CIMA E1 Syllabus E1. Operations management - CSF / KPI - Notes ^{21 / 21}

are performance requirements which are fundamental to an organisation's success

It is what the customer really values in the products, it is what the company must excel in - if it wants to beat the competition.

(for example innovation in a consumer electronics company) and can usually be identified from an organisation's mission statement, objectives and strategy.

Key Performance Indicators (KPIs)

are measurements of achievement of the chosen critical success factors. Key performance indicators should be:

1. specific

2. measurable 

   (i.e. be capable of having a measure placed upon it, for example, number of customer complaints rather than the 'level of customer satisfaction')

3. relevant

   in that they measure achievement of a critical success factor.

Examples of KPI's for operations include:

• Time taken to deliver a customer order

• Percentage defect rate

• Percentage wastage rate

• Transport costs

• Asset utilisation rate

Benchmarking

Benchmarking can be described as:

Comparison of a service, practice or process against one or more similar activities

There are 3 types of benchmarking:

• Internal benchmarking

• Competitive benchmarking

• Inter-industry benchmarking