First Edition Dated September, 2000 16
Managing Improvement Efforts
Business performance measures start from the top and are flowed down into
the supplier's organizations. At each level, the measures need to be
developed, monitored and managed. The supplier should concentrate on
measures of both effectiveness and efficiency (see Identifying and Defining
Performance Measures below).
A set of performance measures that capture customer satisfaction, the cost of
waste and defects, flow time and quality are essential to understanding and
managing the application and focus of the continuous improvement system.
An appropriate suite of performance measures will aid in managing the
continuous improvement efforts by:
• Prioritizing potentially profitable project areas
• Monitoring project results continuously
• Assessing effectiveness of the CI program
• Allocating resources
• Deciding when to stop efforts on a specific project
Analysis and review of these measures should spotlight areas of the
operation that are in need of improvement. It should also be possible to tie the
continuous improvement activity resulting from Section 4.1.3 and the rest of
Addendum 1 to improvement in the performance measures selected.
Management should set challenging goals and spur actions that accelerate
the desired performance.
Managing the Business
The performance measures should be chosen so management, the customer
and all involved personnel understand them. They should be used to manage
the business. Many measures chosen historically do not meet these criteria.
An appropriate collection of performance measures will help managers to:
• Allocate investment in physical capital
• Allocate resources for improvement in human capital
• Justify departmental expansion or contraction
• Understand customer desires
• Achieve customer satisfaction
Identifying and Defining Performance Measures
Measurement of improvement allows management to make better decisions,
identify areas needing improvement, allocate resources and control
