About This Chapter
KPIs in Operations - Chapter Summary
In this chapter, your company's supervisors will study important key performance indicators (KPIs) that are involved in business operations. These bite-sized lessons offer clear definitions and explanations of a variety of performance management concepts, including:
- Capacity utilization rates
- Project schedules
- Cost variance
- Earned value management
- Order fulfillment and delivery
- Product quality
The chapter also includes short quizzes to help supervisors see how well they understand these types of operational KPIs. You can have your supervisors complete the chapter on their own time, and you can also share the material during a corporate training session.
How It Helps
- Builds awareness: Supervisors will develop a deeper awareness of metrics that are used to measure different operational processes.
- Explains measurement processes: The chapter shows supervisors how to properly measure a variety of operational rates, cycle times and values.
- Improves operations: Supervisors who complete the chapter can apply their performance measurement skills to better manage bottlenecks, project schedules, costs, order fulfillments, etc.
By the end of the chapter, supervisors should be able to:
- Explain why competitive advantage is important in strategic marketing
- Discuss the process of benchmarking
- Identify common metrics that are used to measure operational performance
- Measure capacity utilization rates (CUR), order fulfillment cycle times (OFCT) and delivery in full/on-time rates (DIFOT)
- Update project schedules and deal with changes
- Analyze cost variances
- Define earn value management
- Assess the dimensions of product quality in operations and supply chains
- Identify/manage bottlenecks in business processes
1. Competitive Advantage: The Importance of Strategic Marketing
Companies have many options when it comes to gaining market share and increasing profits. Learn about strategic marketing and the tools companies use to their advantage.
2. What is Benchmarking? - Definition, Types, Process & Examples
Companies use benchmarking as a way to compare key metrics to other businesses in the industry. This allows companies to see how well they are performing and identify ways they can become more competitive in the industry. In this lesson, we will look at the different types of benchmarking, the stages of benchmarking, and a real world example.
3. Common Operational Performance Metrics
This lesson reviews common operational metrics. Measures of production, service measures, and customer satisfaction are examined, showing how they can be used to improve a company's performance.
4. Capacity Utilization Rate (CUR): Definition & Measurement
In this lesson, we'll go over the concept of capacity utilization rate. You'll learn what this is, what it tells us, what factors can influence it, and how you can calculate it for yourself.
5. Updating the Project Schedule & Dealing with Change
All projects encounter change, but how you handle that change can determine whether your project succeeds or fails. Read this lesson to learn how to manage change successfully.
6. Cost Variance: Definition, Formula & Analysis
Every business should be reviewing any differences between planned and actual costs. Those differences are called cost variances. This lesson will show you how to determine the source of different types of variances.
7. Earned Value Management: Definition, Formula & Examples
Earned value management is a systematic process used by project managers to determine project performance and forecast project completion schedules and budgets. This lesson demonstrates how to use the essential components of EVM to successfully manage a project.
8. Order Fulfillment Cycle Time (OFCT): Definition & Measurement
Nobody likes to wait, but did you know some businesses actually track wait time? It's a metric known as Order Fulfillment Cycle Time. In this lesson, you'll learn more about this supply chain measurement.
9. Delivery In Full, On-Time (DIFOT) Rate: Definition & Measurement
Are you delivering in full and on time? There's one way to be sure, and that's with the DIFOT rate. In this lesson, you'll learn more about the DIFOT rate and how it measures supply chain efficiency.
10. Product Quality in Operations & Supply Chains: Definition & Dimensions
How do you determine the quality of a product or service? In this lesson, we will discuss the various definitions and dimensions of quality and why quality is important to operations and supply chains.
11. Practical Application: Product Quality Checklist
Product quality is a key driver in customer purchases. As such, it's important for companies to regularly think about the quality of the products they make. This practical application gives you a way to evaluate the quality of products.
12. Identifying & Managing Business Process Bottlenecks
This lesson reviews how to manage a bottleneck, which limits output to the point that it hinders productivity and profitability. We evaluate methods to identify and manage bottlenecks, including balancing overproduction and increasing process capacity.
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