Page 154 - The Handbook for Quality Management a Complete Guide to Operational Excellence

140 I n t e g r a t e d P l a n n i n g O r g a n i z a t i o n a l A s s e s s m e n t 141

• They provide direct information at the level at which they are
applied. No further processing or analysis is required to determine
meaning.
• They are linked with the organization’s mission, strategies, and
actions. They contribute to organizational direction and control.
• They are collaboratively developed by teams of people who provide,
collect, process, and use the data.

Traditional KPI are established within four broad categories (Kaplan
and Norton, 1992): customer­based, internal process, learning and growth,
and financial. These may be evaluated as follows (Pyzdek and Keller, 2010):
Customer. Customers generally consider four broad categories in
evaluating a supplier: Quality, Timeliness, Performance and Service, and
Value. The customer communication methods outlined in the previous
section will provide the means to understand the relative importance the
customer base places on these categories, as well as their general
expectations. On the basis of this feedback, internal goals may be defined,
and operational metrics established from the goals. An example is
provided in Table 8.1.

Internal process. These are the metrics perhaps most familiar to the
operational personnel; however, in this case those operational metrics
that strongly align with the strategic objectives are best suited. Joiner’s
recommendation of total cycle time (i.e., time to process the order) and
first­pass quality are relevant indicators of internal process performance.
Process cycle efficiency, calculated as the value­added time divided by
the total lead time, or Overall Equipment Effectiveness are relevant
Lean­focused metrics for evaluating internal performance and resource
utilization.

Goal Candidate Metrics
We will cut the time required to Average time to introduce a new product for most recent
introduce a new product from month or quarter
9 to 3 months Number of new products introduced in most recent quarter
We will be the best in the industry Percentage of on-time deliveries
for on-time delivery Best in industry on-time delivery percentage divided
by our on-time delivery percentage
Percentage of late deliveries
We will intimately involve our Number of customers on design team(s)
customers in the design of our next Number of customer suggestions incorporated
major product in new design

Table 8.1 Defining Operational Metrics from Goals

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