Techniques for Performance Measures Handout

7/26/2019 Techniques for Performance Measures Handout

1/13

,

.

.............

@

, : ' f ' ~

" ;

rom

Dr.

Muhammad

Asim -

TOM

~ / ' /

"

. ;;

There are Sjx Basjc TechniQues for Presenting Performance Measures :

1

Cost

of

Quality

2. Time Series Graph

3. Control Chart

4. Process Capability

5. Taguchi s Loss Function

6. Malcolm Baldrige National Quality Award

d

:..

i


2/13

.but\on

l'

e yfoY

monee ~ g ~ ~ ~ e P ~ 9 e n b . t i

o.!L_

..

_

"

/

16

~

12

g?

8

0>

Product A

'E

8 4

c

----. ---,---.-,..--,--.--.,---...,-..---,

ttela\

o

Z

o

o

2 3

4

2

3

4

2 3

4

'le

pre

Quarters

the o'

Figure 7-1

Time

Series Graph

for

Percent Nonconforming

1t

or e

j

is e(

nple P

0.08

2

..

0.06

)

s freq'

)'/ us

ir

0.04

al

coni

r '}

0 Q2

t. Tal

)

1-

t

2.

CJ

I .f

.

3.

C:

4.

C

Subgroup number

figure 7-2 Control Chart for Percent Nonconforming

w h ~

LSL

USL

5

y.

L

('f

5

p

LCL

>

t
http:///reader/full/P~9-enb.tihttp:///reader/full/P~9-enb.ti


3/13

Pra.:es.< out of control

veL

I

~ = = z s =

~ : t = . L

; I- - - : : -

Xo "

\:..---

LCL

~ ~

LCL

LCL

~ - - - - - ~ -

c) TWo nsecutiye

(a) Seven consecutive (b) Six consecutive

po,nts in outer

poinrs above points increasing or

or below decreasing

quarter

Figure 18-22

Some

Unnatural Runs-Process Out

of

Control

There are some common

~

ask when investigating an out-of-control process:

I, Are there differences

in the

measurement accuracy

of

the instruments used?

_ Are there differences in the methods used by different operators?

3. Is the process affected by the environment? If so, have there been any changes? ,

4. Is the process affected by too wear?

5. Were any untrained workers involved in the process?

6. Has there been any change in the source of the raw materials'?

7. Is the process affected by operator fatigue?

8. Has there been any change in maintenance procedures?

9. Is the equipment being adjusted too frequently?

10. Did samples come from different shifts. operators. or mach,ines?

It is advisable to develop a checklist for each process using these common questions

as a guide.

rocess

Capability

- - - - - - - -

Control limits are established as a function of the avera

es- in

other words. control lim

i e fo r

average;;.

Sp,!;CI

Icauons. on the ot er and. are the permissible variation in the

size of the part and are, therefore. for individual values. The specificallon or tolerance

limits are established by design engineers to meet a particular function. Figure 18-23

shows that the location of the specifications is optional and is not related to any of the

other features in the figure. The control limits, process spread (process capability), dis

tribution

of

averages, and distribution of individual values are interdependent. They are

determined by the process, whereas the speCifications have an optional location. Control

charts cannot determine if the process is meeting specifications.

j

l .

J:::= nD.

speciticmion

(optional location)

- - - - - - - ,

Di:otribulion of

individuil values

/

Distribwio-

..

__ ~ f T ~ y e m ~

I

I

I

Control I '

'roc.55

limits

capability

3(7,(

3(7

/

I

l

- t - - - - - - 1 ~ - 1 l

1

Lower specirication

(optional location) LSL

Figure 1823 Relationship of Limits, Specifications, and Distributions

The true process capability cannot be determined until the

X

and R charts have

achieved the optimal quality improvement without a substantial investment for new

equipment

or

equipment modification, When the process is

in

statistical control. process

capability is equal to 60', where 0 =

R

o

ld

and d

1

is a factor from Appendix Table A In

the example problem. it is

60'

= 6 Rold2l =

6 0.07912.059)

=

0.230

It is

frequently necessary

to

obtain the process capability by a quick method rather

than by using the X and R charts. This method assumes the process is stable

or

in sta

tistical control, which

mayor

may not be the ca.e. The procedure is as follows:

1. Take 25 subgroups

of

size 4, for a total of 100 measurements.

