Select

Note: This file contains KRA's for various functions on different sheets.
Click on respective sheets for navigation.
Measure
Analyze
Improve
Control
KRA:Market performance

1 2 3 4 5
Select Measure Analyze Analyze
KI Current Performance Gap
Performance Target 4-3

1 Market share ( in percentage ) 15 25 10

Click here to see causes of low market share

2 Overall customer satisfaction ( on a 10 point scale )

3 No. of New products and services introduced

 6 7 8
Analyze Improve Improve
Impact on bottomline Define problem Identify causes
in Rs per annum

Click here to see example Click here to see example

100000000 Low Market share

 9 10
Improve Improve Improve
List Time frame for Take
solutions implementation corrective action ( yes / No )

Click here to see example

6-9 months Y
 Negative

11 12
Improve Control Control
Result after Gap between Positive
improvement result & Target ( 11-4 ) Standardize

25 0 Y
Select
Measure
Analyze
Improve
Control

KRA: Manufacturing Productivity

1 2 3 4
Select Measure Analyze
KI Current Performance
Performance Target

1 Productivity ( Input - output ratio )

Click here to see causes of low productivity

2 Percentage of parts scrapped.

3 Percentage of parts reworked.

4 Percentage of final product graded as seconds.

5 Production per man / machine.

 5 6 7
Analyze Analyze Improve
Gap Impact on bottomline Define problem
4-3 in Rs per annum
 8 9
Improve Improve
Identify causes List
solutions
 10 11 12
Improve Improve Improve Control Control
Time frame for Take Result after Gap between Positive
implementation corrective action ( yes / No ) improvement result & Target ( 11-4 ) Standardize
Select
Measure
Analyze
Improve
Control
KRA: Purchase management

1 2 3 4
Select Measure Analyze
KI Current Performance
Performance Target

1 Excess inventory.
Click here to see causes of excessive inventory

2 Down - time because of parts shortages.

3 Premium freight cost/ demurrage charges.

 5 6 7 8
Analyze Analyze Improve Improve
Gap Impact on bottomline Define problem Identify causes
4-3 in Rs per annum
 9 10 11
Improve Improve Improve Improve
List Time frame for Take Result after
solutions implementation corrective action ( yes / No ) improvement
 Negative

12
Control Control
Gap between Positive
result & Target ( 11-4 ) Standardize
Select
Measure
Analyze
Improve
Control
KRA: Efficient Human Resource Management
1 2 3 4
Select Measure Analyze
KI Current Performance
Performance Target

1 Employee turnover ratio

Click here to see causes of high employee turnover

2 Number of people trained / number of people required to be trained

3 No. of days the positions are vacant without the person

4 No. of grievances resolved / total number of grievances

5 Number of days the company was closed due to labour problems

 5 6 7
Analyze Analyze Improve
Gap Impact on bottomline Define problem
4-3 in Rs per annum
 8 9
Improve Improve Improve
Identify causes List Time frame for
solutions implementation
 Negative
10 11 12
Improve Improve Control Control
Take Result after Gap between Positive
corrective action ( yes / No ) improvement result & Target ( 11-4 ) Standardize
Select
Measure
Analyze
Improve
Control

6
KRA: Quality Assurance
2
Select
KI

Click here to see example

Percentage of products having defects detected by customers.

Percentage of lots rejected due to errors.

Number of engineering changes that should have been detected in design review.

Errors in inspection / test reports.

Cycle time to get corrective actions.

Percentage of appraisal cost compared to production cost.

 3 4 5 6
Measure Analyze Analyze Analyze
Current Performance Gap Impact on bottomline
Performance Target 4-3 in Rs per annum
 7
Improve
Define problem
 8
Improve
Identify causes
 9
Improve Improve
List Time frame for
solutions implementation
 Negative

10 11 12
Improve Improve Control
Take Result after Gap between
corrective action ( yes / No ) improvement result & Target ( 11-4 )
Control
Positive
Standardize
Select
Measure
Analyze
Improve
Control

