This document discusses various performance measures that can be used as part of a total quality management (TQM) system. It describes measuring performance to check if objectives are being achieved and lists common objectives such as achieving business goals and improving customer satisfaction. Examples of measures discussed include production, customer satisfaction, purchasing processes, and resource development. Graphical techniques and the balanced scorecard approach are also summarized as methods for measuring performance.

1. Performance measures

2. Performance Measure:
One of the important measures of TQM is to measure for
success. Performance measurement is done to check
whether an organization is achieving its objectives or not.
The objectives of an organization are manifold as follow.
• Achieving business objectives
• Improving response to customer need
• Reduction of quality cost
• Improving competitive position
• Making more and more profits

3. Why do we need to measure
our performance?

5. What performance should we
measure?

7. Examples of measures:
Production Customer
operations Satisfaction
Purchasing Resource
development
process

8. How do we measure our
performance?

9. 1- Graphical Techniques

11. Examples:
Time series graph:
9.0
8.0
8.0
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6.0
6.0
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5.0
5.0
4.2 4.1
4.0 3.4
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ce e d e ga %
0.0
1 2 3 4 5 6 7 8 9 10
Days
f

12. Sales and earnings of a company from year 1985 to 1990
1- During the years 1986 through 1988, what were the average earnings per year?
(A) 6 million (B) 7.5 million (C) 9 million (D) 10 million (E) 27 million
2- During which two-year period did the company’s earnings increase the greatest?
(A) 85–87 (B) 86–87 (C) 86–88 (D) 87–89 (E) 88–90
3- In which year did sales increase by the greatest percentage over the previous year?
(A) 86 (B) 87 (C) 88 (D) 89 (E) 90

13. 2. Malcolm Baldrige National Quality Awards:
The Malcolm Baldrige National Quality Award (MBNQA) is an annual award
to recognize U.S organizations for performance excellence. It was created
by public law in 1987. this award promotes complete understanding of the
requirements for performance excellence & competitiveness improvement.
There are five categories
• Manufacturing
• Service Key characteristics of the criteria
• Education
• Healthcare *Customer satisfaction
• Small business
*Human resource performance
*Productivity
*Market share, new development

14. 3- Cost of Quality:
Cost of quality is the sum of costs incurred by an organization
in preventing poor quality. There are essentially three types of
quality costs:
• Preventive costs Failure cost
• Appraisal costs
• Failure costs Appraisal Preventive
cost cost

Internal failure cost

External failure cost

15. 4- Balanced Scorecard
The Balanced Scorecard is a management tool that
provides stakeholders with a comprehensive measure of
how the organization is progressing towards the
achievement of its strategic goals.
Focuses on four major perspectives:
• Financial perspective
• Customer perspective
• Business process perspective
• Learning & growth perspective

16. • Financial perspective - includes measures such as
operating income, return on capital employed, and
economic value added.
• Customer perspective - includes measures such as
customer satisfaction, customer retention, and market
share in target segments.
• Business process perspective - includes measures
such as cost, throughput, and quality. These are for
business processes such as procurement, production,
and order fulfillment.
• Learning & growth perspective - includes measures
such as employee satisfaction, employee retention,
skill sets.

17. Objectives, Measures, Targets, and Initiatives
Each perspective of the Balanced Scorecard includes
objectives, measures of those objectives, target values of
those measures, and initiatives, defined as follows:
• Objectives - major objectives to be achieved, for example,
profitable growth.
• Measures - the observable parameters that will be used to measure
progress toward reaching the objective. For example, the objective
of profitable growth might be measured by growth in net margin.
• Targets - the specific target values for the measures, for example,
+2% growth in net margin.
• Initiatives - action programs to be initiated in order to meet the
objective.

18. Balanced scorecard template
Balanced
Objectives Measures Targets Initiatives
Scorecard
Finance
Customer
Process
Learning &
Growth
Balanced scorecard template from the US department of Commerce