Managing a company involves frequently monitoring metrics and results, doesn't it? More than that, it is essential for managers to constantly assess their processes to ensure they achieve strategic objectives.
The question is, no one can measure processes during their implementation; it requires the process to be running for some time to collect sufficient data to verify its effectiveness and determine improvement opportunities.
So, how can this evaluation be conducted, and how can the success of organizational processes be measured? In this article, we clarify what needs to be assessed and highlight effective indicators for this task. Check it out!
Outcome Variables vs. Process Execution Variables
After implementing a process, several questions may arise, such as:
- What variables can be used to measure the quality and quantity of process inputs?
- What execution variables can influence the final outcome?
- How can the impact of each variable be managed?
- Which outcome variables represent the productivity of the process?
- Which variables represent the quality of the achieved result?
To address these questions, let’s delve deeper into the types of variables being discussed:
Outcome Variables
The primary purpose of a process is to guide a team in performing specific activities to achieve a result. Without measuring the process, it’s impossible to know if the desired outcome is being reached.
Each company has its own way of measuring the final outcomes of its processes, as objectives vary depending on the case. These could include new customers, profits, or production units.
After measuring the outcome, it's important to determine information such as: the quantity produced, the quality of the delivery, and the time spent achieving it.
Process Execution Variables
Outcome variables are derived from the process's operation, and direct interference with them is not possible. To ensure the final outcome aligns with initial expectations—or to influence it—it is crucial to manage the elements that affect it.
This allows for predicting the outcome and analyzing how one or more execution variables can impact the outcome variables. This requires measuring and controlling all factors that could affect the final result.
Indicators to Measure Internal Processes
For an organization to improve its internal processes, it is essential to select effective indicators that will measure whether the processes are performing well or need adjustments. The choice of indicators depends on the goal, and some of them are:
Process Effectiveness
This measures the process’s performance in meeting specific customer requirements. Since a process must have a purpose that offers value to the customer, it is essential to clearly define who the customer is, what their problem is, and how the process uniquely solves it. Achieving this purpose makes the process effective.
Process Efficiency
This focuses on measuring the inputs and resources consumed by the process against predefined standards, allowing the company to verify its profitability. Measuring process efficiency includes evaluating characteristics like reliability and added value..
Less efficient companies operate at a competitive disadvantage, incurring higher costs and offering less reliable products or slower response times.
Supplier Effectiveness
This indicator assesses a supplier's performance based on the specified process requirements. It verifies whether the supplier meets the process’s needs. To avoid issues, the company must clearly specify which processes rely on its suppliers to meet its value propositions for customers.
Units in Process
This measures the number of input and output units within the process, representing the quantity of work-in-progress, from the supplier to the customer. This insight is valuable for understanding the supply and demand balance within the process.
Product Cost
This measures the total cost required to produce and deliver a result, including inputs, processing, and resourcescosts. The cost of goods sold encompasses the costs of inputs, process transformation, and support costs necessary to fulfill the process’s purpose.
It is essential for a process to generate a return on the capital invested, resulting in financial success for the company.
Resource Productivity
This measures the ratio between the results produced by the process and the resources consumed, including equipment, facilities, personnel, and IT.
Every asset acquired by a company is intended to generate profit. Thus, it is important to measure whether the resources consumed in executing the process are being used productively.
Process Cycle Time
This measures the time required from the input supply to the delivery of outputs. It involves evaluating the time from a supplier’s order request to the delivery of the finished product to the customer.
Process Alignment
This indicator measures the alignment between customer demand, process outputs, and supplier inputs. An aligned process can design its output based on input capabilities to meet customer demand within their desired timeframe.
So, based on these indicators, will it become easier to assess your process management? Share your thoughts with us in the comments section!
