Organizations sometimes struggle with setting up, maintaining and getting value from process metrics.ISO 9001 does require that:
"The organization shall:
- Determine criteria and methods needed to ensure that both the control and operation of these processes are effective
- Monitor, measure where applicable, and analyze these processes and
- Implement actions necessary to achieve planned results and continual improvement of these processes and Clause 8.2.3
"The organization shall apply suitable methods for monitoring and, where applicable, measurement of the quality management system processes. These methods shall demonstrate the ability of these processes to achieve planned results. "Organizations in some cases set-up process metrics to meet these requirements but do not get any value from the metrics.
Some start by finding out what data is collected from the process and then constructing a metric using whatever data is available. And others start by finding out what other organizations are monitoring for their processes and then constructing similar metrics.
There is a better way.Consider a different approach. An organization's processes are intended to produce an output in order to satisfy an internal or customer need. So a starting point is to describe the expected outcome or results that the process is expected to provide. This must be done in the context of the business development objectives. If we have an objective to drive the business in a certain direction, then the process objectives and process metrics should support that overall objective. We should then construct the process metrics based on the desired output from the process and the direction of the development of the business.
Let's look at a couple of examples of this approach.
Contract Review – Quoting Process
Suppose one of our strategic business objectives is to increase non-automotive business from 10% of our business to 30% of our business with margins of at least 30%. The expected outcome of this process is then quotes accepted (i.e. converted to POs by the customer) with margins above 30% that help increase the non-automotive business volume.
Then we could start collecting quote data including industrial sector of the quote; margin projected in the quote calculations; actual margins on first few orders and the business volume generated by the quote. This data would then allow us to track metrics such as:
- % non-automotive quotes with margins above 30%;
- % non-automotive business volume from this month's quotes
New Product Development Process
Suppose one of our strategic business objectives is to increase sales of new products (new products being those designed within the last 2 years) to 20% of our annual sales volume with margins of 30%. This requires our Product Development Process to develop new products that actually sell in the marketplace. We can then collect sales data that includes when product was designed; margin quoted; and margin on 1st production run and customer ppms on 1st production runs. This data could be used to track metrics such as:
- % sales of new product
- % sales of new product with margins of 30%
- Customer ppms on new product
New Product Launch Process
Suppose one of our strategic business objectives is to increase sales of new products (new products being those designed within the last 2 years) to 20% of our annual sales volume with margins of 30%. This requires our New Product Launch Process to launch new products into manufacturing without customer or manufacturing problems. We could collect data on nonconforming product for 1st and 2nd production runs of product and customer complaints associated with 1st and 2nd production runs. This data could be used to track metrics such as:
- Internal ppms for 1st and 2nd production runs
- Customer ppms for 1st and 2nd production runs not product design related
In summary it is important to develop your metrics so that they directly relate to the output of the process that is important to you and your customers, and which will help achieve the overall business objectives.