Marketing/Sales and Customer Service

total sales/number of employees
average lead time in backlog
lead time performance
premium freight outbound/total freight outbound
performance to sales plan
accuracy of forecast assumptions
number of incorrect order entries
credit request processing time.

Delivery Performance

• timeliness and accuracy of supplier order placement and delivery
• accuracy of shop floor schedule to customer requirements
• ability to meet, but not exceed, MPS
• correct quality and quantity delivery to customer per customer requirements
• analysis of lost sales due to delivery deficiencies.

Information Services

• number of errors per line of code
• percentage of reports received on schedule
• number of rewrites
• number of test-case runs for successful completion.

Financial/Accounting

• amount of non-value-added activity (scrap, rework, excess queue and move time)
• total value of usable finished product produced per period per employee
• total cost and output value ratios
• time-based overhead usage
• performance to budget
• percentage of late payments
• time to respond to customer requests
• number of billing errors
• number of incorrect accounting entries
• number of payroll errors.

Whatever measures are used, one must remember that performance measurements in and of themselves do not add value. Attempts should be made to always focus measures on value-adding activities.

The most useful information derived from performance measure­ments is the trend of the results as opposed to the actual value of the measurement. We should be more concerned with relative performance over time than with absolute numbers. Small incremental improve­ments should be encouraged and celebrated as progress toward the goal. When dramatic changes do occur, these should also be acknowledged. It is often worthwhile to set targets that may at first seem completely unrealistic. But doing so forces us to view the process from a com­pletely fresh perspective, perhaps to find an entirely new way to ac­complish the objective.

To truly be beneficial, performance measures should be used for more than just keeping score. In addition to identifying opportunities and problems, and determining priorities and process improvement, they can be instrumental in changing or adjusting strategy, providing feedback to change behavior, and recognizing and rewarding accom­plishments.

SUMMARY

To thrive, or even simply survive, organizations must establish, re­view, and update comprehensive performance measurements. These measurements are the vehicle that drives a company to achievement of its operational goals. Due to the current trends in world-class organiza­tions to develop and sustain customer satisfaction as well as achieve ongoing improvement, measurements should be designed to drive the improvement process and achieve customer delight.
Often the difficulty is to select measures that satisfy the criteria of meaningfulness, acceptance, reliability, ease of reporting, and consis­tency. Performance measurements must fit an organization's individual needs, not that of a competitor or another facility. The measurements must be meaningful to the organization using them to achieve strategic objectives.
It is important to remember that performance measurement sys­tems must remain fluid and flexible, in order to change with the con­stantly changing needs of an organization. How a company measures itself can have significant impact on how well the company performs in the marketplace.
Once measurements are established, success can be measured by marking progress week to week. This progress, no matter how small, must be published internally, rewarded, and used to motivate everyone within the organization to strive for continuous improvement and achieve excellence.