What's The Value of Process Performance Indicators?
Process performance indicators (PPIs) are a subset of the more familiar metrics known as key performance indicators (KPIs). Today, we'll have a look at the most crucial of these, as well as explain how process mining and analytics can help.
PPI’s focus specifically on your business processes, as opposed to the overall functioning of your company.
Think of them as the operational-level metrics, whereas KPI’s are the broader, more strategic-level measurements.While PPIs can be as granular as necessary to monitor the processes in your organization, every business should really track these five general PPIs. Why? To help you stay on top of how your company is performing, of course.
Effectiveness is the relationship between the actual process results and the expected process results. While no one unifying equation by which this metric can be evaluated exists, there are certainly ways to obtain a measurement. Process effectiveness is a combination of three specific PPIs:
Time: How long does the process take?
Cost: How much money and people power is used to complete the process?
Quality: What is the percentage of non-conforming output to total output?
Process mining software like Perceptif should be your “weapon of choice” when trying to obtain these metrics as it can uncover all the necessary details. Once the results are in, you'd do best to compare them to the expected results of the process, usually calculated as part of a business process management (BPM) model. The ratio is then effectiveness of that process.
Efficiency is the relationship between the results achieved by a process and the resources consumed in that process.
In other words, how much material expense/input went into a given amount of output. It can usually be computed with a simple formula:
Value-added time/total lead time, where
value-added time is the time spent producing the product, while
total lead time is the total time from start to finish of the process, also known as “throughput time.” Throughput time takes into account time spent waiting on materials, machinery downtime, and other delays in production.
This metric is intended to give you a better idea of how much waste is involved in each production run, enabling you to dig deeper with process driven AI tools to find and reduce that waste.
Process compliance as process indicator focuses both on internal and external compliance.
Internally, you should monitor the percentage of non-conforming products being produced. By keeping an eye on this metric and the processes responsible, you can gain insights into possible causes for bad output and begin to improve this metric.
Externally, monitoring process compliance will assist in tracking your facilities' compliance with government regulations that affect your industry. With these PPIs in place, you can ensure your facility and the broader company are protected from fines or other censure due to falling out of compliance.
Process miningis one of the best ways to an up-to-date and complete picture of your processes, which also helps you trace compliance issues directly to the source. This includes the responsible team or station, as well as the preceding or following stages that may be affected by a potential breach.
The throughput time PPI represents the full amount of time it takes to run a given process: from when the process begins, through each step of the process, and finally to the finished product being ready for the customer.
For a production line, this will trace the journey from raw materials being pulled from the warehouse, along the production line, and all the way to the shipping department when the product is ready for the customer.
For a customer service process, this would look like the customer request being received, tracing through the ticketing process, from customer service to the technician or specialist who works on the ticket, through resolution and up to a satisfied customer.It's also one of the factors that go into measuring overall process effectiveness and efficiency.
Is the quality of your product high enough to meet the standards of your clients, while also meeting your internal QA and budgetary guidelines?Output quality is all about answering this question. But what does the calculation looks like?
In manufacturing, it's relatively easy to calculate as the ratio of non-conforming units to total units produced. In other industries it will look a bit different. In consulting, it might be the number of accepted proposals vs rejected ones. In the cloud services sector, it could go as the number of contracts that have to be modified and/or re-signed before work can commence, versus those that are accepted as is.
Even though your can choose to monitor many additional PPIs in your company, these five form the backbone of any complete process monitoring operation and are meant to be included in a full suite of KPIs. A process improvement project is one way to uncover which processes require a guiding hand and which are operating smoothly and at full capacity already. However you choose to proceed, know that monitoring your processes and tracking these five PPIs are key steps toward critical process improvements.
How Can Process Mining Lead To Process Improvements?
Your perceived workflow may not be the reality in your operational processes. That is the hard truth that costs your business. Perceptif is a process mining, analytic & automation solution software that connects and tracks process performance to unlock excellence.
Perceptif is a process mining, analytic & automation tool that connects and tracks process performance to unlock operational excellence.