Key Performance Indicators


	*Revolutive IT™*

Key Performance Indicators (KPI) and Quality

W hat You Can Measure You Can Manage.

A Key Performance Indicator is a measure of performance, there are many performance mesaures, there are only a few (fewer than 20) key performance indicators.

I n order to know "what am I doing?", many companies use functional measures, but to measure the performance of the chain, it is necessary to use complex control parameters to measure the efficiency and the effectiveness.

The Critical Success Factors are "the few area in which it is possible to obtain positive risults determines the success in the business, at the individual level but also of the entire enterprise and of the whole chain".

The intgrated control system must use Key Performance Indicators (KPI).
Thoose KPI must obviousely include performance indicators of the critical factors.
Basically, two approaches exist: - the first is uses the Balanced Scorecards approach that uses four dimensions, the financial dimension, the customers dimension, the internal perspective and the capacity to innovate - and the second the Hierarchical approach in which there are three dimensions. The first is the financial dimension, the second the economic dimensions and the third defines "physical" facts that lead the economic results of a company.
There are four value drivers that represent the products performances (external quality, delivery time, service, variety) and which determines the income of the company; nine cost drivers, three related to the efficiency (throughput time, internal quality, productivity) and six related to the flexibility (volume flexibility, mix flexibility, extension flexibility, product flexibility, production flexibility, operational flexibility).

Each indicator of level 3 can be disaggregated to find more specific measures, and arrive then at a fourth level of indicators. The first three levels are general and useful to represent any kind of company. The fourth level is domain-specific. The analysis can be supported by methodologies of Activity Based Costing and Activity Based Management that determine the best drivers to justify the way the company is going related to costs. For the income analysis, approaches which try to measure the impact of single competitive factors can be used.

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