For decades industrial businesses have worked diligently to effectively measure the performance of industrial operations. As a result a variety of Key Performance Indicators (KPIs) have evolved focused around the performance of individual industrial functions and for industrial operations as a whole. As these KPIs evolved and matured they offered management and workers perspectives and feedback on how they were performing their duties and on how the operation was performing. Unfortunately most KPIs have not been directly linked to the business performance of industrial operations. This is not to imply that improvements in KPIs do not have an impact on the business performance. Rather that their impact is not directly discernible.
Measuring business performance has long been the domain of the cost accounting teams and the overall performance of industrial operations by executive management is typically based on cost accounting reports. Cost accounting was initially developed to provide performance reports on a monthly basis due to the standard billing cycles used across business. But monthly accounting measures are inadequate for operational personnel taking real-time actions to improve the performance of the operation. Additionally, the speed of the business of industry has continually increased since the deregulation of electric power grids and in many cases critical business variables are approaching real-time fluctuation rates. Therefore a new set of Real-Time Accounting Measures (RTAM) are required to supplement the KPIS to provide management and operations personnel with the real-time business feedback required to run the operations in the most profitable manner for the business. This paper presents the concept of real-time accounting, an overview of the required real-time accounting measures and guidance on how they can be developed and implemented in industrial operations.
Date published: August 2016
Authors:
- Peter G. Martin, Schneider Electric
- Dennis Brandl, BR&L Consulting
- Gary Minchell, The Manufacturing Connection
- Mette Toftgaard, Grundfos
- Larry White, Resource Consumption Accounting Institute