Posted in Operations and Supply Chain Terms, Total Reads: 330
Definition: Operational Performance Measurements
Operational Performance Measurements are the key metrics which are used to measure the operational performance of a company. Different companies have different metrics to measure their own performance but few of the metrics are common across the entire business environment. Few of these metrics include:
Keeping in mind the above few mentioned points and points specific to the industry to which the company belongs, a company generally evaluates itself and is evaluated by other agencies in terms of operational performance. Generally keeping a high index or score on all the above mentioned points indicate that the company’s operational performance is good. These metrics which cumulatively determine the operational performance of the company are very useful and important as these help the company to identify the particular area in which the company is lacking and it tries improving on these aspects. A company with a high operational performance is seen in good light by all, customer, employees and investors so all companies are continuously trying to improve this.
For example: A company wants to measure it’s performance, it’s weightage for customer satisfaction index is 20%, employee satisfaction index is 10%, revenue generation is 30%, Productivity is 10% and Gross Profit is 30%. The scores for each of these parameters are given on a scale of 1 to 10. The company scores 7,8,6,7 and 7 for each aspect in the order mentioned above. So, the total score for operational performance of the company becomes 6.8 on a scale of 1 to 10 and the calculation for that is: ((7*0.2) + (8*0.1) + (6*0.3) + (7*0.1) + (7*0.3)).