សាកលវិទ្យាល័យ ប ល

៊ែ ធី អន្តរជាតិ
BELTEI INTERNATIONAL UNIVERSITY
គុណភាព ប្រសិទ្ធភាព ឧត្តមភាព សីលធម៍ គុណធម៌ , Quality Efficiency Excellence Morality Virtue

FACULTY OF EDUCATION, ARTS AND HUMANITIES

LECTURER’S NAME: PANG MENGEANG

TEAMWORKS: SREN Sophea, SOS Sakreilah, OU Sreypich,
LY Hong, OEURN Chansocheata

YEAR: 3, SEMESTER 1
ACADEMIC YEAR: 2022-2023
 Contents
PART lll .................................................................................................................................... 3
TOOLS AND TECHNIQUES................................................................................................ 3
CHAPTER 7: PERFORMANCE MEASURES ............................................................... 3
CHAPTER OBJECTIVE ................................................................................................................. 3
Introduction ................................................................................................................................. 4
I. Basic Concepts .................................................................................................................... 4
II. Strategy ............................................................................................................................... 5
III. Performance Measure Presentation ............................................................................... 6
IV. Cost of Quality ................................................................................................................. 6
V. Improvement action and strategy ...................................................................................... 8
VI. Limitation of Quality Cost ................................................................................................ 8
VII. Malcolm Bridge National Award ...................................................................................... 8
VIII. Rajiv Gandhi National Quality Award .............................................................................. 9
IX. Ramkrishna Bajaj National Quality Award ..................................................................... 10
X. Deming Prize ..................................................................................................................... 11
XI. CII-EXIM Bank Award ..................................................................................................... 12
XII. Balanced Score Card ...................................................................................................... 12
Summary .................................................................................................................................... 13
 PART lll
TOOLS AND TECHNIQUES
CHAPTER 7: PERFORMANCE MEASURES

CHAPTER OBJECTIVE
 Learning how to manage by facts
 Understanding the basic concepts of performance measurement
 Establishing strategic measures system
 Learning basic techniques for performance presentation
 Brief overview of the estimation and representation in quality costs
 Overview of quality cost programs and their implementation
 Detailing of Malcolm Baldrige National Quality Award
 Introduction
The sixth and final concept of Total Quality Measurement (TOM) is performance
measures. One of the Malcolm Baldrige National Quality Award core values is managing by fact
rather than, by get feeling. Managing an organization without performance measures is like a
captain of a ship navigating without instrumentation. The ship would most likely end up traveling
in circles; as would an organization. Measure plays a vital part in the success or failure of an
organization.

I. Basic Concepts
Objectives
Performance measures are used to achieve one or more of the following seven objectives:
1. Establish baseline measures and reveal trends.
2. Determine which processes need to be improved.
3. Indicate process gains and losses.
4. 4 Compare goals with actual performance.
5. Provide information for individual and team evaluation.
6. Provide information to make informed decisions.
7. Determine the overall performance of the organization.
Typical Measurements
What should be measured is frequently asked by managers and teams. The information below
suggests some items that can be measured.
 Human Resources: Lost time due to accidents, absenteeism, turnover, employee
satisfaction index, number of suggestions for improvement, number of suggestions
implemented, number of training hours per employee, training cost per employee,
number of active teams, number of grievances.
 Customers: Number of complaints, number of on-time deliveries, warranty data such as
parts replacement, customer satisfaction index, time to resolve complaints, telephone data
such as response time, mean time to repair, dealer satisfaction, report cards, call-drop
rates:
 Production: Inventory turns, SPC charts, amount of scrap/rework, nonconformities per
million units, software efforts per 1000 lines of code, percent of flights that arrive on
time, process yield, machine downtime, actual performance to goal, number of products
returned, cost per unit.
 Research and Development: New product time to market, design change orders, R & D
spending to sales, average time to process proposal, recall data, cost estimating errors.
 Marketing/Sales: Sales expense to revenue, order accuracy, introduction cost to
development cost, new product sales to tort sales, new customers, gained or lost accounts,
sales income to number of salespeople, number of successful calls per week.
  Administration: Revenue per employee, expense to revenue, cost of poor quality, percent
of payroll distributed on time, number of days accounts receivable past due, number of
accounts payable past due, office equipment up-time.
A good metric compares the measurement of interest to the total possible outcomes, such
as rework hours to total hours.
II. Strategy
The quality council has the overall responsibility for the performance measures. It ensures
that all the measures are integrated into a total system of measures. To develop the system, the
quality council will obtain appropriate information from all of the stake-holders. They will utilize
the core values, goals, mission, and vision statements (see Chapter 2) as well as the objectives
and criteria given above. With this information, the strategic measurement system is created An
example of a system that emphasizes percent improvement might contain the functions and
metrics as given below:
Quality
Percent reduction in cost of poor quality
Percent reduction in nonconformities
•Percent of certified suppliers
Percent reduction in supplier base
Percent reduction in corrective action cycle time
Percent of calls dropped
On-time arrival percent
Cost
Percent increase in inventory turnover
Percent reduction in data transactions
Percent increase in materials shipped direct to work-in-process by the supplier
Percent increase in output dollars per employee
Percent reduction in floor space utilization
Flexibility
Percent reduction in evcle time
Percent reduction in setup time
Percent reduction in lot/batch size
Percent increase in number of jobs mastered per employee
Percent increase in common materials used per product
Reliability
Percent of processes capable of C, = 2.0
Percent reduction in down time
Percent reduction in warranty costs
Percent reduction in design changes
Percent increase in on-time delivery
Innovation
Percent reduction in new product introduction time
Percent increase in new product sales revenue as a percent of total sales revenue
Percent increase in new patents granted
Customer perception as a leader in innovation
Percent of management time spent on or leading innovation

