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Meaningful Measures

Meaningful measures

We often hear that supply chains must be streamlined to enable delivery of the best products and services on time and in full to customers.

It is really amazing that within organisations, staff are not aware as to what the main value chain processes are, how they are sequenced and who are responsible for managing each process.

The new ISO9001:2015 Standard requires organisations to determine performance indicators that will indicate whether a process operates effectively. This does not mean that organisations must start measuring everything and anything. Careful consideration should be given to the real purpose of each process. The performance indicators should then be closely linked to determine whether the process is delivering that purpose.

What makes a good measure?

It should be possible to monitor the measure easily without having to implement expensive computer systems or appoint additional staff.
Furthermore, careful consideration should be given to ensure that the measure will drive the right behaviour. If for instance in production, only efficiency or outputs are measured without a measure of the quality of product, it will drive exactly that – a store full of unsaleable product. Measures should therefore be balanced between utilisation, productivity and performance.
It should be possible to allocate a quantitative, objective target for each measure.
There should be buy-in from all stakeholders who can influence the measure. It should therefore be defined and agreed by all the key process participants, internally and externally where relevant.
Measures should take consideration of inputs as well as inputs to streamline a supply chain.
Measures should be simple and easy to understand. Visual monitoring will enable all involved to drive success.
Define how the measure will be calculated. A measure of "% complaints" can be easily misinterpreted. Does this refer to the number of complaints per quantity of product produced, or the number of complaints per quantity of product sold?
Be careful of having metrics for the sake of metrics. Define measures that focus on key performances of the process - those that will add value.
A set of good measures can be used in the same way as looking at the dashboard of a car - to indicate where attention is required. By measuring on a month-to-month basis, trends will emerge to indicate whether targets have been met or not, and interventions can be implemented based on facts that were generated by the management system. In this way, the system starts to make a difference to the business’s bottom line.
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