6
KRA: Product Engineering
2 3
Select Measure
KI Current
Performance

Click here to see example

1. Number of engineering changes per document.

2. Number of errors found during design review.

3. Number of errors found in design evaluation test.

4. Percentage of time over- run compared to planned time for development.

5. Percentage of cost over - run over estimated cost of development.

6. Number of tooling redesign after trial production.

 4 5 6
Analyze Analyze Analyze
Performance Gap Impact on bottomline
Target 4-3 in Rs per annum
 7
Improve
Define problem
 8
Improve
Identify causes
 9
Improve Improve
List Time frame for
solutions implementation
 10 11 12
Improve Improve Control Control
Take Result after Gap between Positive
corrective action ( yes / No ) improvement result & Target ( 11-4 ) Standardize
Select
Measure
Analyze
Improve
Control

4
KRA: Product reliability

2 3 4
Select Measure Analyze
KI Current Performance
Performance Target

Click here to see example

Failure rate.

Probability of failure occurrence during given time interval.

Mean life time.

Mean time to repair.

 5 6 7
Analyze Analyze Improve
Gap Impact on bottomline Define problem
4-3 in Rs per annum
 8 9
Improve Improve Improve
Identify causes List Time frame for
solutions implementation
 10 11 12
Improve Improve Control Control
Take Result after Gap between Positive
corrective action ( yes / No ) improvement result & Target ( 11-4 ) Standardize
Select
Measure
Analyze
Improve
Control

KRA: Financial performance

1 2 3 4
Select Measure Analyze
KI Current Performance
Performance Target

Click here to see example

1 Profit before interest and financial charges

2 Profit before tax

3 Growth in profits over last year

4 Return on capital employed

5 Return on sales

6 EPS ( Earning per share )

 5 6 7
Analyze Analyze Improve
Gap Impact on bottomline Define problem
4-3 in Rs per annum
 8 9
Improve Improve Improve
Identify causes List Time frame for
solutions implementation
 Negative

10 11 12
Improve Improve Control Control
Take Result after Gap between Positive
corrective action ( yes / No ) improvement result & Target ( 11-4 ) Standardize
 MARKETING COMPETITION

Increase in number of competitors

Poor after sales service

Poor marketing
Non competitive pricing

Lack of market penetration

Click on the boxes for solutions

Perceived credibility of organization

Poor product quality

Poor designing
Late market entry

Poor technology Low customer satisfaction

PRODUCT CUSTOMERS
 MEN MACHINE

Frequent breakdowns
Lack of experience

High set up times

Inadequate training

Too much of variation

Unclear instructions

Low
Productivity

Poor supplier evaluation

Inefficient processes

Complex design Poor inspection & testing

Inadequate Q.A
Unclear specifications

METHODS POOR QUALITY

OF RAW MATERIALS

MEN SUPPLIERS
 MEN SUPPLIERS

Over caution by purchase Excessive supplier lead time

Over ambitious marketing targets High rejections

Late deliveries

No check before financial approvals

Supplier defaults
High
Inventory
High transportation time
High stock of slow/ non moving items

High production cycle time

Min-Max levels not in place
Single source
Delayed indents
Obsolete inventory lying in stores

SYSTEMS MATERIALS
 MEN PAY & PERKS

Looking for faster growth Uncompetitive pay & perks

Do not relate future with us Poor career planning

Lack of family sensitivity

Locational preferences
No rewards or recognition

High emplo
turnover

No counselling Unprofessional atmosphere

No resolution
Previous reasons for departure not analyzed

Lack of cocern for employees

No negotiation
Employee surveys never done

SYSTEMS ATMOSPHERE
ber of competitors

ompetitive pricing

LOW
MARKET
SHARE

ate market entry

much of variation

Low
Productivity

oor inspection & testing

te deliveries

High
Inventory

Single source
of family sensitivity

High employee
turnover

Lack of cocern for employees

Cause
Increase in number of competitors

Cause

Poor technology
Cause

Poor product quality

Cause

Poor designing
Cause

Non competitive pricing

Cause

Low levels of customer satisfaction

Cause

Lack of market penetration

Cause

Poor after sales service

Cause
Poor marketing

Cause

Late market entry

Cause

Perceived credibility of the organization

Back to cause & effect diagram
Solution
I.Have competitive edge by delivering more value
II.New product development