2. Calculate the range. R, for each subgroup,

3. Calcula te the aVerage range: R= :

4. Calculate the estimate

of

the popUlation standard deviation:

0 = Rid,

where d

is obtained from Appendix Table A and is 2.059 for

n

4.

5. The process capability will equal 60'.

O \ J ~

o

,;5


4/13

STATISTICAL

PROCESS CO

LSL

USl

Tolerance l

0t I

- - -01 Be-t-)apabiliry

I I

101

\

o f.-..---t

13.09

13.15

13.21 13.27

Hole location ~ m m

Figure 1824 Relationship of Process Capability

to

Tolerance

Remember that his technique does not give

the

true process capability and should be

used

only if circumstances require its use. Also. more than 25 subgroups can be used to

improve accuracy.

The relationship of process capability and specifications is shown

in

Figure

18-24.

Tolerance is the difference between the upper specification limit (USL) and

the

lower

specification limit (LSL). Process capability and the tolerance are combined to

form

a

capability index. defined as

USL - LSL

C

p

6cr

where

USL - LSL =upper specification - lower specification, or tolerance

C

p

=capability index

60' = process capability

Cf' >

i

If

the

capability index is greater

than 1.00.

the process is capable of meeting

the

spec

, p t.. I

ifications; if the index is

less than 1.00.

the process is not capable of meeting

the

speci

fications. Because processes are continually shifting back and forth. a C

p

value of

1.33

has become a

de

facto standard, and some organizations are using a 2.00 value. Using

the

capability index concept. we can measure quality, provided the process is centered.

The larger the capability index.

the

better the quality.

V(.e

should stri

ve

to make the ca

p.:;?i1ity index

as

large

as

possible. This result

is

accomplished

by b..aving

realistic spec

ificatiws and continual striving to improve

the

process capability.

The

;;;;'pability index.

does not

measure process performance in terms of

the

nominal

or target value. This measure

is

accomplished using C

pk

which is

_ Min {(USL X) or

(X

-

LS,:ll

Cr

, -

30

AC

pk

value of 1.00 is the de

facto standard. with

some:

orgunizutiolllllsln,ll

value of

1.33. Figure 18 25 illustrates C

p

and C

pk

values for processes thlllnfe

Cl IItCfCI.

lind 0110

off center

by

Icr.

Case 1

C

p

=

USL

LSL)16

=

8,,160- a 1.33

CC]

~ r o \ 1

LSL

~ ~ ~

o USl

LSL

Xu USL

C

p

=

1.33

1.33

p

'

C

p

= 1.33

Cpt'

1.00

Case 1I C

p

=

USl LSL)/6

= 60 /60 '

1.00

\1

L/\J

=, _

LSl

Xo

USL

tSL

Xn

USL

C

p

'

1.00

C

p

'

1.00

C

p =

1.00

Cpi

'

0.67

Ca.e

III

C

p

= (USL - LSL)l6=

4 1100

= 0.67

~ 6 c r

0'-1

~ L / J

LSI:.

Xo

USL

LSL

USL

u

C =0.67

p

C

p

=0.67

Cpt :0.67

C .

=

0.33

Figure 18-25 e and

e

.. Values for Three Different Situations

4


5/13

~ ~ - ' - - J

a .

.

Comments concerning

CI

and

p

are as follows:

I. The

p

value does not change as the process center changes.

2.

p

=

p

when the process is centered.

3.

p

is always equal to or less than

Cp-

4. A

p

value greater than 1.00 indicates the process conforms t< } specifications.

5. A

p

value less than 1.00 indicates that the process does not conform.tospeci-

fications.

6. A

p

value less than 1.00 indicates that the process

is

not capable.

7. A

p

value

o

zero indicates the average is equal to one

o

the specification

limits.

8. A negative

p

value indicates that the average is outside the specifications.

Quality professionals will use these eight items to improve the process. For example,

if a

p

value is less than one, then corrective action must occur. Initially 100% inspec-

tion

is

necessary

to

eliminate noncomformities. One solution would be

to

increase the

tolerance

o

the specifications. Another would be to work

on

the process to reduce the

standard deviation or variability.

fr:;-
http:///reader/full/conform.tohttp:///reader/full/conform.to


6/13

ch treatmentconditionasdepictedin

i

i

I

I

I

Table

19 9. s t u

afullfactorial

d e ~ i

andevaluatethe s i ~ f i c a n c e andfac

toreffectsof thi studyfora levelsof .10and0.05.Basedon urresults,com

mentonreduc'

3

3

4 5

4

6 6 7

gthisstudytoafra ionalfactorialexperim t.

