Metrics in Closed Loop Operations Processes – PowerPoint Presentation

Characteristics of Good Performance Metrics

Quantitative – the metric can be expressed as an objective valueEasy to understand – the metric conveys what it is measuring and how it is derivedEncourages appropriate behavior – the metric rewards productive behavior and discourages “game playing”Visible – the effects of the metric are readily apparent to all involved in the process being measuredDefined and understood – the metric has been defined by and/or agreed to by by those stakeholders involved in the processIncludes both inputs and outputs – all aspects of the process are measuredMeasures only what is important – the metric only includes key performance indicatorsMultidimensional – the metric is properly balanced between factors such as utilization, productivity, performance, and trade-offsEconomies of effort – the benefits of reporting the metric outweigh the costs of collection and analysis10. Facilitates trust – the metric validates the participation of all parties involved

Process Measurement Categories

The primary categories of operational metrics are time, quality, cost, andother/miscellaneousTime Metrics: On-Time Delivery / Receipt Order Cycle Time Order Cycle Time Variability Response Time Forecasting / Planning Response TimeTime metrics need to include both the absolute time measurement and variability measures.

Cost Metrics

Cost Metrics: Finished Goods Inventory Turns Days Sales Outstanding Cash-to-Cash Cycle Total Landed Cost Misc. Costs Including IT and G&A Costs Cost of Excess Capacity Cost of Capacity Shortfall Cost metrics are increasingly being geared towards free cash flow and returnon asset measurements.

Quality Metrics

Quality Metrics: Overall Customer Satisfaction Processing Accuracy Perfect Order Fulfillment – on-time delivery – complete order – accurate product selection – defect free – accurate invoice Forecast Accuracy Planning Accuracy (budgets and operating plans) Schedule AdherenceQuality metrics are rapidly changing to incorporate the perfect order fulfillmentConcept.