See complete chart on "Gaining competitive Edge"

See New product development cycle

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Solution

I.Review existing technology , features and capabilities

II. Identify technology functionality gaps
III. Mapping functionality to business processes
IV. Develop new technology and functionality framework

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Solution

I. Improve supplier quality to ensure defect free materials

II. Install / Outsource state-of-the art manufacturing technology
II. Ensure strict quality checks & controls so that a bad product never
passes on to the customer
IV. Improve functioning of products under stressful / difficult conditions
V. Improve robustness
See checklist for product designing
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Solution

I. Add irressistible product features

II.Sleek designing
II.Environment friendly
IV.Easy operation
See checklist for product designing
 Back to cause & effect diagram

Solution

I.Competitive pricing through efficient cost management

II.Balance price and value

See "Efficient Cost Management Model"

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Solution

I. Benchmarking products with best in class or world class parameters

II. Compare customer satisfaction levels with key competitors by inhouse
studies and independent surveys
III.Use qualititative measures throughout the organization for performance
measurement
IV. Conduct customer satisfaction measurement at regular intervals
and make improvements on the shortcomings
Know how to conduct effective customer surveys

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Solution

I.Install technologies that allow customers to easily access co's products

II. Install technologies and workflows that allows prompt processing of
customer requests.
III.Improve networking to facilitate wider reach
IV. Back the products with good warranty
V. Conduct dealer training programs
 Back to cause & effect diagram

Solution

I. Improve aftersales network

II. Improve service on the following fronts:-
- Timeliness
- Responsiveness
- Accessibility
- Empathy
- Deliverables

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Solution
I.Strategic selling
II. Targeting marketing resources in proportion to potential returns.
III. Make your company & product look interesting
IV. Energise selling effort with good incentives to employees

See how to do strategic selling

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Solution

I. Create a niche market for products

II. Good product segmentation
III. Beat the price barrier

See how to create niche markets

 Back to cause & effect diagram

Solution

I. Improve market perception

II. Induce culture of "excellence" throughout the organization

See "Market perceived value model"

See 4C's of "Excellence culture"
1
2
3
4
5

6
7
8
9

2
3
4
5

6
7
8
9

1
2
3
4
5
6
7
8
9
10

11
12
13
1.

*
*

2.

a
b
c
d
e

a.
b.

*
*
*
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c.

d.

e.

*
 *
*

4.

5.

*
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 .

.
 .

Deliver value
1

2
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1
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1
1

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IV
2

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1

6
 Back to cause & effect diagram

Checklist for product designing

Means of knowing the product

Have the non quantitative features of the product been defined in some manner?
Do the designers know the level of product sophistication suitable for the user involved?
Are adequate design guidelines, standards, handbooks and catalogues available?
Do the designers understand the interaction of their part of design with remainder of the design?
Do the designers understand the consequences of a failure or other inadequacies of their designs on:-
i. The functioning of the total system
ii. Warranty costs and
iii. User costs ?
Do they know the relative importance of various components & characteristics within components?
Do the designers know what are the manufacturing capabilities relative to the design of tolerances?
Do the designers derive tolerances based on customer/functional needs or just use standard tolerances?
Do the designers know the shop and field costs incurred because of incomplete design specifications or designs
required in change?

Means of testing designs

Do the designers have the means of testing their design with regard to the following :-
a. Performance & reliability tests
b. Tests for unknown design interaction or effects
c. Pilot run
Is their an independent review of design?
Have the detailed drawings been checked?
Do the designers record analysis for the design?
Do the designers receive adequate feedback from development tests, manufacturing tests, acceptance tests and
user experience?
Are the results quantified where possible including frequency of problems and costs to the manufacturer and user?
Does failure information contain sufficient technical details on causes?
Are the designers aware of material substitutions or process changes?
Do the designers receive notice when their designs specifications are not followed in practice?