The above metrices are tracked monthly to show trends, identify problem areas, and
allocate resource.
Once the strategic measurement system is developed, the functional areas can develop their
systems by involving their departments and work groups. The first step is to determine which
processes or Sub-processes are critical to providing input for the strategic system. Next, the
critical metric(s) are determined using the information given above under Basic Concepts. This
activity is followed by assigning responsibility for the collection, analysis, and dissemination of
the data. The last step is the development of improvement procedures.
Each month the quality council should meet to monitor current activities and plan future
ones to assist them, a report package is prepared consisting of (1) performance measures; (2)
narrative reports on competition, opportunities, and pertinent events; and (3) system audits.
III. Performance Measure Presentation
There are six basic techniques for presenting performance measures. The simplest and
most common is the time series graph. Time as measured by days, weeks, months, and so
forth. A second form of presentation is the control chart. A control chart for percent
nonconforming.
A third presentation technique is the capability index, which is the ratio of the tolerance to the
capability. Another way of measuring quality is Taguchi’s loss function. This technique combines
target, cost, and specifications in to one measurement. The fifth method of presenting
performance measures is the cost of poor quality. And the last method includes the performance
measurement based on the criteria of national and international quality awards such as Malcolm
Baldrige National Quality Award (US). Another approach adopted by organization’s financial
performance in “balance” with the other business aspects.
IV. Cost of Quality
“Cost of quality” is and approach to measure and track financial impact of various quality
actives. Until 1950s, the concept did not explicitly extend to the quality functions and the
activities related to inspection, testing and audits were merely categorized as “overheads”. In the
1050s, Dr. Amand Feigenbaum suggested to consider reporting systems focusing on quality costs.
 What is the Need of Evaluation?
Quality problems, when manifested on monetary scale, have better appeal. Cost of quality
is a result of many specific segments, each one linked with a specific (or linked) root cause.
 Categories of Quality Cost
Internal failure costs
These are costs which are associated with the defects or non-conforming situations that are
found prior to shipment of the product customer. These costs can be reduced to zero if no
defect existed prior to shipment.
Examples of internal failure costs are:
 Rework, fixing of bugs detected in internal testing of software
 Premium freight due to late delivery
 Internal scrap
 Engineering and drawing changes of correct errors
 Energy cost for remelting of rejected castings
External failure costs
Often the defects are found only after the product reaches the dealer or customer. Such costs
are included in the external failure costs.
 Complaints: Complaints from customer are analyzed, resolved and communication is
sent to customers.
 Warranty claims: Recall of vehicles for defects, cost involved in repairs or replacement
of product during warranty period.
 Retrofit and recall costs: sit is often required to modify or update the incorporate new
design changes in order to overcome design deficiencies.
 Liabilities and penalties: Insurance claims and contractual obligatory claims are
included in such types of costs.
 Allowances and customer goodwill: The cost of concessions offered to the customer due
to substandard product poor quality or cost incurred because the customer is not
completely satisfied with the quality.
Appraisal Costs
Cost of maintaining the inspection and test equipment is a part of appraisal cost.
Example include:
 Design reviews
 Software testing
 Set-up inspection
 Performance testing by customer
 Receiving inspection of purchased parts
Prevention costs
These are the costs of all such activities undertaken to prevent defects in design, development
 Examples of prevention costs include:
 Staff Quality Planning
 Design and process FMEA
 Process capability study for process qualification
 Designed experiment for optimum settings of the product