Replicate

8

9

2

4 5

6

8


7/13

TAGUCHI S

QUALITY ENGINEERING

- - - - - - . : : . .

Tow loss Producer's loss + Customer's loss

I

LSL

USL

Vinyl thickness

Figure 20-1 loss to

Society

Reproduced, with permission, from

Taguchi

Methods: ntroduction to Quality Engineering Allen

Park,

Mich.: American Sup

plier Institute, inc., 1991).

meeting the specifications (USL and LSL); however, it is on the target

tau, ...

1 After con

siderable effQrt, the productiQn p ~ s s was imprQved by reducing the variability about

the target, as shown at (2). In an effort to reduce its production costs, the organization

decided to shift the target closer to the LSL,

as

shown at (3). This action resulted in a

substantial improvement by lowering the cost to the organization; however, the vinyl

covers were not as strong as before. When farmers used the covers to protect wheat from

the elements, they tore and a substantial IQSS occurred tQ the farmers. In additiQn, the

CQst .of wheat increased as a result of supply-and- demand factors, thereby causing an in

crease in wheat prices and a further loss to society. The company 's reputation suffered,

which created a JQSS of market share with its unfavorable loss aspects.

Assuming the target is correct, Josses of concern are those caused

by

a product's crit

ical performance characteristics deviating from the target. The importance .of CQncen-

trating

.on

hitting the target is documented by Sony. In spite

.of

the fact that the design

and specificatiQns were identical, U.S. customers preferred the c.olor density

of

shipped

TV sets produced by Seny-Japan .over those preduced by SQny-USA. Investigatien .of

this situ'ation revealed that the frequency distributions

were

markedly different. as

shewn in Figure 20-2. Even theugh SQny-Japan 0.3% .outside the specificatiQns, the

I

Taguchi uses the

symooi

m

or the target.

lSL

I

T

4 luny

-llpI

s O nY - U SA

Color

density

5

Figure 20-2 Distribution

of

Color Density 10r Sony-USA and Sony-Japan

Source: The Asahi April 17, 1979.

distribution was normal and centered

.on

the target. The distributien

of

the Sony-USA

was

unifQrm between the specifications with no values .outside specificatiQns. It was

clear that custemers perceived quality as meeting the target (Japan) rather than just meet

ing the specificatiens (USA). Ferd

MQtor

Company had a similar experience with

transmissiQns. ,

Out of specification is the

commQn

measure of quality less. Although this concept

may be appropriate fe r accQunting. it is a poor concept fe r all other areas. It implies that

all

products that meet specifications are good, whereas

thQse

that

de nQt

are bad. From

the customer's PQint .of view, the prQduct that barely meets specificatiQn is as geed .or

bad) as t le product that is barely .out

of

specificatiQn. It appears the wrQng measuring

system is being used. The less function CQrrects fQr the deficiency described abQve

by

cembining CQst, target. and variatiQn into .one metric. /

Nominal-the-Best

. .

.---

.

AlthQugh Taguchi developed

mQre

than 68 loss functiens, many situations are ap

prQximated by the quadratic functien which is called the neininal-the-best type.

Figure 20-3(a) shQWS the step functiQn that describes theSQny-USA situatiQn. When

the value fQr the performance characteristic, y, is within specificatiQns the Joss is $0,

and when it is outside the specificatiQns the loss is

A.

The quadratic function is

shQwn at 20-3(b) and describes the Sony-Japan situatiQn. In this situatIOn

lQSS

occurs

as soon as the perfermance characteristic, y, departs frQm the target, ...

