Objectives of Performance Measures1. Establish base line measures and reveals

trends2. Determine which processes need to be

improved3. Indicate process gains and losses.4. Compare goals with actual performance5. Provide information for individual and team

evaluation.6. Provide information to make informed

decisions7. Determine the overall performance of the

organization.

Typical Measurements

1. Human Resources

2. Customers

3. Production

4. Suppliers

5. Marketing and sales

6. Administration

Ten Criteria for Measurements

1. Simple2. Few in number3. Developed by user4. Relevance to customers5. Improvement6. Cost7. Visible8. Timely9. Aligned 10. Results

Seven Basic Characteristics to Measure Performance

1. Quantity

2. Cost

3. Time

4. Accuracy

5. Function

6. Service

7. Aesthetics

Metrics for Performance

1. Quality % reduction in cost of poor quality % reduction in non-conformities % reduction in supplier base % reduction in corrective action cycle time % of certified supplier

2. Cost % increase in inventory turn over % reduction in data transaction % increase in material shipped % reduction in floor space utilization % increase in output dollars per employee

Metrics for Performance

3. Flexibility % reduction in cycle time % reduction in set up time % reduction in batch / lot size % increase in number of jobs mastered per employee (multi-

skilling) % increase in common materials used per product

4. Reliability % of process capability % reduction in down time % reduction in warranty costs % reduction in design charges % increase in on time delivery

Metrics for Performance

5. Innovation % reduction in new product reduction time % increase in new product sales revenue as a percent of

total sales revenue % increase in new patents granted Customer perception as a leader in innovation % of management time spent on or leading innovation

Quality Costs1. Preventive Cost Category

Marketing / customer/ user Product / service design development Quality Administration Purchasing Training

Manufacturing costs

2. Appraisal Cost Category Purchasing Appraisal costs Operations Appraisal costs External Appraisal costs Review of tests and inspection data Miscellaneous Quality Evaluations

Quality Costs3. Internal Failure Cost Category

Purchasing failure costs Operations failure costs Product or service design failure costs

4. External Failure Cost Category Complaint investigation Returned materials Warranty claims Liability costs Penalties Lost sales Retrofit and recall costs Other external failure costs

Malcolm Baldrige National Quality Award

1. Leadership 1101.1Leadership System (80)

1.2Company responsibility and citizenship (30)

2. Strategic Planning 802.1Strategic Development Process (40)

2.2Company Strategy (40)

Malcolm Baldrige National Quality Award

3. Customer and Market Focus 803.1Customer and market knowledge (40)3.2Customer satisfaction and relationship

enhancement (40)

4. Information and Analysis 804.1Selection & use of information & data (25)4.2Selection & use of comparative information

and data (15)4.3Analysis & review of company performance

(40)

Malcolm Baldrige National Quality Award

5. Human Resource Focus 1005.1 Work Systems (40)

5.2 Employee Education, Training & Development (30)

5.3 Employee well being and satisfaction (30)

6. Process Management 1006.1 Management of Product and Service Processes (60)

6.2 Management of Support Processes (20)

6.3 Management of Supplier & Partnering Processes(20)

Malcolm Baldrige National Quality Award

7. Business Results 4507.1Customer Satisfaction Results (125)

7.2Financial & Market Results (125)

7.3Human Resource Results (50)

7.4Supplier and Partner Results (25)

7.5 Company-specific Results (125)

Total Points 1000