Performance metric (PM)
A single performance measurement used to evaluate, motivate and improve performance.
System of metrics
A group of metrics that collectively attempt to provide a multi-dimensional view of a resource or outcome.
What are reasons organizations use PMs?
-Helps to establish and support standards
-Motivate good behavior
-Identify trends
-Manage from afar
-Managing large numbers of resources
-Performance data can facilitate decision making and planning
What are the importance of Goals and Stakeholders?
The key to developing metrics that meet stakeholder goals is first recognizing all the stakeholders and then understanding their individual goals. Knowing the relationships between the stakeholders helps a manager understand how certain actions by one par
What are the consequences of poor metrics?
-SC are not met
-Poor output
-Waste
-Undesirable employee behaviors
-Managers may make poor decisions
-Employee victimization
-Underserved winners
-Lack of contentment
What are the requirements of a good metric?
-Measurable
-Easily Understood
-Attainable
-Strategically oriented
-Easy to measure
-Provides Value
-Provides guidance
-Cheater proof
What are SMART metrics?
A metric that is Specific, Measurable, attainable, relevant and timely, thus the acronym S.M.A.R.T. This is a helpful device that can guide managers in the development of useful managerial metrics.
What are the 3 Key measurement system attributes?
-Effective: were the desired goals met?
-Efficient: A measure of resources used in the process.
-Adaptable: A measure of the conditions under which the tasks were completed.
Keys to designing a system of metrics
-Stakeholders and Goals: Have plan that revolves around the stakeholders and the goals.
-Good metrics: Be sure each individual metric is sound.
-Simplicity: Attempt to keep things simple.
-Completeness: Be sure the system accounts for effectiveness, effic
KPIs: Key Performance Indicators
Individual performance metrics identified by the company as being imperative to achieving the organization's most important goals.
Executive dashboards
A computer generated visual representation of a company's performance that is often available to executives on nearly any of their digital devices. They provide important data like KPI's, real time and historical data, and color coded performance centers
Managerial paralysis
A situation where managers are inundated with data. This overflow of data actually slows decision making and may even result in managers stalling or avoiding decision making
What are some common measurement pitfalls?
-Managers fail to use the data
-Blind belief in institutional metrics
-Incomplete measurements
-Utilizing too many metrics
-Driving toward perfection may waste resources
-What do those numbers really mean?
Shared metrics
A metric that is impacted by two related parties.
Balanced scorecard
A performance management tool that focuses on strategic activity and strategy outcomes.
What 4 areas do balanced scorecards track?
-Financial results
-Customer related results
-Internal business process results
-Learning and growth results
SCOR Model: Supply Chain Operation Reference Model
A measurement tool that enables SC partners to track performance, communicate progress, and develop opportunities for improvements.
What are the 5 primary processes for the SCOR Model?
-Plan: demand & sc planning
-Source: purchasing process
-Make: manufacturing process
-Deliver: logistics & transportation
-Return: reverse logistics
Total SCM Costs
The cost of every process, material, fee, defect, etc. that runs through the SC.
Cash-to-cash cycle
A measure of the number days between the time a company pays their supplier for inventory and the time that same company is paid for the same inventory by their customer.
Capacity utilization
A ratio of the amount of product produced by a manufacturing process vs. the max capacity of that facility.
Process Velocity
A measure of how long a unit sits in a process vs the amount of work time that expended on the unit.
Perfect Order fulfillment
The percentage of orders that are full, arrive on time and are damage free.
Quality
The ability of a product or service to meet a consumer's expectations.
Dimensions of quality (product and service)
Product design, durability, performance, materials used, aesthetics, delivery, consistency and associated service.
Service
Time, timely, complete, accurate, responsive, courtesy, consistent, accessible and convenient.
Costs of Quality
Managing quality requires a vigilant commitment to monitoring quality, identifying problems at different stages in the SC, finding the root causes, and then devoting resources to fixing the root causes.