Means of regulating Design

Have the designers been provided with the means of regulating the design process?
Are they provided with information on new alternative materials or design approaches?
Have they been given performance information on previous designs?
Are the results of research efforts on new products transmitted to the designers?
Are the approvals required from the designers to use products from the new suppliers?
Do the designers participate in defining the criteria for shipment of the product?
Can the designers propose changes involving trade-offs between functional performance, reliability and maintainability?
Are designers told of changes to their designs before they are released?
Have causes of design failures been determined by thorough analysis?
Do designers have the authority to follow their designs through the prototype stage and make design changes where
needed
Can the designers initiate design changes?
Are field reports reviewed with designers before making decisions on design changes?
Do designers understand the procedures and chain of command for changing a design?
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 Back to cause & effect diagram

Customer surveys
Steps in conducting customer surveys: -

1. Identify your customers requirements under various segments.

2. Determine your survey methodology
3. Develop survey / interview questions
4 Conduct survey / Interview your customers
5 Disseminate findings of your Customer Surveys

Identify your customers requirement areas.

It is extremely important to know the requirement of your customers before designing a questionnaire or survey.
This is because if we do not ask the right questions, the answers we get will be irrelevant and it will be difficult to find
out if the customers are really satisfied with the issues that are important to them.

Ways to identify customer requirements:-

Discuss the issue with sample group of customers
Ask your existing customers “If we have to develop a questionnaire to measure our customers’ satisfaction,
what questions should we ask.

Brainstorming with employees from various functions within the organization. A cross section of ideas from various
people will give us the complete picture about the requirement of the customers

Determine your survey methodology

This requires the organization to answer the following questions :

How many customers to survey?
Whom to survey?
How to survey?
When to survey?
Who should conduct the survey?

How many customers to survey?

The basic rule behind sample selection is to choose a cross section of customers which represents your overall
customer base. For example if your customer database consists of large, medium & small organizations, your sample
must represent the same.

Other criteria for selecting may include percentage of frequent versus infrequent customers, industry sector & geographic
area.

Whom to survey?
While conducting the survey, the organizations must include the following customers:
Present customers
Potential customers
Past customers
Competitor’s customers

The customer sample must never be biased. Everyone wants to hear good things from the customers and nobody wants
to hear a negative feedback. There is a natural tendency to include a positive feedback and to exclude the negative feedback.
This will never reflect the true measure of customer satisfaction. The organization must be willing to hear both positive
& the negative from the customers if they are truly willing to improve their customer satisfaction.

How to survey?
The following methods can be used for conducting the survey:
Mail survey
Telephonic surveys
Face to face interviews
Comment cards
The best method will depend on your situation, number of customers in the sample group and what works best for your
customers.

When to survey?

I.Survey at periodic intervals:

Many organizations prefer to conduct customer satisfaction measurement survey at certain time of the year. This however
has certain disadvantages. If the period of survey is widely known it can signal the time for enhanced services to the
customers during that period. The marketing personnel may distribute questionnaires to customers during these periods.
Such conduct is open to all sorts of bias & this practice should be discouraged and avoided.

II. Surveying continuously:

More & more organizations are moving towards continuous measurement of customer satisfaction due to turbulent & dynamic m
& dynamic marketing environment. Continuous measurement recognizes the on-going importance of customer satisfaction
and is not influenced by momentary events (good or bad). This method keeps the organization completely focused on
customer satisfaction & does not allow it to be forgotten between survey waves.

III.Surveying after “moments of truth” :

Moments of truth are any interactions with customers in which an organizations effectiveness is tested. For example
making payments in a bank is a moment of truth. Similarly, settlement of claim in the Insurance business is also a
moment of truth

Every moment of truth can be followed up with a satisfaction survey to determine as to how well the organization has
performed in this important interaction.

Who should conduct the survey?

The survey can be undertaken by the organizations themselves or it can also be given to outside agencies.
here are following advantages of getting the survey by outside professional agencies.
They are more objective in formulating questions & analyzing responses.
Customers are more open when providing information to third parties.
Professional agencies have the expertise to ensure that the process is productive & effective.

3. Develop survey questions

The organization must develop a pre-determined set of questions which must take into account all the requirements
of the customers.

The questionnaire must give an impression to the customers that you are thorough & organized when gathering customer
satisfaction information. The presentation & packaging of the questionnaire should not be shoddy. A good appearance can
suggest evidence of organization’s high commitment to customer satisfaction management process and vice versa.

