Process Quality Indicators focus on assessing a task’s status and progress in comparison with established objectives. According to the BPM CBOK, PPIs are vital for measuring results in your business and identifying improvement opportunities.
Do you know the best indicators to monitor for your business? Find out the answers to these questions and more below.
What is a process quality indicator (PQI)?
Process quality indicators, also known as Key Performance Indicators (KPIs), are tools that help managers evaluate the quality of processes or the performance of tasks.
Companies can also use strategic indicators to measure upper management objectives and encourage continuous improvement. These indicators can help a company better understand which processes deliver value to their customers.
Types of indicators used for generic processes quality indicators
Below are the most common types of process indicators that companies can use.
1. Productivity Indicator
Many companies find it important to measure productivity. The formula is:
This indicator allows you to evaluate the use of resources as well as the quality of the operations performed on a daily basis.
This indicator can be used to measure the number of support requests made per employee and per month. One employee may answer 200 calls per month while another might only answer 250.
2. Efficiency Indicator
This indicator assesses the use of resources. The goal is to produce as much as possible with the fewest resources.
The efficiency indicator measures wastes, losses, working hours on a particular project, and more.
3. Efficacy indicator
The efficacy indicators, although similar in name to the previous indicator, measures whether processes are working appropriately.
Examples of this include the durability of a product, the percentage of customer complaints, and its performance.
4. Effectiveness indicator
The effectiveness indicator is a combination of efficiency and efficacy that measures whether a business employs the appropriate processes for each situation.
Client support is a good example of an area that can be measured for effectiveness and efficiency.
Efficiency and effectiveness are the keys to achieving effective results.
5. Quality Indicator
The formula to calculate a quality indicator can be found here:
It is important to determine the percentage of production that meets quality standards.
As an example, a mask factory produces 200,000 masks a month but only 180,000 of them are up to the standards for their intended use. The quality percentage is therefore 90%.
6. Capacity indicator
This measures the amount of product a company is able to produce over a certain period.
A farm, for example, can produce 200 liters of milk per day.
7. Profitability indicator
This analysis compares profit on production to total revenue. This shows whether your business is profitable or not.
Profitability can be measured by a retailer who sold $50,000 worth of products and earned $20,000 profit, resulting in a 40% return.
8. Returns indicator
The return indicators are slightly different. These indicators measure the sum of all investments and profits. They are calculated by dividing profits over a period of time by the initial investment.
This indicator is very important because will tell you whether the strategy that your company uses is appropriate and if you should continue on the same path.
Let’s say that $1 million was invested into a software firm, and the company made $300,000. In this case, the return is 30%.
9. Value indicator
The value indicator also measures the image that customers perceive of your brand. Improving the production chain will increase the value of products.
It is important to map all processes in order to identify those that can be optimized or eliminated.