~

1


8/13

TAGUCHI S QUALITY ENGINEERiNG

L LSL

USL

t

e

j

---- --.---

Y

t -A

't

t A

Perfomlance characteristic

0

(a)Stepfunction(Sony- USA)

L

LSL

USL

A

3

\

---t----.,

Y

t -A

't

t+A

Perfonnancecharncterislic

(b)Quadraticfunction(Sony- Japan)

Figure20-3

St .p and Quadratic Loss Functions

.Thequadraticlossfunctionisdescribedbytheequation

L=kfy

l i

where L cost incurred qualitydeviatesfromthetarget

y ::= performancecharacteristic

1:

=target

k

=

qualityloss o e f f i ~ i e n t

Thelosscqefficientisdetermineq.bysettingA := fy

1:).

thedeviationfromthe tar

get.When AisattheUSL

or

LSL,thelossto hecustomerof repairingordiscardingthe

productisSA. .

~ = A / y - =AltJ ?

EXAMPLE

PROBLEM

f Ihespecificationsare 10: :: 3foraparticularquality ~ h u n c t e r i ~ t l c anti Iht Jvtru._ r,.

pair costis $230,determine

the

lossfunction.Determinethelou At V 12.

k =230/3

2

=25.6

Thus,L= 25.6y -

10)2

and aty= 12,

L= 25.6(y- 10)2

=

25.6(12

$102.40

characteristicisstatic.

In

reality.

o n ~

ngdueto noise,andthelossfunctionmust

re-

flectthe ariationof manypiecesr e r than

just

onepiece.Noise

faCTors

are

classi

fiedas xternalandinternal,

withfoternal

beingfurtherclassifiedasunit-to-unita:1d

dele.

oration/

refrig,eratortemperature

onttol

willserve

as

an

exampl etohelpcI:uifythe noise

concept.Externalnoiseisduetotheactionsof theuser,such

as

numberof times the

doorisopenedandc.sed.amount

of

foodinside,theinitialt perature.andsoforJ!.

Unit-lo.-unitintern noiseisduetovariationduringprodu tonsuchassealtightness.

controlsensorv . ationsandsoforth.Althoughthistype noiseisinevitable,everyef-

fortshouldbe adetokeep

it

toaminimum.Noise etodeteriorationiscaused

by

leaIiageof re gerant,mechanicalwearof compres rparts,andsoforth.This t y ~ of

noiseispri

lya

functionof thedesign.Noise f torscausedeviation fr()m thetarget,

w ~ i h

ca esalosstosociety.

Figu

20-4shows thenominal-!he-bestloss function withthe distribution of the

noisefactors.Anequationcan be derivedbysummingtheindividualloss,'aluesand di

/tidingbytheirnumbertogive

L Ha

+

(y - T/l

where

I.

=

theaverage

0

xpectedloss.

Becausethepopul on standarddeviation,cr, willrar beknown,thesamplestan

dardde'fiation,

s w needtobesubstituted.This acti willmakethevaluesomewhat

larger;however, eaveragelossisaveryconserva.evalue,

Thelosscan loweredbyfirstreducingthev iation,cr, andthenadjustingthe3'-

erage,y to

b

giton target.1:. Thelossfunction 'speaksthelanguageof things,"which

2-

.1


9/13

6. Should operating personnel be responsible for inspection. thus decreasing costs?

7. Is appraisal being used as a substitute for prevention?

~ ~ ( ) g

r ~ f l J l p l _ e

..

e n t a o n

______ ...

'The first step in the implementation

of

a quality cost program is to determine if the pro

gram can

be

beneficial to the organization. Small organizations with limited resources

are cautioned that implementation time and expen se are extensive. It might be better to

concentrate

on one metric, such as scrap or easily measured external failures. A simple

system using one metric will provide very conserv ative numbers.

For

larger organizations, a review and analysis of the cost data, when made

in

suffi

cient detail, will usually indicate that the costs are quite large. Before proceeding, it is

necessary to detemline that top management is receptive to new ideas.

A presentation is prepared and g iven to top management to con vince them of the need

for the program. 'The presentation should describe the results to expect the implemen

tation plan, and the return on in vestment. Emphasis is placed on the organization-wide

aspects of quality costs and n()t just the operational aspects. t should be pointed out to

management that they will need to take an active role in the program.

'The program will have a greater chance of success if a single product line or department

is used on a trial basis. Selection of the trial area should be strongly influenced by its p0 -

tential to produce quick and significant results. A full-time leader who

has

the confidence

of

senior management will be needed. 'The steps

of

the trial program are measurement of

quality costs, determination of the appropriate indexes and ratios, establishment

of

trend

analysis charts, identification

of

improvement opportunities, assignment of project teams,

and reporting of results.

