PDCA FOR MEASUREMENT

CRITERIA FOR SELECTION OF MEASURES MEASUREMENT STRATEGY

REPORTER: LEUNIZE U. ROSALES

PDCA (Plan, Do/Measure, Check, Act)

Also known as Shewhart Cycle Is a fourstep model for carrying out change A model for continuous improvement

PDCA for Measurement

Confirmation of the measures if the results validate the reality

Possible measures are identified

Act

Plan

Check
Results are counter checked through other means

Do (Measure)
Collection of data as per approved procedures on a pilot basis

Examples of Measures

1. Customer Satisfaction Customer Satisfaction Index (CSI) Warranty cost Mean time to repair Number of customer complaints as a percentage of turnover Total quality cost as a percentage of turnover

2. Quality Measures in Production Actual production time as a percentage of planned time Machine idle time as a percentage of total production time Value of Work In Progress Cost of miscellaneous materials such as lubricants as a percentage of production value Percentage of billable hours to total time available

3. Quality Measures in R & D Number of design changes Average percentage deviation from project schedule Ratio of R & D expenditure to turnover

4. Quality Measures in Human Resource Management Employee Satisfaction Index (ESI) Number of employee suggestions received and implemented Employee attrition rate Percentage of employees involved in process improvement Training expenditure as a percentage of turnover

5. Quality Measures in Purchasing Number of deliveries rejected as a percentage of total Cost of failures of incoming materials Cost of incoming inspection Reorder level

6. Quality Measures in Administration and Sales Number of invoices with errors Number of credit notes with errors

7. Measures for Financial Performance Number of credit notes as a percentage of total invoice Market capitalization growth Revenue vs expenditure ratio Ration of overhead expenditure to total expenditure

Criteria for Selection of Measures

1. The selected measure should relate closely to the to the issues, which will require examination. 2. The measures should have high information content. 3. The measures should be sensitive to variations. 4. The measures should really reflect the degree to which the process achieve goals to the organization. 5. The measures should permit easy and economical collection of data. 6. The measures should facilitate consistent collection of welldefined data. 7. The measures should help the organization to identify occurrence of special cause variations. 8. The measures should be easily understandable and implementable.

9. A few vital measures than many trivial measures should be selected. 10. The measures should be identified by or acceptable to the process owners. 11. The measures should reflect the needs of internal customers and external customers. 12. The measures should facilitate improvement actions. 13. The measures should be obtainable on time for taking corrective and preventive actions. 14. The measures should be aligned to the organizations vision mission and objectives, i.e. They must be able to bring out how close the organization is to achieving the goals of the organization. 15. The measures should be able to satisfy all the five stakeholders. 16. There should be measures for each process, each section and organization as a whole.

Measurement Strategy

What is the purpose of measuring? How will the measurement result will be? Is it important in determining the acceptance of the process or product?

Three Activities of Measurement Planning

Objectives of the Organization

Identify issues of process, products business, system and employees

Select and define measures

Integrate with processes

Steps for identifying issues Classifying business goals or objectives Identifying critical processes Listing the objectives for each critical processes Listing potential problem areas associated with the processes

Selecting Measures 1. Product quality Internal failure cost External failure cost Materials rejected Vendor rating Cost per piece Product quality characteristics Percent on tome delivery Mean time between failures Mean time to repair

2. Process cycle time Set up time Total cycle time

3. Product delivery quality Wrong shipments Delayed delivery Product delivery with defects Products returned to supplier

4. Process cost Cost of work in progress Down time of machinery Material cost Percent reduction in floor space 5. Customer satisfaction Sales growth Profit growth CSI New customers Customer attritions 6. Employee satisfaction Employee productivity Employee absenteeism