Metric Architectire

“If you can’t measure it you can’t manage & improve it “

What is a Metric?

A metric is nothing more than a standard measure to assess your performance in a particular area. Metrics are at the heart of a good, customer-focused process management system and any program directed at continuous improvement.

Challenge 1 - Measure the right things
Clearly, you need to measure your financial performance. However, today, most aggressively successful businesses find that they also need to assess other aspects of their business.

CUSTOMERS:

1. Performance against customer requirements
2. Customer Satisfaction

PERFORMANCE OF INTERNAL WORK PROCESSES:

1. Cycle times
2. Product and service quality
3. Cost performance (could be productivity measures, inventory, etc.)

FINANCIAL:

1. Profitability (could be at the company, product line, or individual level)
2. Market share growth and other standard financial measures.

Challenge 2 - Create metrics that are SMART

Developing effective metrics may appear easy at first glance, but many have fallen into common traps that you can avoid. Examples of common pitfalls are:

1. Developing metrics for which you cannot collect accurate or complete data.
2. Developing metrics that measure the right thing.
3. Developing so many metrics that you create excessive overhead and red tape.

What you need are metrics that are Specific, Measurable, Actionable, Relevant, and Timely or SMART objectives.

"Specific" in that your metrics are specific and targeted to the area you are measuring. For example, if you are measuring customer satisfaction, a good metric would be direct feedback from customers on how they feel about your service or product. A poorer metric would be the number of returned products or number customer complaints.

"Measurable" in that you can collect data that is accurate and complete.

"Actionable" in that the metrics are easy-to-understand, and it is clear when you chart your performance over time which direction is "good" and which direction is "bad", so that you know when to take action.

"Relevant" simply means don't measure things that are not important.

"Timely" metrics are those for which you can get the data when you need it.

Metrics generally fall into two categories:

1. performance metrics, and
2. diagnostic metrics

Performance Metrics are high-level measures what you are doing.
Diagnostic Metrics are measures that ascertain why a process is not performing up to expectations


Challenge 3 - Follow a proven process for developing metrics

One tried and true approach follows four simple steps:
1.Identify your customers and outputs of your process. Customers may include end-users of products and/or services, process managers of downstream processes, and process users.
2.Determine your customer needs/requirements.
3.Understand the key goals of the business.
4.Determine effective measures, including both performance and diagnostic metrics.

Ref(BPR OnLine Learning Center Series)

Happy reading....
Sudhs
Sudhish10@gmail.com