Unit 8: Quality Metrics and KPIs
Expert-defined terms from the Professional Certificate in Performance Management in Quality Control course at London School of Business and Administration. Free to read, free to share, paired with a globally recognised certification pathway.
Balanced Scorecard (BSC) #
A performance management tool that translates an organization's mission and strategy into a comprehensive set of performance measures across four perspectives: financial, customer, internal processes, and learning and growth.
Key Performance Indicator (KPI) #
A measurable value that demonstrates how effectively an organization is achieving key business objectives. KPIs are used to evaluate the success of an organization or of a particular activity in which it engages.
Quality Metric #
A metric used to measure the quality of a product, service, or process. Quality metrics are often used in quality control to ensure that products and services meet the required standards.
Balanced Scorecard Perspectives #
The four perspectives of the Balanced Scorecard are:
1. Financial Perspective #
Measures that focus on financial performance, such as profitability, return on investment, and shareholder value.
2. Customer Perspective #
Measures that focus on customer satisfaction, such as customer loyalty, customer retention, and customer satisfaction scores.
3. Internal Process Perspective #
Measures that focus on the efficiency and effectiveness of internal processes, such as cycle time, defect rates, and process capability.
4. Learning and Growth Perspective #
Measures that focus on the organization's ability to learn and adapt, such as employee satisfaction, employee retention, and the number of new products or services developed.
SMART Criteria #
A framework for setting goals and objectives that are Specific, Measurable, Achievable, Relevant, and Time-bound. SMART criteria help ensure that goals and objectives are clear, actionable, and aligned with the organization's overall strategy.
Leading Indicator #
A metric that predicts future performance. Leading indicators are proactive measures that can help an organization anticipate and prevent problems before they occur.
Lagging Indicator #
A metric that measures past performance. Lagging indicators are reactive measures that can help an organization understand the causes of past performance and identify areas for improvement.
Process Capability #
A measure of a process's ability to produce output within specified limits. Process capability is often measured using statistical process control (SPC) techniques.
Defect Rate #
A measure of the number of defects in a product or service. Defect rates can be used to evaluate the effectiveness of quality control processes and identify areas for improvement.
Cycle Time #
The time it takes to complete a process or task. Cycle time can be used to measure the efficiency of a process and identify opportunities for improvement.
Return on Investment (ROI) #
A measure of the financial return on an investment. ROI is calculated by dividing the net profit from an investment by the cost of the investment.
Customer Loyalty #
The degree to which customers are loyal to a brand or product. Customer loyalty can be measured using metrics such as repeat purchase rates, customer lifetime value, and net promoter scores.
Employee Satisfaction #
The degree to which employees are satisfied with their jobs and the organization. Employee satisfaction can be measured using surveys and other feedback mechanisms.
Employee Retention #
The degree to which employees stay with the organization over time. Employee retention can be measured using metrics such as turnover rates and length of service.
New Product Development #
The process of creating and bringing new products or services to market. New product development can be measured using metrics such as time to market, development costs, and market share.
Statistical Process Control (SPC) #
A method of quality control that uses statistical methods to monitor and control a process. SPC techniques can help organizations identify and correct problems before they result in defects.
Six Sigma #
A method of quality control that aims to reduce defects to 3.4 defects per million opportunities. Six Sigma uses a structured approach to problem-solving and statistical analysis to improve processes and reduce variability.
Total Quality Management (TQM) #
An approach to quality control that involves all employees in the organization in the pursuit of continuous improvement. TQM emphasizes customer satisfaction, process improvement, and data-driven decision-making.
Value Stream Mapping #
A technique used to visualize the flow of materials and information through a process. Value stream mapping can help organizations identify opportunities for improvement and eliminate waste.
Root Cause Analysis #
A problem-solving technique used to identify the underlying causes of a problem. Root cause analysis involves gathering data, identifying patterns, and developing solutions to address the root cause of the problem.
Continuous Improvement #
A philosophy of always striving to improve processes, products, and services. Continuous improvement involves using data and feedback to identify opportunities for improvement and implementing changes to achieve those improvements.
Pareto Chart #
A graphical tool used to prioritize problems or issues based on their frequency or impact. Pareto charts are based on the Pareto Principle, which states that 80% of the problems are caused by 20% of the causes.
Control Chart #
A graphical tool used to monitor a process over time and detect trends or patterns. Control charts are used in statistical process control to identify when a process is out of control and requires adjustment.
Histogram #
A graphical tool used to display the distribution of data. Histograms can help organizations identify patterns and trends in their data and identify opportunities for improvement.
Scatter Diagram #
A graphical tool used to analyze the relationship between two variables. Scatter diagrams can help organizations identify correlations and causations between variables and develop solutions to problems.
Failure Modes and Effects Analysis (FMEA) #
A technique used to identify potential failures in a system or process and assess their impact. FMEA involves identifying potential failure modes, analyzing their effects, and developing mitigation strategies.
Capability Maturity Model Integration (CMMI) #
A framework used to evaluate the maturity of an organization's software development or acquisition processes. CMMI provides a structured approach to process improvement and helps organizations achieve higher levels of maturity.
ISO 9001 #
A standard for quality management systems developed by the International Organization for Standardization (ISO). ISO 9001 provides a framework for organizations to ensure that their products and services meet customer requirements and are consistent in quality.
ISO 14001 #
A standard for environmental management systems developed by the International Organization for Standardization (ISO). ISO 14001 provides a framework for organizations to manage their environmental impacts and continually improve their environmental performance.
Lean #
A philosophy of process improvement that aims to eliminate waste and maximize value for customers. Lean techniques include value stream mapping, continuous flow, and pull systems.
Agile #
A philosophy of software development that emphasizes flexibility and collaboration. Agile techniques include iterative development, continuous integration, and test-driven development.
Kaizen #
A Japanese term meaning "continuous improvement." Kaizen involves making small, incremental improvements to processes and systems over time.
5S #
A methodology for organizing and standardizing workspaces to improve efficiency and reduce waste. The 5S's are: Sort, Straighten, Shine, Standardize, and Sustain.
Single Minute Exchange of Dies (SMED) #
A technique for reducing the time it takes to change over a production process. SMED involves analyzing the current changeover process, identifying waste, and developing solutions to reduce changeover time.
Total Productive Maintenance (TPM) #
A methodology for maximizing the productivity and efficiency of production equipment. TPM involves proactive maintenance, continuous improvement, and employee involvement.
Just #
In-Time (JIT) Production: A technique for producing goods and services in response to customer demand. JIT involves minimizing inventory levels and producing goods and services only when they are needed.
Theory of Constraints (TOC) #
A methodology for identifying and managing the constraints in a production system. TOC involves identifying the bottleneck in the system, managing it effectively, and continuously improving the system to increase throughput.
Supply Chain Management (SCM) #
The coordination and management of activities involved in the production and delivery of a product or service, from raw