Interview your customers

Customers appreciate if asked for a feedback and have come to expect in many industries. Whichever method
is chosen to gather the information, it must be done in a way which shows the customers that you sincerely desire
the feedback & are serious in using their input for improving the product / service.

It is equally important to acknowledge the participation of the customers in the survey. Once the survey is over
and their valuable inputs have been considered, they must be informed about it as well. This has a great impact on
customer loyalty and retention.

Disseminating the findings of your Customer Surveys

The report on your customer satisfaction management must include the following:

Summary of findings
Key trends
Planned follow up measures
Methodology of improvement plan

It is also important to schedule a presentation to the top management & top executives. In a face to face discussion,
it is far easier for the executives to ask questions & form consensus of agreement with the results. The presentation
must include an action plan & reference tools for quality improvement as well.

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 Back to cause & effect diagram

Competitive
. Edge

.
 .

.
More output Less input

More sales Less cost

Strategic Customer
Deliver value New products People Material Equipment
positioning satisfaction

Better quality Unexploited Joy & pride Motivated Quality Better

New features
segments in ownership employees suppliers technology

Identify new Make customers Focused Reduced Improved mfg

Lower prices Innovation
customer needs more competitive employees inventory processes

Make customers Skilled Reduced Improved

Dependability R&D Niche marketing
more secure people scrap utilization

Irresistable Reduced Less

features turnover downtime

Ease of
acquisition

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 Back to cause & effect diagram

Strategic Selling

New
WHO?

New
HOW?

New
WHAT?

The new WHO?

A new customer segment that emerges from the changes in the Industry, such as shifting customer preferences
or new demographics.
A new customer segment formed by creative re-segmentation of existing customer base.
An existing customer segment which the competitors have neglected.
An existing customer segment which explodes & grows as a result of change in the Industry.

The new WHAT?

The new customer need which emerges from changes in the Industry.
A new customer preference that becomes important as a result of changing business envionment
A new customer need created by marketing tactics of other companies

The new HOW?

A new way (usually made possible by a new technology) of manufacturing, selling and distributing an existing
or new product or service.

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4 C's of excellence culture

Customer
focus

Continuous Excellence Creativity &

Improvement innovation
Culture

Commitment
 Culture

Commitment

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Market perceived Value model

 Market perceived Value model

How
customers
perceive you

In your
favor

Value

Customer Custome
Functional Emotional
expectation r
s Quality Behavior Decision
Cost Sensitivity

Delivey Respect
In favor of
competito
r

How customers
perceive your
competitors

Improving perceived Value

The customer perceived value is a relative concept. It depends on how your customers see you in relation to your
competitors. An existing customer may be satisfied with you, or a new customer may not find anything wrong with
your product, but the decision still may not be made in your favor because the competition is offering greater value.
Merely improving quality or peformance may not provide any market advantage if the improvements do not offer
enhanced value to your customers as depicted in the above figure.

Functional Value Vs Emotional Value:

Functional value is created by quality, cost and delivery factors.Unfortunately, your competitors can most easily duplicate
functional values. They can easily drop prices to match yours, they can install better technology and even provide 24 hrs
delivery.

Emotional value on the other hand is created by good behaviour, sensitivity towards the needs of the customers and
the ability of making the customer valued and important. This value is less easily duplicated by the competition and
generally is the outcome of qualified, friendly and helpful employees.

The creation of functional value is of course important but genuine customer relationships cannot be formed on the basis
of functional value alone. We need to satisfy the emotional values of customers as well. Emotional value is more lasting
but difficult to create and duplicated as well.

How we make our customers feel is as important as how easy we make it for them to buy.

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Efficient Cost Management model

1. Reduce 2. Reduce
quality costs cycle time

Cost
Management

3. Eliminate 4. Eliminate
non-value adding waste
activities

Cost Management Vs Cost cutting

Most of the organizations have wrong notions about cost. They confuse cost management with cost cutting measures.
It is extremely important to understand that cost management is different from cost cutting. What is required by the
organizations is efficient cost management as depicted in the above figure and not cost cutting. Many times organiz-
ions who have taken resort to cost cutting have faced serious quality problems.

