What are Metrics ?
Metrics are numbers that tell you important information about a process under question. They tell you accurate measurements about how the process is functioning and provide base for you to suggest improvements. It is said that only when one can express their understanding in terms of numbers is the understanding satisfactory and meaningful.
Usually measuring results with one metric is not a good enough strategy. A combination of metrics is used to measure the effectiveness of the process.
Types of Metrics
Operational: Operational metrics are the ones that are represented by performance on the shop floor or service levels in case of service industry. Common example of these metrics include turnaround time, production time, number of defects etc. These metrics measure the performance of the people in operations function and can help identify where the discrepancy has its roots, if a discrepancy has risen.
Financial: Financial metrics judge the ability of an organization to convert operational performance into financial goals. Such metrics include profitability ratios, sales figure comparisons so on and so forth.
In the end it is only an understanding of both types of metrics and what they suggest can meaningful decisions be made about the process is question. Here are some important functions that metrics fulfil in an organization.
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