How Do You Measure Process Improvement
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Measuring process improvement is more difficult than just measuring efficiency or productivity, because it requires looking at both the internal and external processes of an organization.
Efficiency measures how well everything in an organization functions for a given amount of time and resources. For example, calculating average cost per item produced gives us a measure of efficiency. Calculating total revenue divided by total costs is another way to look at this indicator.
If you only focus on these two numbers alone, you will not get a true picture of whether or not your company is performing optimally. The two indicators above only consider what happens within the organization, whereas one should also be thinking about how well the organization is functioning overall and with other organizations in its area of responsibility.
Another important element of efficiency is effectiveness. Does the organization produce the right products using effective methods? If yes, then they are effectively producing things.
However, if no, there may be changes needed inside the organization that could improve quality. Or, the organization may need to find new ways to do something, which would increase efficiency.
Effectiveness and efficiency can sometimes work against each other. A business that is doing extremely well may have too much influence and control over their environment, which can prevent them from trying new approaches or even changing things that are working now.
External effects like this are called “internal barriers” to change.
A process improvement initiative can be quite the undertaking, which is why there are so many different ways to measure its success. While some may focus on costs or savings, more qualitative measures look into how well the organization functions overall and if it feels like an improved version of itself.
The first thing that must be accounted for when measuring process improvements is what people use the current process for. If everyone has always done things one way, then changing the process would not make much sense. By understanding the function of the current process, you can determine whether introducing change is needed.
Once this has been determined, the next step is determining what changes should be made. Just because something worked before does not mean it is the best option for every situation, even if it was popular. It will also depend on the resources available to implement the new process.
Finally, these processes need to be implemented properly and monitored effectively. There could be unexpected setbacks due to insufficient preparation, or someone may try to do too much in a short amount of time.