3.2.2 Flashcards
What measures should be considered in contract specific Key performance Indicators (KPIs)?
Number of payments made within terms (common complaint among suppliers is late payment)
Timeliness of orders, e.g. number of urgent orders as a percentage of total orders
Accuracy and completeness of orders
According to Laura Tyson, what should useful KPIs do?
Be Important
Relate to a potential improvement or a potential problem
Fall within the authority or ability of the parties to influence the results. Monitoring KPIs simply involves looking at what they tell us about performance; to manage them you must act on those results
Explain KPI measurement
KPI measurement is about improvement. The measures must be about things which are important and relate to potential problems and improvements, and which can be influenced. The costs of capturing the information using a KPI must never outweigh the potential benefit from avoiding the problem or generating the improvement. Part of the purpose of having KPIs is to drive improvements in performance
Where can the data for KPIs be collected?
Cost data from financial systems
Delivery of goods and services evidenced through ordering and receipting records
Health and safety records required to be kept by law
Help desk and complaints departments will retain records
What are the key things to consider when collecting and storing KPI data?
The data must be easily accessible, accurate (capable of being trusted by both parties) and cost effective
What does converting a measure into a score involve?
An understanding of what ‘good’ means to the organization concerned
What is the meaning of the acronym SMART used when setting targets?
Specific, Measurable, Attainable/Achievable, Realistic/Relevant, Timely
What is a common method of converting KPI measures into performance scores?
The 0 to 4 scales i.e.
0= unacceptable
1= poor
2= meets the requirements
3= good/very good
4= excellent
What is a Service Level Agreement?
An agreement between the provider and the user of a service that details what performance and quality will be provided; this agreement is legally enforceable if it is referred to in a contract
A ‘service level agreement’ may also mean a non-contractual agreement, a schedule or section of a wider contract, the whole contract, or a side agreement.
List the Five steps to defining KPIs
Decide what matters: what are you going to measure?
How are you going to measure it?
Who is going to measure it?
How often or over what period will it be measured?
How does the measure convert into a score?
How do SLAs work?
The word Service is used in its widest sense
The recipient of the service may or may not be the purchaser (could be a third party)
The word quality is used in its widest sense
Standards
What is an Alternative Dispute Resolution (ADR)?
method of solving a problem by bringing in an impartial outsider but not using the court system
What are the core elements of an SLA?
Service definition
Quality definition
KPI details (what is measured, how it is measured, who measures it, how often it is measured, targets)
KPI management response
Operational performance
Operational performance management response
Constraints or mitigating
To ensure that the SLA is effective, it must
have the same force as any other part of the contract. It must be legally binding
What should the SLA clearly state if it is the only document setting out the requirements?
KPIs: how they are to be measured, who measures them and how often
How the measurements convert into scores
Any other service level standards, which may be of lesser importance than KPIs
Minimum acceptable standards or scores in each case
Range of scores both above and below the minimum acceptance
Any mitigating factors which might apply in the event of poor performance
Any period permitted in which to remedy a situation of poor performance
Remedies available to the injured party if the situation is not remedied
Process to be followed to access the remedies
How any inconsistencies or conflicts between the KPIs and any standards referred to are to be dealt with
