16 Process Metrics To Track
Updated August 21, 2023
Process metrics give data trackers both quantitative and qualitative ways to evaluate an operation. Measuring these statistics can help you assess and improve operational performance across an entire company. Determining which metrics best fit your processes can give you the right data to make informed decisions.
In this article, we discuss what process metrics are, explain why they're important and list 16 examples of ones you can track in your own company.
What are process metrics?
Process metrics are measurements used to track the performance of a business process. They are like key performance indicators (KPIs) in that they measure how a task performs and if it's meeting the defined goals. Process metrics provide relevant and accessible information about process quality for managers and supervisors to study. They typically run in a cycle, where you measure the current process metrics performance, make improvements to your cycle and then measure it again to check for changes. This cycle can repeat infinitely if necessary.
Process metrics can be useful in a variety of business sectors, such as human resources, manufacturing, information technology, finance and other disciplines. They're often represented as ratios or percentages that show the progress of the metric as a part of a whole. There are three major categories of process metrics, which include:
Static process metrics: Relate to the properties of a defined process
Dynamic process metrics: Relate to the performance of a process
Process evolution metrics: Relate to making changes within a process over time
What is a business process?
A business process is a strictly defined, repeatable unit of work that fulfills a business need. Essentially, a business process could be any function a company needs to meet the expectations of its staff, stakeholders or customers. These can include tasks completed by humans or machines. Some examples of business processes may be mass or batch production and continuous improvement.
Why are process metrics important?
Process metrics provide valuable information at each stage of a business process. They can help you make more accurate decisions about innovation. They can also increase your production speeds and help measure your company's excellence standards. Regularly tracking process metrics may help your company be more transparent by publishing factual, quantitative results about your production.
16 types of process metrics
Learn about 16 different types of process metrics you can track for your company:
Efficiency is the ratio of an input to an output. More simply, it's how quickly you can get something done with accuracy or the best way to make something with the least amount of resources. Measuring efficiency can tell you how much waste exists in your production cycle. You can calculate this metric using the formula:
Efficiency = Production time / Total process time
For example, if you're trying to figure out the efficiency of your cupcake-baking process, you could look at the time it takes to make the cupcakes in relation to the entire length of the process, from buying materials to delivering the product.
Productivity measures how much of a process you can complete within a time period, in hours. It's typically represented in a ratio showing how much you've produced and the resources used to do it. Productivity is useful for making comparisons between two employees, techniques or processes.
For example, if one bricklayer can assemble three retaining walls in an hour, his ratio may be 3:1. Another bricklayer may assemble one retaining wall in an hour, making her ratio 1:1. In comparison, the first bricklayer is more productive because he can create more products in less time.
3. Cycle time
Cycle time is the amount of time it takes to complete the entire length of a process from beginning to end. Depending on the process, you could measure the cycle time in hours, days or even years. For example, the cycle time of producing and delivering a unit of sweaters may include subprocesses of buying and receiving raw materials, creation and shipment. All these smaller processes factor into the length of the cycle time.
4. Turnaround time
The turnaround time measures how long it takes to fill a customer's request from placement to delivery. You often measure turnaround time from the customer's perspective rather than the producer's. It can span over multiple business processes, similar to cycle time.
For example, a customer ordering a book from an online bookstore may receive an email that the turnaround time on their order is five days. That means, from the time they hit the submit button on their order, it's expected to take five days to find their product, fill the order, ship it and have it delivered.
5. Takt time
Takt time is the measurement of the amount of time it takes to finish producing one unit before making the next. For example, a candy company may say the takt time on their chocolate bars is 15 seconds. That means they're able to start production on a new batch every 15 seconds.
Throughput, also known as the rate of production, is the output in a given time. Unlike productivity, throughput doesn't focus on the quantity of what you produce but rather on how fast you can produce it. The formula for this metric is:
Throughput = Number of units produced / Production time per unit
For example, a stationery company may want to determine the throughput of their greeting card production. If they produce 400 units of cards in 200 hours, then their throughput would be two units of cards per hour.