Reduce Quality Costs

Categories of Quality costs are given below:-

The objective is to increase the preventive costs and reduce Appraisal, Internal failure and external
failure cost.

Prevention costs - Increase these costs as they pay in the long run.
Market research
Quality training programs.
Contract review
Design review
Field trials
Supplier evaluation
Process plan review
Process capability review
Design and manufacture of jigs and fixtures
Preventive maintenance

Appraisal costs - Reduce these costs through proper preventive measures

Proto type testing
Vendor surveillance
Incoming material inspection
Process inspection/control
Final inspection
Laboratory testing / measurement
Quality audits

Internal failure cost - Reduce these costs through proper preventive measures
Design changes/ corrective action
Scrap due to design changes
Excess inventory
Rectification / reject disposition of purchased material
Rework/rejection in manufacturing
Downgrading of end product
Downtime of plant & machinery
Trouble-shooting & investigation of defects

External failure cost - Reduce these costs through proper preventive measures
Processing / investigation of customer complaint
Repair/replacement of sold goods
Warranty claims
Product liability & litigation costs
Interest charges on delayed payment due to quality problems
Loss of customer goodwill & sales

Note: Calculate your quality cost under each category and make improvements on a continuous basis.
Reduce Cycle Time

This involves reduction of following cycle times

Inventory cycle time by following Just in time ( JIT )

Machine set-up times by efiicient Total Productivity Maintenance ( TPM )

Eliminate non-value adding activities

Activities in any organization can be classified into two broad categories

Activities that add value to customers

Activities that do not add any value to customers

The organization's time and resources must be focused on activities that add value to customers and all effort must be
done to eliminate activities that do not contribute any value to the customers.

Examples of non-value adding activities

Chasing information
Misdirected queries
Unproductive meetings
Seeking authority to act
Bureaucracy
Ineffective procedures

Eliminate Waste

The following activities are termed as wasteful activities and must be eliminated:-

Waiting time.
Set- up times.
Time spent on over production .
Avoidable Transportation.
Ineffective communication.
Inopportune timing of activity

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Get products to the market

before the competition

Seize segments that

Use innovative distribution competitors have overlooked
channels to bypass competitors

Be a big fish Niche Customize products to

in a small pond Marketing satisfy customers
 Make your own product
obsolete before the competition
Attack established markets
with special advantages

Identify new needs

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1. Opportunity evaluation
Customer's present & future requirements
Customer's unperceived & unarticulated needs

8. Implementation
Tool & vendor development 2. The idea generation
Process refinement Creativity & innovation

New product
7. Validation
Prototype testing, field trials development 3. Product positioning
& market feedback and pricing options
Cycle

6. Financial evaluation 4. Feasability check on ideas

Commercial evaluation Styling, Costing, sourcing
Logistics evaluation & Resource requirements

5. Market research
Present, Future &
Worst case scenario

Important tips for new product development

Put innovation at the heart of every new product concept so that it meets the customer's unperceived and un articulated
needs.

Big ideas can originate anywhere in your organization. It is important to have a formal system for channeling them,
testing them and converting them into product concepts

Develop only those new products that have the best chance of success in the marketplace given company's
capabilities and competitive strengths.

Evaluate the fit of every new product concept with the market realities and only then distribute your resources

Use cross functional teams to collectively design new products. Use concurrent and not serial participation of
every function. Marketing, R& D, Manufacturing, Engineering, Sourcing & Finance - Involve all of them for their
views.

Make every new product conform to parameters chosen up-front for meeting the customers needs being targeted.

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& geographic

obody wants
egative feedback.

This however

ese periods.

bulent & dynamic marketing environment. Continuous measurement recognizes the on-going importance of customer satisfaction and is not
er satisfaction
ing customer
pearance can
Equipment

Better
technology

Improved mfg
processes

Improved
utilization

Less
downtime
 In your
favor

n favor of
ompetito
r

sily duplicate
ovide 24 hrs

on the basis
ce of customer satisfaction and is not influenced by momen tary events (good or bad). This method keeps the organization completely focus
ganization completely focused on customer satisfaction & does not allow it to be forgotten between survey waves.