For example, a company wanting to improve delivery speed would measure time. A data digitizing company might measure percentage of character errors in batches, or process output.
For example, suppose a company is measuring time in days. Different branches of the same company may define “one day” in different ways. It could mean business days only, any 24 hour period, or the 8-hour work day. These kinds of inconsistencies can be misleading. [2] X Research source
For example, delivery speed could be measured either in minutes or hours, and taking time to convert one to the other would be inefficient.
For example, all departments must agree how to round off decimals.
For example, a company trying to improve delivery speed should not see an increase in damaged products due to sloppy handling. Proportion of damaged products would be the consequential metric in this case.
For example, an improvement in manufacturing time may be expected to increase the company’s revenues. The company would monitor revenue, along with other factors like profit, from the time the changes were instituted and on to measure how the change in process affected them.
Reducing process time is a proven strategy for better business. Doing so allows for greater production and delivers the product or service sooner. Consider furniture manufacturing. All things being equal, customers would rather receive their new couch or dining room set sooner rather than later. If you can reduce process time, you improve your chances for repeat orders and new business.
Cost reduction strategies become important to businesses when revenue starts to decline. For example, when Bank of America experienced a downturn in lending and trading revenue in 2011, they decided to reduce their workforce in order to continue delivering revenues to shareholders. Bank managers and consultants decided to use cost metrics to identify jobs to eliminate that could save the most money without compromising the organization. [9] X Trustworthy Source Harvard Business Review Online and print journal covering topics related to business management practices Go to source
The healthcare industry relies heavily on quality metrics. Quality improvement must be data-driven. Analysts look at financial and clinical data to identify variations in how health care is delivered by providers. They break down the process and find areas of waste or redundancy in order to create a process that delivers a high-quality clinical outcome. The cost reduction is not valuable unless it increases or maintains the current level of quality provided. [11] X Research source The key in quality improvement is to increase efficiency without compromising effectiveness. Efficiency refers to the amount of resources necessary to deliver a product or service. Effectiveness refers to how well the objectives of the product or service have been achieved. [12] X Research source
One strategy for increasing output in manufacturing is standardized work. For example, in the automobile industry, auto makers have a standard method for assembling cars. Manufacturers can standardize production processes with the goal of increasing output. Metrics can help to analyze how well a process improves the output for the manufacturer. If more products are produced in a given time with the new standardized process, then it is a success. [14] X Research source
Companies aim to reduce the complexity in their processes, organization, products and information systems in order to stimulate growth, reduce costs and increase returns. Measuring process complexity helps managers to identify where products or services fully meet customer needs at the lowest cost. It helps to reveal hidden costs in overly complicated processes. It allows companies to identify which products are most profitable, what customers really value and where process bottlenecks are getting in the way of efficiency. [16] X Research source
