Trying to drive your operations forward using fixed annual goals to measure performance is like steering a car by looking in the rearview mirror.

This was the outlook shared by ARC Advisory Group executives and others at ARC's Performance-Driven Manufacturing & Supply Chain Forum. Their discussions focused on ways that companies can build high-performance manufacturing and supply chain operations with real-time performance management (RPM).

RPM uses real-time operational data, not an annual budget and predetermined targets, to develop business strategies and performance metrics that are responsive to market changes. It allows companies to monitor performance daily or even hourly.

"Today's business environment demands RPM, especially given that customers are more demanding, security issues more prevalent and the Asian market growing rapidly, just to name a few," says Andy Chatha, president of ARC Advisory Group ( www.arcweb.com).

"As changes occur, such as increases or decreases in demand, companies must use real-time operational data to adjust performance measurements accordingly and find incremental ways to improve business processes," he adds.

That requires a culture change. People must become "knowledge workers" empowered by the right information and tools to make quick, effective business decisions, Chatha explains.

The centerpiece of RPM is a unified data model, says Greg Gorbach, director of collaborative manufacturing at ARC. An effective manufacturing platform orchestrates information from various applications, such as warehouse management and enterprise resource planning systems, to provide real-time information and visibility throughout an enterprise.

Equally important is access to analytical and collaboration tools that convert real-time data into actionable information. With an easy-to-use dashboard that displays performance metrics, people on the plant floor can participate in driving manufacturing productivity.

To be successful, RPM requires that all employees from the plant floor up through top-level management be aware of the company's performance metrics. "Show these metrics in dollars and cents to reflect the direct impact a worker's actions have on the company's profitability," says Chatha.