measures of business excellence
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Measures of business excellence
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Measures of business excellence
The organization must measure all the functions through
quantifiable measures of excellence. To facilitate this
assessment, sample measures of excellence for various
functions are given on the following slides.
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Measures of business excellence
The measures of business excellence can be broadly classified
into following two categories:-
A. Non financial measures
B. Financial measures
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A. Non financial measures
Non financial measures can be further classified into
three categories:
I. Employee related
II. Operations related
III. Customers related
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I. Employee related
Employee satisfaction
Awards presented
Internal promotions
Turnover
Safety and health
Suggestions received and implemented
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II. Operations related
1. Marketing
2. Purchase
3. Manufacturing
4. Product Engineering
5. Quality Assurance
6. Product reliability
7. Accounting
Operations measures can be classified
as under:-
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1. Marketing
Product Strategy
Sales growth rate
Market share
Relative market share
Breadth of product lines & market coverage
Rate of successful new product introductions
Distribution strategy
Distribution and sales force productivity
Distribution cost per channel
Customer service levels
Operations related
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Marketingcontd
Price strategy
Price sensitivity
Pricing of marketing mix
Promotion and advertising strategy
Brand acceptance
Product segmentation
Marketing intelligence - Ability to anticipate
customer needs and detect changes in the
marketing trends
Operations related
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Marketingcontd
Others
Accuracy of forecast assumptions.
Number of incorrect order entries.
Overstocked field supplies.
Contract errors.
Late deliveries.
Customer complaints.
Warranty cost as a percentage of
sales.
Operations related
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2. Purchase
Premium freight cost/ demurrage charges.
Down - time because of parts shortages.
Number of Off specification parts used to keep line
going.
Cycle time from start of purchase request until items
in house.
Excess inventory.
Percentage of purchased material rejected on
receipt.
Operations related
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3. Manufacturing
Yield per ton of raw materials.
Percentage of parts scrapped.
Percentage of parts reworked.
Percentage of parts accepted on concession.
Percentage of final product graded as seconds.
Production per man / machine
Percent of production capacity in use
Average setup time
Operations related
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4. Product engineering
Number of engineering changes per document.
Number of errors found during design review.
Number of errors found in design evaluation test.
Percentage of time over- run compared to planned
time for development.
Percentage of cost over - run over estimated cost of
development.
Number of tooling redesign after trial production.
Operations related
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5. Quality Assurance
Percentage of lots rejected due to errors.
Percentage of products having defects detected by
customers.
Number of engineering changes that should have
been detected in design review.
Errors in inspection / test reports.
Cycle time to get corrective actions.
Percentage of appraisal cost compared to production
cost.
Operations related
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6. Product reliability
Mean time to failure
Failure rate
Probability of failure occurrence during given time
interval
Probability of failure non-occurrence during given
time interval
Mean life time
Mean time to first generate overhaul
Mean time to repair
Operations related
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7. Accounting
Percentage of late payments.
Time to respond to customer request for
information.
Billing errors.
Incorrect accounting entries.
Payroll errors.
Errors in cost estimates.
Operations related
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III. Customer related
Market share
New markets identified
Overall customer satisfaction
Customer complaints
Customer retention
R&D expenditure as a percentage of
sales
New products and services introduced
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B. Financial measures
The normal business pressures in todays world tend to cause more time to be
spent on financial measures than any other element of business. We need to besure that the strong signals sent by this attention in no way underestimates the
importance of the non financial measures as discussed in the previous slides to
improve the overall business performance.
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B. Financial measures
Cost of quality as a percentage of sales
Profit before interest and financial charges
Profit before and after tax
Growth in profits over last year
Return on assets
Return on capital employed
Return on sales