What are the 4 caterogies of Costs of Quality?
-Internal Failure Costs: Such as, resources wasted, disposal of damaged good, and possibly the costs of work & materials needed to repair the item.
-External Failure Costs: Costs associated with repairing damaged caused from delivering substandard items o
Deming's 14 pts
Deming was a champion of continuous improvement. In an effort to help organizations foster a culture of continuous improvement he developed a list of quality recommendations.
Juran's Quality Trilogy
His primary quality teachings emphasized three things: quality planning, quality improvement, and quality control.
Crosby's Quality is Free
Crosby is famous for his book that proclaimed "Quality is Free". Before Crosby, most saw quality as a burden on corporate costs. He argued that a lack of quality may have lower costs, but it would eliminate any value. As a result, the more that was invest
Who are the Quality gurus?
Deming, Juran amd Crosby
Calculating Reliability
Reliability is a measure of the percentage of time a system or product operates successfully. It assumes that in order for a system or product to operate successfully all parts of the system must themselves be reliable.
Calculating Reliability Formula
Reliability of a product with "n" interdependent components = (Reliability of component 1)
(reliability of component 2)
Reliability of component 3)... Reliability of component n)
Reliability (Product) = r(1)
r(2)
r(3)...r(n)
ISO9000
an international quality certification that helps organizations to understand the basics of quality management, to measure their present state of quality, and also to identify areas for improvement.
The Malcolm Baldrige National Quality Award (MBNQA)
Once companies learn about the world of quality certification and quality improvement programs, some will endeavor to reach new quality heights.
Deming Prize
A Japanese quality award given to companies or individuals that have contributed to the field of quality.
What are Quality Tools?
Cause and Effect Diagrams
Scatter diagrams
Pareto charts
Histograms
Flow charts
Control Charts
Cause-and-Effect Diagrams (Fishbone Charts)
.
A diagram used to identify possible causes to quality problems.
Scatter Diagrams
They attempt to show a possible relation and/correlation between two sets of data.
Pareto Charts
Are used when there are a number or different quality problems. Help identify which categories of problems are most prevalent. Qualitative.
Histograms
Attempt to categorize output. The data falls into quantitative categories.
Flow Charts (Process Maps)
A diagram made up of a series of symbols that maps a process. Each symbol represents a different step or activity in the process. It aids in building a quality process and identifying points.
TQM: Total Quality Management: TQM seeks to address the management of quality at all levels of an organization and SC
seeks to address the management of quality at all levels of an organization and SC
What are the 3 Common Principles of TQM?
-Customer Focus: The customer defines quality, so all attention should be focused on the customer and the evolving definition of quality. The customer is the guide for employees, management, supply chain partners, and all continuous improvement efforts.
-
Benchmarkin
is a process whereby companies compare their practices and performance measurements to those of other companies. Identify area to benchmark, Identify Leaders, Contact Leaders and gather data, then analyze and follow up.
What are 3 types of benchmarking?
-Competitive Benchmarking: used when companies want to measure their processes, programs, and outcomes vs those of their direct competitors.
-Functional Benchmarking: Benchmarking a company that is successful in an area with similar processes.
-Internal B
Six Sigma
a quality program that developed by Motorola in the 80'sand has been used widely around the world since 1990's.It strives for the complete elimination of defects. The five step process is referred to as DMAIC.
What is DMAIC?
Define the problem
Measure the performance of the process
Analyze the data measured in an effort to find a root cause
Improve the process. Develop and implement solutions and Control the process. Monitor the progress and measure levels of improvement.
Calculating Reliability Formula
Reliability of a product with "n" interdependent components = (Reliability of component 1)
(reliability of component 2)
Reliability of component 3)... Reliability of component n)
Calculating Reliability Formula
Reliability of a product with "n" interdependent components = (Reliability of component 1)
(reliability of component 2)
Reliability of component 3)... Reliability of component n)