All personnel who will be involved with the system should be educated and trained.

This initial training will be limited to those involved with the trial program and key

members of each functional area. Education will concentrate on the purpose of quality

costs: identification

of

opportunities for quality improvement, justification of corrective

action, and measurement of results.

Concurrent with me progress

of

the trial program, basic accounting procedures are

revised to accommodate the quality cost system. Each cost element is described. as well

as

how the data will be collected or estimated. Also, the methods for treating fringe ben

efits, overhead, and other accounting adjustments are determined. To ensure the integrity

and acceptance

of

the data, the comptroller approves the procedures.

After the trial program is complete, the quality cost program is ex.panded to include

the entire organization. Because

of

better reporting, quality costs may actually increase

while the system is in the development period. Data are collected onto appropriate

spreadsheets by department. product, project, and so forth. Trend and Pareto analyses

are conducted to determine opportunities for improvement. Projects are assigned, and

an

ongoing system is

in

operation.

6..

- . ~ -

...

, . ,

'The Malcolm Baldrige National Quality Award (MBNQA)

is

an annulIl award to recolnilC

U.S. organizations for performance excellence. It was created by Puhlic Law 100-107 (In

August 20. 1987. The award promotes: understanding of the requirements for performnn.:e

excellence and competitiveness improvement. sharing

of

information on successful

fonnance strategies, and the benefits deriVed from using these strategies. There are five cat.

egories: manufacturing, s ervice, small business, health care. and education. 'Three awards

may be given each year in each category. Competition for the awards is intense, and inter-

many organizations who are not interested

in

the award are, nevertheless, using the

categories as a technique to measure their TQM effort on an annual assessment basis.

Criteria for Performance Excellence

~ ~ . ~

-

- - .

The

criteria for performance excellence are the basis for malejng awards and for giving

feedback to applicants. In addition, they (I) help improve performance practices and ca.

pabilities, (2) facilitate communication and sharing of best practices information among

U.S. organizations

of

all types, and (3) serve as a Working tool for understanding and

managing performance, planning. training. and assessment. The results-oriented goals

are designed to deliver ever-improving value to customers, resulting in marketplace sue

c ~ s s ,

and to improve overall organization performance and capability. 'The criteria

are

derived from the set

of

core values and concepts described in Ch apter 2, Leadership.

'The core values and concepts are embodied

in

seven categories, as shown

in

Figure 7-9.

'The seven categories shown in the figure are subdivided into 20 ex.amination item.;.

Each examination item consists of

sets

of

areas to address. Information is submitted by

applicants in response to specific requirements of these areas.

Characteristicso the Criteria

I. 'The criteria are directed towa rd results. 'They focus principally on seven key area;

of

business performance. Results are 1 composite

of

Customer satisfactiollfretention.

Market share, new market development.

Product and service quality.

Productivity, operational effectiveness, and responsiveness.

Human resource performance/development.

Su pplier performance/development.

Public responsibility/corporate citizenship.

1 Adapted

from

U.S. Dep,artmentofComrnerce,Malcolm Baldrige National Quality Awanll998 Criteria

1997

PERFORMANCE

MEASURES

alcolm Baldrige

National

Quality

Award

' ~ '

. .

" . . . . . . .

W

1

he :

l


10/13

Baldrige Criteria for Perfomlanc. Exc.Hence Framework

A System Perspecti

1

:i; - . ~

eade",hip

I

1

BUSIness

---

",suits

; : ~ ?

:t

management

\ /

Information and analysis

J

Figure 7 9 Award Criteria

Framework

Improvements in these seven areas contribute significantly to orgamzauon perlorm

ance, including financial penormance.

The

results also the importance

of

sup

pliers,

the

needs of communities, and the needs of the nation.

2. The criteria are nonprescriptive and adaptable because

The focus is on results, not

on

procedures

or

tools. Organizations are encouraged

to develop and demonstrate creative, adaptive, and flexible approaches. for

meeting basic requirements. Nonprescriptive requirements are intended to fos-

ter incremental and major "breakthrough" improvement.

Selection of tools, techniques. and systems usually depends upon factors such

as business type and size. the organization's stage of development, and

em-

ployee capabilities and responsibilities.