7. Error rate
Error rate, also known as failure rate or defect rate, measures the number of errors made throughout an entire production cycle. This figure, typically written as a percentage, shows the number of units or products that failed your quality control test. To calculate the error rate, use the formula:
Error rate = Total units produced / Total number of errors
For example, if a silverware manufacturing company wanted to learn how many packages were missing a utensil, they could calculate the error rate. If they made 500 units of silverware and 25 of them were missing a spoon, then the error rate would be 5%.
Effectiveness measures the comparison between your expected results for a process and your actual results. Often, you're looking for your effectiveness rate to be 100%, meaning your actual results met your expectations. Time, cost and quality are all factors of effectiveness.
Cost-effectiveness is a specific measure of effectiveness that tracks how much it costs to achieve a benefit. Cost-effectiveness can measure monetary factors, such as cost per unit or cost per service. It can also measure non-financial factors like health outcomes.
Capacity measures the maximum number of items or units you can produce in a given time period. Unlike productivity and throughput, this metric shows the best output you could achieve if all factors worked perfectly.
11. Quality rate
The quality rate measures the opposite of the error rate and tells you how many units or products you've produced that meet your quality standards. The formula for quality rate is:
Quality rate = (Total number of quality units / Total number of units produced) x 100
For example, if a soap company was producing bottles of liquid handwash and wanted to see the percentage of units that met their standards, they may find that they produced 750 units of handwash, and 698 of them were quality. That would be a quality rate of 93%.
Profitability measures the relationship between how much money you make in sales and how much of that is more than what you spent on production costs. To find this metric, use the formula:
Profit = Total sales - Total expenses
For example, if a cell phone company made $100,000 in sales in the last quarter and spent $25,000 to produce all the batches of products in that time frame, their profit would be $75,000.
The competitiveness metric shows your relationship with the other companies in your market. You can often measure this through market share, which tells how much control a specific entity has over a market. To calculate market share, use the formula:
Market share = (Total sales revenue of the company / Total sales revenue of the entire market) x 100
For example, if a day planner company makes $160,000 per year and the total sales revenue for their entire industry is $1,250,000, then that company has about a 13% market share of the industry.
Value measures what a customer thinks a product is worth compared to the asking price. Any product can have a good or bad value depending on factors such as location, necessity and competition. For example, a one-bedroom apartment in a small suburb for $3,000 per month may be a poor value, but that same apartment at that price point in a large metro area may be a good value.
15. Return on investment (ROI)
The ROI measures the relationship between a company's profit and the number of investments gained. This metric can tell you if you're making enough money to justify what you're spending on a particular campaign or process. To calculate ROI, use the formula:
ROI = [(Total sales - Total investment) / Total investment] x 100
For example, if a record player company received $100,000 in investments for its latest venture and sold $400,000 worth of profit in the last quarter, then its ROI would be 300%.
The timeliness metric measures if you're able to complete the process within a pre-defined time frame. For example, if you promise a supplier you'll deliver a shipment in three weeks, you'll use timeliness to determine how productive and efficient your process must be to meet that deadline.
Tips for setting process metrics
Use these tips to help set your process metrics:
Understand the purpose
Determine what you're trying to accomplish by measuring your processes. One way to do this is to use a diagram to gather information and visually display the different segments of the entire flow. Try using a SIPOC diagram, which stands for suppliers, inputs, process, outputs and customers. This type of map defines all those elements and shows how they interact with one another.
To get the most out of your processes, train your employees to understand the process metrics, how to perform them and how to track them. This can ensure that you're getting the best numbers possible for each metric through consistency and content knowledge.
Use a process metrics software program
Many software programs allow you to track your process metrics in one location. With databases and system integration, you can choose, update and measure all your processes and progress over time. Research different programs to see what type of services they offer to see which is right for you.
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