MT400 Unit 5 Process Performance Indicator Set Example

Measured as the Homeowner Lives It: An MT400 Unit 5 Performance Indicator Set for Contract to Cash

[Student Name]

Purdue University Global

MT400: Business Process Management

Unit 5 Performance Indicator Set

[Instructor Name]

[Date]

The company, baselines and targets are composite; the sources cited are real.

What Homeowners Value

The set begins with the receiver's outcome, not with whatever data already exists. A sample of 120 post-install comments at Loess Hills Window Company shows homeowners value three things: an install date they can rely on, set soon after signing; one visit that leaves the job complete; and a final bill that is settled promptly without reminders. Each indicator answers one of these values, and a column in the table shows which.

The Six Indicators

Contract to installed measures the median number of calendar days from the signature date on the contract to the date on the signed completion slip, for all jobs completed in the month, with the 90th percentile reported beside it. The baseline is a median of 58 days with the 90th percentile at 104; the targets are 40 and 70. It answers the value of a soon and firm install date. The clock starts at signature, not at deposit, because the homeowner's wait starts when they sign.

Installed right on the first visit measures the share of jobs completed in one visit with no return trip within 30 days, from the scheduling system. The baseline is 78 percent; the target is 90.

Remake rate measures the share of ordered units remade because of a measurement, ordering or installation error, from purchasing's remake log. The baseline is 6.8 percent; the target is 3.5.

Installed to paid measures the median days from the completion slip to the cleared final payment, from the payment record. The baseline is 11 days; the target is 3. It answers the value of a clean close.

Status calls per job measures inbound calls asking where an order stands, divided by jobs in progress, from the phone system's call codes. The baseline is 1.9 per job; the target is 0.5. Each such call is a sign that the homeowner did not know what was happening.

Post-install rating measures the average score on the one-question survey sent the day after installation, on a five-point scale. The baseline is 4.1; the target is 4.5.

Leading and Lagging

Remake rate is filed as a leading signal and the rating as a lagging one. A remake is known weeks before the homeowner rates the job, because the remake order is placed as soon as the wrong unit arrives. Watching remakes therefore warns of first-visit trouble well before any homeowner scores it. Kaplan and Norton (1992) argued that a useful measurement system pairs outcome measures with the drivers that predict them, and this pairing does that at the scale of one process.

A measure that two analysts would compute differently is an argument waiting to happen, not a measure.

Balancing Measures

Every indicator invites a shortcut, so two balancing measures watch the likeliest ones. Crew overtime per install watches whether contract to installed is being shortened by working crews longer days rather than by removing waiting. Order-line corrections after release watches whether orders are being released faster by skipping verification, which would show up as more remakes later. Kerr (1975) showed how reward systems end up paying for the opposite of what managers want, and the balancing measures exist to catch that drift early.

Indicators Retired

Four departmental counts will no longer be reported. Measures completed per technician per day is retired because it rewards rushing measurements, the main source of remakes. Orders entered per day is retired because it ignores how long orders waited before entry. Crew utilization is retired as a headline figure because it rewards holding installs until a full day's route is booked, which lengthens the homeowner's wait. Invoices issued per week is retired because it says nothing about how long completed jobs waited to be invoiced. Parmenter (2015) recommends keeping the number of headline indicators small, and retiring counts that conflict with the process measures keeps the set focused.

How the Set Was Tested

Before adoption, two analysts computed all six indicators independently from the same quarter's records. They matched on four. They differed on contract to installed, because one counted from the deposit date and the other from the signature date, and on installed right on the first visit, because one counted a service call for an unrelated issue as a return visit. Both definitions were tightened: the clock starts at the contract's signature date, and only return visits that complete the original scope count against first-visit success. A second independent computation then matched on all six.

What the Baselines Show Together

Read together, the baselines describe one problem from several angles. A 58-day median install, 1.9 status calls per job and a 4.1 rating are what homeowners experience when orders wait between departments; a 6.8 percent remake rate and 78 percent first-visit success are what happens when information is lost at those same handoffs. The targets assume the redesign in Unit 7 will remove most of the internal waiting.

Review and Accountability

The six indicators are reviewed monthly by the process owner named in the Unit 9 charter, and each is assigned an accountable role for its data. Targets are reviewed after twelve months.

References

Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard: Measures that drive performance. Harvard Business Review, 70(1), 71-79.

Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management Journal, 18(4), 769-783. https://doi.org/10.2307/255378

Parmenter, D. (2015). Key performance indicators: Developing, implementing, and using winning KPIs (3rd ed.). Wiley.