The focus is on com mon require ments within an organization rather than on spe

cific procedures, which fosters better understanding, communication, sharing

and alignment while supporting diversity and creativity in approaches.

3. Th e crite ria support a systems appr oach to maintaining organization-wide goal

alignment. A systems approach to goal alignment, particularly when stIategy and goals

change over ti me, requires dynamic lin kages among cr iteria items. In the criteria, action-

PERFORMANCE MEASURES

oriented learning takes place

feedback between processes and results through cy

c1es of learning.

The learning cycles have four clearly defined stages. similar to She wharf s P-D-S-A.

I. Planning, including design of processes, selection of measures. and deploy

ment

of

requirements.

2. Execution of plans.

3. Assessment of progress, taking into account internal and external results.

4, Revision of plans based upon assessment findings, learning, new inputs, and

new requirements. .-

4. The criteria support goar-based diagnosis. The criteria and the scoring guidelines

make up a two-part diagnostic (assessment) system. The criteria are a set

of

20

perfonnance-oriented requirements. The scoring guidelines indicate the assessment di

mensions-approach, deployment, and results--and the key factors used to assess

against each dimension. An assessment thus provides a profile of strengths and oppor

tunities for improvement relative to the 20 basic requirements. In this way, asse,sment

leads to actions, which contribute to the r esults composite pre viously described. This di

agnostic assessment is thus a useful management tool that goes beyond most penorm

ance reviews and is applicable to a wide range of strategies and management systems.

Criteria for

Performance

Excellence

- - . . . . - - - - - - - - - -_ ._ - - -

Table 7 1 shows the seven award categories and the 20 items with their point values. It

is important to note that almost halfof the total score is based on results.

The Leadership

category examines the company's leadership system and senior lead

ers' personal leadership. It examines how senior leaders and the leadership system ad

dress values. company directions, penormance expectations, a focus on customers and

other stakeholders. learning, and innovation. Also examined is how the company ad

dresses its societal responsibilities and provides support to key communities.

The Strategic Planning c2.tegory examines how the company sets str ategic directions

and how it develops the critical strategies and activn plans to suppor t the directions. Also

examined are how plans ate deployed and how penormance is tracked.

The Clistomer

nd

Market Focus category examines how the company determines

requirements. expectations, and preferences of customers and markets. Also examined i5

how the company builds relationships with customers and determines their satisfaction.

TIle

Information nd Analysis

category examines the selection. management, and

effectiveness of lise of information and data to support key company processes and ac

tion plans, and the company's penormance management system.

The Human Resource Focus category examines how the company enables employ

ees to develop and utilize their full potential, aligned with the company's objectives.

Also examined are the company's efforts to build and maintain a work environment and

work climate conducive to penonnance excellence. full partiCipation, and personal and

organizational growth.

t

i

l


11/13

PERFORMANCE MEASURES

The Process Management

categoryexaminesthekeyaspectsof processmanage

ment, includingcustomer-focused design,productand servicedelivery, support,and

TABLE

7 .1

ward

Categories

nd Item

Ustlng with Point

Values

110

Leadership

80

1.1 LeadershipSystem

1.2 CompanyResponsibilityandCitizenship

30

80

2

Strategic Planning

2.1 StrategyDevelopment

Process

40

2.2 CompanyStrategy

. . . . . .

.

40

80

Customer and

Marketfocus

3.1 CustomerandMarketKnowledge. . .40

3.2 CustomerSatisfactionandRelationshipEnhancement...... . .40

80

Information

and Analysis

4

4.1 SelectionandUseofInformationand Data 2

5

4.2 SelectionandUseofComparativeInformationand Data

15

4.3

Analysis

andReviewofCompanyPerformance

40

100

Human

ResourceFocus

5.1

WorkSystems....... .

.40

5.2 employeeEducation,Tra:ning, andDevelopment

30

5.3 EmpioyeeWell-BeingandSatisfaction .30

100

6

Process

Management

6.1

ManagementofProductand

Service

Processes

,

60

6.2 ManagementofSupportProcesses

20

6.3 Managerrie"ltof Supplierand PartneringP roces ses.

. .

