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KPI’s key performance indicators

Posted by Legal / Medical Interpreter on 09/13/2012

What are key performance indicators?
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  • Rod Novillo Identifying indicators of organization

    Performance indicators differ from business drivers and aims (or goals). A school might consider the failure rate of its students as a key performance indicator which might help the school understand its position in the educational community, whereas a business might consider the percentage of income from returning customers as a potential KPI.
    The key stages in identifying KPIs are:
    Having a pre-defined business process (BP).
    Having requirements for the BPs.
    Having a quantitative/qualitative measurement of the results and comparison with set goals.
    Investigating variances and tweaking processes or resources to achieve short-term goals.
    A KPI can follow the SMART criteria. This means the measure has a Specific purpose for the business, it is Measurable to really get a value of the KPI, the defined norms have to be Achievable, the improvement of a KPI has to be Relevant to the success of the organization, and finally it must be Time phased, which means the value or outcomes are shown for a predefined and relevant period.
    [edit]KPI examples

    [edit]Marketing
    Some examples are:
    New customers acquired
    Demographic analysis of individuals (potential customers) applying to become customers, and the levels of approval, rejections, and pending numbers.
    Status of existing customers
    Customer attrition
    Turnover (i.e., revenue) generated by segments of the customer population.
    Outstanding balances held by segments of customers and terms of payment.
    Collection of bad debts within customer relationships.
    Profitability of customers by demographic segments and segmentation of customers by profitability.
    Many of these customer KPIs are developed and managed with customer relationship management software.
    Faster availability of data is a competitive issue for most organizations. For example, businesses which have higher operational/credit risk (involving for example credit cards or wealth management) may want weekly or even daily availability of KPI analysis, facilitated by appropriate IT systems and tools.
    [edit]Manufacturing
    Overall equipment effectiveness, is a set of broadly accepted non-financial metrics which reflect manufacturing success.
    Cycle Time – Cycle time is the total time from the beginning to the end of your process, as defined by you and your customer. Cycle time includes process time, during which a unit is acted upon to bring it closer to an output, and delay time, during which a unit of work is spent waiting to take the next action.
    Cycle Time Ratio (CTR) – CTR = Standard Cycle Time / Real Cycle Time
    Utilization
    Rejection rate
    [edit]IT
    Availability
    Mean time between failure
    Mean time to repair
    Unplanned availability
    [edit]Supply Chain Management
    Businesses can utilize KPIs to establish and monitor progress toward a variety of goals, including lean manufacturing objectives, minority business enterprise and diversity spending, environmental “green” initiatives, cost avoidance programs and low-cost country sourcing targets.
    Any business, regardless of size, can better manage supplier performance with the help of KPIs robust capabilities, which include:
    Automated entry and approval functions
    On-demand, real-time scorecard measures
    Rework on procured inventory.
    Single data repository to eliminate inefficiencies and maintain consistency
    Advanced workflow approval process to ensure consistent procedures
    Flexible data-input modes and real-time graphical performance displays
    Customized cost savings documentation
    Simplified setup procedures to eliminate dependence upon IT resources.
    Main SCM KPIs will detail the following processes:
    Sales forecasts
    Inventory
    Procurement and suppliers
    Warehousing
    Transportation
    Reverse logistics
    Suppliers can implement KPIs to gain an advantage over the competition. Suppliers have instant access to a user-friendly portal for submitting standardized cost savings templates. Suppliers and their customers exchange vital supply chain performance data while gaining visibility to the exact status of cost improvement projects and cost savings documentation.

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