are pursued for their
identified resilience indicators that are particularly suitable for reasons (cf. [20]). For example, the objective “reduce operating
application in value creation systems, such as manufacturing time” is not an end in itself, it helps to achieve the objective
systems [26]. A subsequent description by GRONEBERG ET AL. “reduce overall throughput time”. This serves to achieve the
with a categorization into proactive and reactive action and objective “increasing performance”. This can be a fundamental
process design is visualized in Table 2 [1]. objective in a system of objectives. The relationship between
fundamental and instrumental objectives is often referred to as
Table 2. Resilience indicators. [1] the means-ends relationship and represents their specific cause-
Proactive action Reactive action Process design
effect relationship.
It can be stated that an alternative-focused approach leads to
Flexibility Responsiveness Visibility
the use of instrumental objectives without intensive thinking
Agility Adaptability Redundancy about the fundamental objectives. Decision-makers often tend
Innovativeness Robustness to think in terms of alternatives, e.g. alternative-focused, when
Learning ability Complexity they have concrete ideas. If a decision-maker has an idea about
concrete alternatives suitable for problem solving, the
decision-maker tends to attach possible objectives to their
The application of superordinate indicators is also beneficial
characteristics [20]. Thus, the objectives determined in this
for the performance measurement of a manufacturing
way often have only a intermediate status, without the
company, as it provides a link to suppliers and customers
decision-maker being aware. Consequently, when structuring
within a value creation system. For manufacturing companies,
objectives, it is important to find out whether they are
these initially qualitative indicators are decomposed into
fundamental or instrumental objectives.
objectives at a shop floor level. This serves to create a
comprehensive base of possible objectives. Subsequently, the
Paul Molenda et al. / Procedia CIRP 120 (2023) 189–194 193
Structuring the objectives serves to determine the proxy key performance indicators can be used to approximate
fundamental and instrumental objectives by using a the objective. They represent an indicator of target
“top-down” or “bottom-up” approach. In the “top-down” achievement. In a developed system of objectives, for example,
approach, the appropriate subordinate objectives (e.g. the objective “Improve ergonomics at the workplace” can be
instrumental objectives) are assigned based on a higher-level measured by the key performance indicator “Number of sick
objective (e.g. a fundamental objective) [5,20,21]. This days per year due to medical complaints”. If there is no direct
procedure is carry out until sufficiently quantifiable objectives measurability, artificial key performance indicators can be
are available and these can no longer be further subdivided. The used. In this case, an artificial scale is used, to simplify the
instrumental objectives at the lowest level can then be information by summarizing it. A practical example is the
operationalized, for example, by utilizing key performance taxation of motor vehicles, which is based on an allocation of
indicators. motor vehicles to certain pollutant classes. Concerning a
Alternatively, objectives can be assigned to the higher-level manufacturing company, the objective “increase degree of
objectives of the hierarchy structure, using the “bottom-up automation” for example can be measured on an ordinal scale
approach”. In the structuring process, the question “Why is this (very high, high, medium, low, very low).
important?” (WITI-Test) can be used to determine whether the The operationalized system of objectives serves as a basis
objective is superordinate or subordinate. [5,20] for the development of the company-specific Resilience
Instead of choosing one of these two approaches, a Balanced Scorecard.
combined “top-down” and “bottom-up” approach could be
applied, depending on the objectives under consideration. In 5. Resilience Balanced Scorecard of Manufacturing
the combined approach, all identified objectives are to be Companies
classified in a system of objectives. During the hierarchy of the
objectives, additional overall and sub-objectives are generated After identifying, structuring and operationalizing the
to group the corresponding objectives. objectives using the value-focused thinking approach, the
In general, the distinction between fundamental and results are transferred to the Resilience Balanced Scorecard.
instrumental objectives is not absolute. It always depends on For this purpose, the Balanced Scorecard is extended to include
the company and the individual. The system of objectives is a fifth perspective, the “Resilience perspective”, see Fig. 3. The
completed, if the criteria in Table 3 can be predominantly fifth perspective allows an increased focus on resilience as a
affirmed. core characteristic of the manufacturing company.
Consequently, resilient companies are prepared to compensate
Table 3. Requirements for the system of objectives. [5,25] for and respond to disruptions. They have the flexibility to adapt
Requirement Description their organizational structure as well as processes to new
Completeness The developed system of objectives must contain all circumstances. Thus, resilience contributes holistically as a key
crucial aspects and items. to the success of a manufacturing company in present but also
Measurability All identified objectives should be measurable using in the future.
a key performance indicator. The identified and structured objectives covering multiple
Non- A system of objectives should not use multiple levels can be adopted into the resilience perspective, listed in
redundancy instrumental objectives that relate to the same issue. tabular form. Afterward, the previously defined key
Simplicity The system of objectives should be as simple and performance indicators are also added. The next step is to
and Structure clear as possible. determine the status quo of the key performance indicators. For
Consistency Objectives that completely contradict each other this purpose, the key performance indicator should relate as
should not be included in a system of objectives. directly as possible to the corresponding objective.
Actual Obsolete objectives should not be included in the Subsequently, the target values for every objective have to be
system of objectives. defined and benchmarked for the identification of target values.
To achieve these, optimization actions are defined for the
instrumental objectives. The optimization actions act through
4.3. Operationalization of Objectives the developed hierarchy at multiple levels to achieve the overall
objectives. This is due to the means-end relationship between
The operationalization of objectives is primarily used for instrumental and fundamental objectives. The optimization
measurement, e.g. the evaluation of the achievement of the actions are designed to strengthen a company's resilience in a
objective, and describes the characteristics of the objective. continuous improvement process. At the same time, the
This is done with the help of key performance indicators. When systematic measurement of key performance indicators enables
operationalizing objectives, a distinction can be made between benchmarks within and outside the company. In addition to
“natural key performance indicators”, “proxy key performance internal data and information, external sources such as
indicators” and “artificial key performance indicators”. In evaluations and surveys should be exploited.
principle, natural key performance indicators are derived
directly from the formulation of the objective and can be
measured on a “natural” scale. This is especially the case for
quantitative objectives, such as “reduce set-up times”. If it is
not possible to measure the success of the objectives directly,
194 Paul Molenda et al. / Procedia CIRP 120 (2023) 189–194
References