Management should establish measurements to track progress on CPIs.
The unit of measurement should fit the indicator being evaluated and should be understood by those who contribute to the improvement process for that indicaton.
For instance, the cost of quality CPI should be measured in dollars and compared to several key values, such as cost of sales or cost of manufacturing. Another example is on time performance. This CPI can be measured in several ways, which should all relate directly to customer requirements.
The unit of measurement should fit the indicator being evaluated and should be understood by those who contribute to the improvement process for that indicaton.
For instance, the cost of quality CPI should be measured in dollars and compared to several key values, such as cost of sales or cost of manufacturing. Another example is on time performance. This CPI can be measured in several ways, which should all relate directly to customer requirements.
For example, this CPI can track orders shipped to customer-required dates (external customer measure), or it could track design engineering input to manufacturing engineering (internal customer measure), or it could track quote turn around from your suppliers (a measure of your needs as a customer of your supplier).
CPIs when methods of continuous improvement are explored.
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