Why Project Managers Must be Prepared to Deal with Disruptions of All Kinds
Disruption is the Name of the Game We live in an age of disruption. Indeed, disruption is the norm rather than the exception and this means that firms, businesses, governments, and individuals have to be prepared to deal with disruptions of all kinds. Considering that project managers are tasked with executing specific projects in organizations […]
Role of a Project Lead in a Six Sigma Project
The Project lead is the second most important person in the entire Six Sigma project exercise. The Project lead reports to the Project Champion. The Project Lead is also selected by the Project Champion to execute a given Six Sigma project. The role and responsibility of a Six Sigma project lead have been listed below: […]
Contract Logistics Pricing Methods
Warehousing and Contract Logistics forms an important part of Supply Chain Networks. Contract Logistics projects are of two kinds. The first being a flow through the warehouse that can be a Finished Goods warehouse for the purpose of consolidation and merging or documentation purposes or in the case of supplier shipments, inventories being consolidated to […]
Business Process Management – Meaning and Important Concepts
The Wealth of Nations by Adam Smith is perhaps one of the most influential books on Economics in all history. However, not many people know that it is in this book that the idea of improving processes to increase productivity and therefore profit was born. Although Adam Smith called it “division of labor” and not […]
Contract Logistics – Key block in Supply Chain Management
Supply Chain Activities constitute multi-modal transportation, customs clearance, and warehousing activities in one or more locations in the entire network. Supply chain activities may be local referring to within the country or regional meaning within a continent or region and global which is essentially intercontinental. Global operations are the order of the day as businesses […]
A KPI is a great tool to measure and control the performance of any given process. In management jargon, there is a famous saying which says “That which cannot be measured cannot be managed”. The whole process of control, therefore relies on real time measurement and transfer of information from the site where the task is actually being performed to the control room i.e. the management.
Definition of KPI: The KPI can therefore be thought of as a measurement that tells that management the precise state of operations at any given point of time.
There are 4 components to any KPI.
It is important that these 4 parameters are carefully defined keeping in mind the operational and technical capabilities. Measuring the wrong KPI or measuring the right KPI in the wrong manner can cause more harm than good to the organization that is measuring it.
While a KPI is a measure of performance, the Service Level Agreement or SLA is the ideal state of those measurements. For instance our body temperature is a KPI for our health, while 98.3 degrees Fahrenheit is the SLA i.e. the ideal state of affairs.
Hence, if we were to control our health, we would create a mechanism in which our temperature is being automatically measured. When the KPI deviates from the desired SLA i.e. temperature deviates from 98.3 degrees Fahrenheit, it must send some sort of a message to the management that management interference is required.
The beauty of KPI’s and SLA’s is that it provides required solutions in required time. Hence management can take preventive action instead of having to cure the problems.
Algedonics: While BPM solutions have built in functionalities to report any and every deviation from the SLA, it would not be in the best interest of the management. It is impossible for any process to function at uniform speed, if it is being performed by humans. Even mechanised processes do not function at absolutely uniform speed. Some level of tolerance, therefore needs to be built in the control mechanism.
The KPI’s and SLA’s should therefore allow for +/- 10% changes. Anything which goes above this is serious enough to require management attention.
The 10% is a ballpark figure and may be different depending on the degree of automation and criticality of the process. But the idea is clear, some tolerance level needs to be built in this system or else the managements mailboxes will be flooded with deviation messages which do not even represent an operational problem.
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Continuous Improvement and Business Process Re-Engineering
February 12, 2025
