Process indicators are a subset of the more familiar metrics known as key performance indicators (KPIs). These indicators measure the performance of a company's processes, focusing specifically on them to help those responsible for them to move towards excellence, minimising errors, defects and inefficiencies.
While KPIs are the broader, strategic level measures, process indicators work at the operational level.
While Process indicators can be as granular as necessary to monitor processes within the organisation., there are some that could be applied universally to all businesses. Those who want to stay on top of their company's performance should track these indicators:
It shows the relationship between the actual outcomes of the process and the expected outcomes of the process. While there is no unifying equation by which this metric can be evaluated, there are certainly ways to obtain a measurement. It is obtained by combining three specific process indicators:
Once results are obtained, it is best to compare them with the expected results for the process, which are generally calculated as part of a Business Process Management (BPM) model. The relationship is then the effectiveness of that process.
Efficiency is the relationship between the results obtained from a process and the resources consumed in that process. In other words, it tells you how much material/input expenditure was allocated to a certain amount of production. Generally, it can be calculated with a simple formula:
Value added time / total delivery time
In this formula, value-added time is the time spent producing the product, while total lead time is the total time from the start to the end of the process, also known as «processing time». Production time takes into account time spent waiting for materials, machinery downtime, and other production delays. This metric offers a better idea of the amount of waste involved in each production cycle, allowing for the identification and reduction of that waste.
Process compliance as a process indicator focuses on both internal and external compliance. Internally, the percentage of non-conforming products produced must be monitored. By tracking this metric and the responsible processes, insights can be gained into the potential causes of incorrect results and improvements can be initiated. Externally, monitoring process compliance will help track the compliance of facilities and their suitability with applicable regulations. In this way, the company protects itself from fines or other censure due to non-compliance.
Represents the total amount of time required to execute a given process: from when it begins, through each step of the process, and finally until the finished product is ready for the customer. On a production line, this would involve tracking the journey from raw materials being taken from the warehouse, along the production line, and through to the shipping department when the product is ready for the customer. In a customer service process, This would look like the customer request being received, through to the technician or specialist working on the issue, to the resolution and ultimately resulting in a satisfied customer from all the work. It is also one of the factors involved in measuring the overall effectiveness and efficiency of the process.
It is the last of the key process indicators for any company. It allows you to find out if the quality of products or services is high enough to meet customer standards. and at the same time adhere to internal budgetary and quality control guidelines. In manufacturing, it is relatively easy to calculate as the ratio of non-conforming units to total units produced. In other industries it will look a little different. In consulting, it could be the number of proposals accepted versus those rejected. In the cloud services sector, it could depend on the number of contracts that need to be amended and/or re-signed before work can commence, compared to those that are accepted as is.
In any case, we know that what cannot be measured is difficult to control, and for that reason, it is advisable start working with process indicators. And if you want to have more aspects of your business under control, Sign up for flexible remuneration which, in addition to incorporating social benefits, allows you to resort to solutions that facilitate reclaim VAT on meals easily and without needing to keep receipts (this is the case of Ticket Restaurant).