 Relating Quality Cost to Business Measures

 As a percentage of sales: Most of the financial reports extensively use total sales or
business value as a key performance index.
 As compared to profit: In the initial studies of quality cost, it comes as a surprise that
quality costs are even higher than the company profit.
 As related to production: Quality cost per unit of production cost is also a commonly
used index.
 As related to unit of productions: Quality cost per unit, unit such as a and engine, one
meter of cloth.
Analysis
Analysis of how quality costs are distributed amongst various categories indicates focus areas.
Most common tools are trend and Pareto analysis. Trend analysis over a long time period helps
in monitoring the progress of improvement actions.
V. Improvement action and strategy
Cost of quality is a powerful management tool for the purpose of focusing attention on
quality management. The basic of action plan is that failures have a root causes are
preventable. Once the management is convinced about the focus on reducing the cost of
quality, the next question is What action must be done to reduce the cost of quality?

VI. Limitation of Quality Cost

Quality cost analysis is useful for setting priority for upper management but usually does
not suggest specific action. It provides a broad direction but requires further detailed analysis of
data such as item wise analysis of rejections, warranty, customer complains etc…
VII. Malcolm Bridge National Award
The Malcolm bridge national award (MBNQA)is annually awarded to US organization for
performance excellence. It was created by the public law 100-107, 1987. The Nist (National
Institute of Standard and Technology) an agency 0f the US department of Commerce, manage
this program. The award promotes awareness of the requirement for performance excellence and
competitiveness improvement sharing information on performance strategies.
VIII. Rajiv Gandhi National Quality Award
What is Rajiv Gandhi National Quality Award?
Rajiv Gandhi National Quality Award
(RGNQA) was instituted by the Bureau of Indian
Standards in1991, with a view to encourage Indian
manufacturing and service organizations to strive
for excellence and giving special recognition to
those who are considered to be the leaders of
quality movement in India. This award is intended
to generate interest and involvement of Indian
Industry in quality programs, drive the products
and services to higher levels of quality and equip
industry to meet the challenges, of the domestic
and international markets.
The award has been christened after India's late
Prime Minister Rajiv Gandhi, recognizing the new
thrust the had given to the quality movement in
India, which would enable India to march into 21st
century with pride.
RGNQA helps Indian Industry to improve quality by:
 Encouraging Indian industry to make significant improvements in the quality for
maximizing consumer satisfaction and successfully facing competition in the global
market.
 Recognizing the achievements of those organizations which have improved the quality of
their products and services and thereby, set an example for others
 Establishing guidelines and criteria that can be used by the industry in evaluating their own
quality improvement efforts
 Providing specific guidance to other organizations that wish to learn how to achieve
excellence in quality by making available detailed information on the Quality
Management Approach adopted by the award winning organizations to change their
culture and achieve eminence.
The award has been designed in line with similar awards like Malcolm Baldrige National Quality
Award in the U.S., Deming Prize in Japan and European Quality Award.
IX. Ramkrishna Bajaj National Quality Award
Ramkrishna Bajaj National Quality Award is the Indian equivalent of the MBNQA. It
was introduced in 1996 and was name after Ramkrishna Bajaj. His motto was
“Trust in Quality and Business Ethics”. This award has been founded based on the
11 interrelated core values ad 14 business philosophies of Deming Prizes, which is
an award for Japanese companies that have made significant advances in
quality improvement. Many of these philosophies relate to psychology and
understanding of human behavior. Thus it is the involvement of people that
creates a solid building block for business excellence. The evaluation is done
on following criteria with the total score of 1000

