measures of business excellence

8/8/2019 Measures of business excellence

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Measures of business excellence


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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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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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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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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

measures of business excellence

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