FICCI CE

Measures of business excellence

FICCI CE

Measures of business excellence

The organization must measure all the functions through

quantifiable measures of excellence. To facilitate this
assessment, sample measures of excellence for various
functions are given on the following slides.
FICCI CE

Measures of business excellence

The measures of business excellence can be broadly classified

into following two categories:-
A. Non financial measures
B. Financial measures
FICCI CE

A. Non financial measures

Non financial measures can be further classified into

three categories:
I. Employee related
II. Operations related
III. Customers related
FICCI CE

I. Employee related

• Employee satisfaction

• Awards presented

• Internal promotions

• Turnover

• Safety and health

• Suggestions received and implemented

FICCI CE

II. Operations related

Operations measures can be classified

as under:-

1. Marketing

2. Purchase

3. Manufacturing

4. Product Engineering

5. Quality Assurance

6. Product reliability

7. Accounting
FICCI Operations related CE

1. Marketing

Product Strategy
• Sales growth rate
• Market share
• Relative market share
• Breadth of product lines & market coverage
• Rate of successful new product introductions

Distribution strategy
• Distribution and sales force productivity
• Distribution cost per channel
• Customer service levels
FICCI Operations related CE

Marketing…contd

Price strategy
• Price sensitivity
• Pricing of marketing mix

Promotion and advertising strategy

• Brand acceptance
• Product segmentation
• Marketing intelligence - Ability to anticipate
customer needs and detect changes in the
marketing trends
FICCI Operations related CE

Marketing…contd

Others

• Accuracy of forecast assumptions.

• Number of incorrect order entries.
• Overstocked field supplies.
• Contract errors.
• Late deliveries.
• Customer complaints.
• Warranty cost as a percentage of
sales.
FICCI Operations related CE

2. Purchase

• Premium freight cost/ demurrage charges.

• Down - time because of parts shortages.
• Number of Off specification parts used to keep line
going.
• Cycle time from start of purchase request until items
in house.
• Excess inventory.
• Percentage of purchased material rejected on receipt.
FICCI Operations related CE

3. Manufacturing

• Yield per ton of raw materials.

• Percentage of parts scrapped.

• Percentage of parts reworked.

• Percentage of parts accepted on concession.

• Percentage of final product graded as seconds.

• Production per man / machine

• Percent of production capacity in use

• Average setup time

FICCI Operations related CE

4. Product engineering

• Number of engineering changes per document.

• Number of errors found during design review.
• Number of errors found in design evaluation test.
• Percentage of time over- run compared to planned
time for development.
• Percentage of cost over - run over estimated cost of
development.
• Number of tooling redesign after trial production.
FICCI Operations related CE

5. Quality Assurance

• Percentage of lots rejected due to errors.

• Percentage of products having defects detected by
customers.
• 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.
FICCI Operations related CE

6. Product reliability

• Mean time to failure

• Failure rate
• Probability of failure occurrence during given time
interval
• Probability of failure non-occurrence during given
time interval
• Mean life time
• Mean time to first generate overhaul
• Mean time to repair
FICCI Operations related CE

7. Accounting

• Percentage of late payments.

• Time to respond to customer request for

information.

• Billing errors.

• Incorrect accounting entries.

• Payroll errors.

• Errors in cost estimates.

FICCI CE

III. Customer related

• Market share
• New markets identified
• Overall customer satisfaction
• Customer complaints
• Customer retention
• R&D expenditure as a percentage of sales
• New products and services introduced
FICCI CE

B. Financial measures

The normal business pressures in today’s world tend to cause more time to be
spent on financial measures than any other element of business. We need to be
sure that the strong signals sent by this attention in no way underestimates the
importance of the non financial measures as discussed in the previous slides to
improve the overall business performance.
FICCI CE

B. Financial measures

• Cost of quality as a percentage of sales

• Profit before interest and financial charges

• Profit before and after tax

• Growth in profits over last year

• Return on assets

• Return on capital employed

• Return on sales