 Leadership (120)
 Strategic Planning (85)
 Customer focus (85)
 Measurement, analysis and
knowledge management (90)
 Workforce focus (85)
 Process measurement (85)
\
 Results (450)
 X. Deming Prize
The Deming Prize is one of the highest awards in TQM and it is presented to the organization
that has implemented TQM suitable for its management philosophy, scope/ type/ scale of
business and management environment. There is no limit to the number of potential
recipients of this prize each year. It was established in 1951 in commemoration of Dr Deming's
great contribution to Japan's proliferation of statistical process control post World War II.
Assessment of the applicants is on the basis of criteria: customer oriented business objectives
and business strategies, implementation of TQM to achieve these objectives, and
measurement/ achievements after implementation.
The Deming Prize for an individual or group is given to those who have made outstanding
contribution to the study of TQM, statistical methods used for TQM and/or dissemination of
TQM.
The Deming Prize for any organization is given to those that have achieved distinctive
performance the improvement Deming Grand through Prize is application given to operations
of TQM business in a designated unit of year.an organization that has achieve a distinctive
performance improvement through application of quality control and management pursuit of
TQM in the given year. Three years after a company achieves the Deming Prize, it can apply for
this award.

There are more than 150 organizations

who have won this award. During the
period2000-2017, The prizes were won
as follow:

 India (27)
 Thailand (14)
 Japan (20)
 China (2)
 USA (4)
 Singapore (1)
 Taiwan (1)
XI. CII-EXIM Bank Award
CII-EXIM Bank Award for Business Excellence, instituted jointly by the Confederation of
Indian Industry and Export Import Bank of India in the year 1994, is the most prestigious
Award in India for Excellence that an Indian company can aspire for. The Award is based on a
comprehensive model focusing on the Organization’s performance and transformation under
seven different criteria, which are further divided into twenty-five parts. It is not given for
specific products or services. To be an Award winner, a company must demonstrate excellence
in results with respect to its various stakeholders (customers, employees, society and share-
holders) through excellence in processes and people. The Award was established to promote the
awareness of Excellence as an increasingly important element in competitiveness. Not only
does it recognize excellent businesses, but also increases the understanding of the elements
critical for Excellence.

XII. Balanced Score Card

A new approach to strategic management was developed early 1990s by Robert Kaplan and
David Norton.
Characteristics of the Balanced Scorecard Model (BSC) Information is collected and analyzed
from four aspects of a business:
 Learning and growth are analyzed through the investigation of training and knowledge
resources. This first leg handles how well information is captured and how effectively
employees use that information to convert it to a competitive advantage within the
industry.
 Business processes are evaluated by investigating how well products are manufactured
Operational management is analyzed to track any gaps, delays, bottlenecks, shortages, or
waste.
  Customer perspectives are collected to gauge customer satisfaction with the quality,
price, and availability of products or services. Customers provide feedback about their
satisfaction with current products.
 Financial data, such as sales, expenditures, and income are used to understand financial
performance. These financial metrics may include dollar amounts, financial ratios, budget
variances, or income targets.
These four legs encompass the vision and strategy of an organization and require active
management to analyze the data collected.

Summary
In order to achieve growth and progress, an organization must establish performance
measures for itself. Management should track the performance and take corrective steps to steer
the organization to its stated goals and objectives.
The measures should include all those aspects that it considers critical for business. such as
human resource, customers and stakeholders, production, R&D efforts, suppliers,
marketing/sales, administration, etc. Performance measures or metrics should be aligned with
organization's core and business values and policies. Management should track the metrics on
regular basis in order to identify problems and allocate resources. Several tools and techniques
are available for the presentation of the measures. An organization should establish methods to
assess and control cost of poor quality. High cost of quality is an indication of management
effectiveness. Quality cost programs should address all perceived, hidden and buried costs in all
the functional areas.
The Malcolm Baldrige National Quality Award (MBNQA) is an annual award to recognize
organizations from U.S. in the eld of performance excellence. The award criteria support a
systems approach in maintaining organization-wide goal alignment and goal-based diagnosis.
The system for scoring is based on three evaluation dimensions, namely, (1) approach, (2)
deployment and (3) results. Several other national awards like Deming Award and Rajiv Gandhi
National Quality Award also adopt similar approaches in evaluation of organizational
excellence.