20

450

7

BusinessResults

7.1

CustomerSatisfactionResults

12

5

Financialand Market

Results

125

7.2

. . . . . . . . . . . . . . . . . . . . . .50

7.3 HumanResource

Results

7.4 SupplierandPartnerResults .... .

25

....... ........ ...... .125

7.5 Company-Spedfic

Results

1000

TOTALPOINTS

supplierandpartneringprocessesinvolvingallworkunits.Thecategoryexamineshow

key processes aredesigned, implemented.managed,andimprovedtoachievebetter

performance.

The

Business Results

categoryexaminesthecompany'sperfoImance and im

provement

inkeybusinessareas:customersatisfaction,financialandmarketplaceper

formance,humanresourceresults,supplierandpartnerperformance.andoperational

performance_Alsoexaminedareperformancelevelsrelativetocompetitors.

/

ScoringSystem

The systemforscoringapplicantresponsesisbasedonthreeevaluationdimensions: (I)

approach,(2)deployment,and(3)results.

pproach

referstohow the applicantaddressestheitemrequirements.

The

factors

usedtoevaluateapproachesinclude:

Appropriatenessof themethodstotherequirements.

Effectiveuse

of

themethods.

Degree towhichtheapproach issystematic,integrated.andconsistentlyapplied;

embodieseffectiveevaluationlimprovementlleamingcycles;andisbasedonreli

ableinformationanddata.

Evidenceof innovativeand/orsignificantandeffectil'eadaptations of approaches

use(\inotherapplications

or

types

of

businesses.

Deployment

referstotheextenttowhichtheapplicant'sapproachisappliedtoallre

quirementsof theitem.The factorsusedtoevaluatedeploymentinclude:

Useof theapproachin addressingbusinessanditemrequirements.

Use

of

theapproachbyallappropriateworkunits.

Results

referto outcomes inachievingthepurposesgiven in theitem.Thefactors

usedtoevaluateresultsinclude:

Currentperformance.

Performancerelativetoappropriatecomparisonsand/orbenchmarks

Rate,breadth,andimportance

of

performanceimprovements.

Demonstration

of

sustainedimprovementand/orsustainedhigh-levelperformance.

Linkageof resultsmeasures tokeyperformancemeasuresidentifiedinthe busi

nessoverviewandinapproach/deploymentitems.

l

L


12/13

PERFORMANCE

MEASURES

Use of the scor ing system requires considerable training. Examiners receive more

than three days

o

training. with most of the time devoted to the scoring stem. A

simpler system is given

by

the sample self-evaluation. which is shown in the next

section. This approach would be more appropriate for small and medium-sized

organizations.

~ ~ r t 1 p l _ ~ e l : E v a l u a t ~

The following self-evaluation consists of a series of statements. organized into the ma-

jor categories

o

he Baldrige Award criteria. Use subjective judgment to grade how well

your organization conforms to the criteria by assigning a numerical rating from 1

to 10

to

each statement, with 10

being

high

and

1 being low. Add

the

scores

in

each calegory

and normalize. For example. the five leadership items tOlallo 32; therefore the category

score is 32150 110

=

70. Use the individual

and

total scores to monitor the status of he

quality management program. Use the first score as a baseline and subsequent scores to

monitor progress.

/. Leadership

Senior executives

are

actively and personally.involved

in

developing the

quality goals and standards for the organization. communicating these

goals. planning for quality,

and supervising its implementation and

progress.

All levels of management demonstrate through their words and actions

that quality

is

the first priority within the organization.

There

is

a wiliingness to assist depanments and individual employees to

improve.

We

operate in a matter consistent with a high sense

o

ethics, concern for

public health, and concern for the environment.

We have a system to evaluate the effectiveness of its leadership.

2.

Slralegic Planning

.

We

have an effective short-range one

to

two years) plan for implement

ingTQM.

We have an effective long-range three years or more) plan for leadership.

in quality and customer satisfaction.

Adapted. with permission. from O.

W.

Chase.lmple 'lIling

TQM in

a

C }1IStrucrion Company Washington.

D.C.: Associated

Gene,....:t

Contractors of America. 1993).

The information in the plans is adequately disseminated within the

organization.

We evaluate and improve our planning process.

We constantly determine future requirements of the customer.

3. Cilstomer and Market Focus

We have developed strategies

10

maintainand build customer relationships.

We have effectivenieans to determine client expectations.

We effectively communicate those expectations to the work force.

