Kpis. Metrics

7/26/2019 Kpis. Metrics

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MEASURES, METRICS, KPIsand Performance

Management


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Measurement systemterminology

Basic terms

1 !ata

" Measure# Metric

$ Indicator

% Inde&


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!ata ' it is a collection of facts ()ic) )a*e similarattri+utes or c)aracteristics

eg -)one num+er, emailids

Measure ' data (it) associated unit of .U/M0measure

is ty-ically termed as measure

eg la+ )ours -er mont) , a*erage (ait time for +ill-ayment

Metric ' it is a system of measures +ased on standard

U/M (it) t)e +usiness conte&tEg -roduct defect rate ' is an e&am-le of measuring

()at -ercentage of goods (as returned +y customersin di2erent cities


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Indicator ' it is a +usiness metricused to trac3 +usiness results orsuccess 4 -erformance

Eg earning -er s)are

Inde& ' it consists of a com-osite setof indicators used to address t)eo*erall )ealt) of +usinesso-erations

Eg mar3et -erformance inde&

measured using standard stoc3 mar3et


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Metric

A metric data ()en -ro-erly de5nedincludes four com-onents

Two are descriptive in nature .They are said to qualitative.T)ecom-onents are su+6ect and stratum

Two are quantitativecomponents. They are quantumand application.


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subject' t)is measure is a+out a customer, a-roduct, a su--lier and an em-loyee7

Quantum it is t)e *alue of t)e measure suc)

as cost , fre8uency, duration, amount etc7 Stratum it is t)e grou-ing consideration

e&-ressed li3e +y location , +y 8uarter, +ycustomer,

Application :*alue com-ared (it) similarmeasurements li3e -re*ious mont), forecasttarget etc7


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In +usiness scenario +usiness leaders de-endon 3ey functions to reac) +usiness goals suc) as

1 9uman resource

" Sales# Mar3eting

$ Researc)

% Production

: Procurement

;


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Eac) team in t)e +usiness )a*e t)eiro(n s-eci5c goals and t)ey ma-t)eir function need to ac)ie*e t)eir

goals

T)us in +usiness -erformance termsis called alignment


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Attri+utes of a good metric

A++re*iation

!escri-tion

Units of measure .for data ca-ture0

Scale

Metric o(ner


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E&-erts suggest test for ensuringmetric rele*ance to +usiness T)eyare

1 S-eci5c

" Measurea+le

# Attaina+le

$ Result oriented

% Time +ound


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Su--ly c)ain associated (it) t)e metric

Entities to +e measured

Instrumentation

Ra( material

Su+?assem+lies

Product

Metrics deli*ery

Business acti*ity areas ' decisions 4 actions Business a--lications

Business *alue


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Performance measurement is t)eselection and use of 8uantitati*emeasures s-eci5c to team initiati*es,

!e-artment grou-, entire com-any Key -erformance indicators are

1 Rele*ance and functionality

" Understanda+le# Relia+ility and credi+ility

$ A+use -roof


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>)ere do +usiness metrics and 3PIScome from

1 Cor-orate *ision, mission and *alues

" Business -erformance -ro6ections4forecasts4guidance

# Business -lan

$ Production 4 manufacturing% /-erations4 ser*ice

: Society

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Kpis. Metrics