Generally in an organization, operational excellence is being measured in terms of productivity, quality, delivery, environment, engagement and cost. These are the general parameters based on which operation excellence is being measured. And each parameter is having some expectation. For example, productivity a productivity is one of the measure of operational excellence. Similarly 10 system quality either on product or service is one of the measure of operational excellence flexible flexibility and speed that is a measure of delivery in operational excellence, similarly, safer or place a level of engagement and best in class cost. This is a way only operation excellence is being measured.
And each parameter comes with some set of key performance indicators. For example, in productivity generally high productivity is a measure of operational excellence, but under a productivity. We are measuring some of the key performance indicators like for example, average man hours per unit efficiency, parts per man per day. These are some of the KPIs. We are measuring under productivity. If it increase, we can say that operational excellence is good or it is better or It is best.
Similarly, quality also there are some KPIs are being measured. Like for example, rejection BPM rework percentage defects per part like that. Similarly on delivery there are some KPIs are being measured like late term reduction on time delivery sure do actualization percentage in return. Similarly under environment near miss accidents gyro accident was lost due to accident. These are some of the key performance indicators is being measured under safer openness. Similarly, on engagement like engagement score case on per employee number of cfps absenteeism rate, our attrition rate These are some of them KPIs or key performance indicators are being measured under engagement.
And last one is cost like manufacturing costs, raw material cost percentage over sales, overhead cost, profit percentage, inventory costs and so on. The idea is operational excellence is being measured under broad categories pq CDM, like productivity, quality, delivery, environment, engagement and costs. And each parameter there are some subset of key performance indicators are being measured through this only it is being measured. Most of the organizations are measuring the operational excellence with this parameter only. But it comes with some advantages or solar some drawbacks. If you look at these measures These measures are individual area focused or it is isolated performance metrics.
For example, we say efficiency increase efficiency we can say that we are improving the productivity by which we are improving the operation excellent parameter. It looks fine, but we don't know. But they increase the efficiency we deliver the right product or not, we don't know. Similarly, rejection percentage with the reduced rejection we can say that quality is improved by which we can say operation excellence is in a good or better best direction. But through this measure, we are not sure whether as it is fully coalesced a procedure is fully monitor or not. Whether it's a delivery or not, we are not sure so the problem is These measures are individual centric, or they're focused on a particular area or a particular objective, they are not interlinked with that we cannot able to see in a holistic manner whether it is linked with the business profitability or not.
Those are some of the drawbacks associated with this individual matrix. They're only the part of UI comes in picture. So, next session, we are going to see, the data is about the way how it is being measured, how it is linked with the productivity all those things we are going to discuss. So in the next lecture, we'll discuss what are the typical mindset or behavior we're displaying in this kind of measurement. How the relevance of hooey comes into picture