We have established standards to meet those expectations.

We have developed effective means surveys, visits, etc.) to measure

the level o client satisfaction with all processes that affect client

expectations.

We have a good client-contractor communications system.

We

conduct a post-project follow-up with customers.

Employees visit customer sites. as appropriate. to help promote un-

derstanding.

We

operdy share information with

the customer.

We

are responsive to customer inquiries.

We

are responsive to customer complaints.

Employees at all levels are alerted to report possible customer dissatis

faction with any product or service. .

Those who interface with the customer receive special training listening.

complaint resolution. negotiation. and the like).

4. Information and Analysis

We

have an accurate and timely database that provides information on

customers, internal operations, organization performance, and OSts and

finances.

We benchmark ourselves against others

who

are leaders in panicular ar-

eas and use the data to help improve quality.

Information collected is pertinent to the improvement effort.

Wormation

collected is analyzed and actually used to support improvement.

We

evaluate and improve our information and analysis system.

J 24


13/13

PERFORM NCE MEASURES

5. Hllman Resource Focus

Human

resource

and

management plans support

qUality.

We

have

an

effective training program on quality awareness, teamwork.

and structured problem solving.

We provide effective training in technical skills.

The

training program is open to all employees.

All employees are involved in process improvement and customer

satisfaction.

Employees

are

encouraged to

make

recommendations for improvement.

. Employees, individually and .in teams, are recognized for improvement.

A positive work environment is maintained for the well-being, growth,

and positive attitude of employees.

Personnel practices

such as

recruitment. hiring. training. and other ser

vices are evaluated to determine their effectiveness.

Job site conditions are evaluated for possible improvement.

6. Process Management

These statements refer

to

all processes performed

by

the organization. including

adminrs/rative. logistical, engineering. alld cOils/rue/ion.

All

processes performed

by

this organization

have

been identified, and

the ownership of

each

process has been established.

All areas of duplication have been identified.

An

effective system

ex.ists

within

the

organization

to

prioritize processes

for

improvement.

Performance standards for processes have been established.

A system to measure process performance against

the

standards has been

developed.

We

have

an effective system for improving those processes identified as

needing improvement.

There

is an

effective

means

of disseminating "lessons leamed" informa

tion from

project

to

project

and

throughout

the

organization.

Quality requirements are effectively communicated to subcontractors

and

suppliers.

Subcontractor and supplier quality

are

effectively monitored

and the re

sults

are

furnished

to them.

We have

an

effective

metho-d

for evaluating the process improvement

system itself.

7.

Business Results

~ t e can

show

quantifo:lble

improvement

in the follawing

areas

rate each one):

Safety/number of worker compensation claims.

.

Employee

satisfactionfabsenteeisrnfturnover.

Grievances/strikes.

Satisfaction with our performance on the

part

of

other

parties

with whom

we

deal i e

architectsler.gineers. subcontractors. suppliers. government

agencies.

Punch

(defect)

lists.

On-time performance.

Reduced

delivery times.

Financial return.

Rework.

Subcontractor quality.

Supplier quality.

Engineering

processes.

Logistical processes,

Administrative processes.

Construction

processes.

Customer (client) satisfaction.

Repe at business.

Market share.

Comments

. ~ .

The MBNQA provides

a plar, to

keep

improving all operations continuously

and

a sys

tem

to

measure

these

improvements

accurately. Benchmarks

are used

to

compare the

or

ganization's

performance

with the world's

best and

to establish stretch goals. A close

partnership

with suppliers and

customers

that feeds

improvements back into

the

opera

tion

is

required.

There

is

a long-lasting relationship

with

customers,

so that

their

wants

are

translated

into

products

and

services

that go

beyond

delivery.

Management

from top

1

bottom

is

committed

to improving quality,

Preventing

mistakes

and looking

for im

provement opportunities

is

built

into the

culture. There is a

major

investment

in human

resources

by means

of training. motivation,

and

empowerment.

According to Dr. J. M.

Juran,

who

studied

the

winners of

the

a'Nard,

the gains have

been

stunning. The

gains

can

be

accomplished by large

and small U.S.

organizations

and

by

U.S.

workers. The gains include

quality, productivity,

and cycle

time.

m

3

Techniques for Performance Measures Handout

Documents

Transcript of Techniques for Performance Measures Handout