Explain External Performance Measurement

External performance measurement:

External performance measures are very necessary to monitor, understand, and maintain a focused customer perspective and to gain innovative insight from other industries.

Customer perception measurement

Regular measurement of customer’s perceptions is necessary to have a leading edge in logistical performance. Such measures can be obtained through surveys or by systematic order follow-up. Such survey asks questions regarding the firms and competitors performance, in general or for specific order. A typical survey incorporates the measurement of customer’s perception regarding availability of products/goods, performance cycle time, information availability regarding the product, solution to problems faced by the customer’s etc. the type of survey required may be developed by the company itself or by professional consultant in the field.

Reengineering

Reengineering implies changes of various types and depth to a system, from a slight renovation to a total overhaul. Business process reengineering (BPR) began as a private, sector technique to help organizations fundamentally rethink how they do their work in order to dramatically improve customer  service, cut operational costs, and become world-class competitors. A key stimulus for reengineering has been the continuing development and deployment of sophisticated information systems and networks

There are six standard steps, which are useful to guide a firm in its reengineering procedure,

Step 1: Target Identification.

This is the most important aspect of the overall reengineering procedure. It is very essential to identify which work or operation is required to be changed or improved. It is also important to identify the known range of potential improvement i.e. we should know and be aware of limitations or extent of scopes of improvements that can be made.

Step 2: Understand the work sequence

Understanding the work sequence which is being evaluated is the second step in the reengineering procedure. The traditional gay of doing this is to make a detailed flow chart or process map of the various steps that are required for performing a particular activity. However in reengineering process only those steps that are capable of potential improvement are studied and alternative suggested. In situations where the alternatives suggested require capital commitment like installing of new machinery the return on investment is also taken in account.

Step 3 and 4: The creative aspect.

A model of the activity which is being studied for improvement is created. This is done to identify best possible alternative design. Simultaneously the firm should also initiate steps to study and analyze external benchmarking in order to find out improved alternative approaches to the design. A final combination of the suggested alternative design of the activity would be a combination of both the internal as well as external perspectives.

Step 5: Evaluation the modifications to the activity

The fifth step involves evaluation the modifications to the activity which is being reviewed on the cost benefit basis. During the benchmarking exercise, various ideas would be generated. Care should be taken only to adopt those ideas, which are practical and meaningful. The focus of the evaluation should be on the accurate assessment of the expected benefits that will be accrued from the implementation of the modified activity.

Step 6: Implementation.

Depending upon the extent of the proposed change, it may become necessary for the firm to resort to suitable training for its employees. How effective will be the implementation will depend upon the risk involved in adopting and managing the proposed change in the activity.