A measurement system can be defined as a series of actions to measure, evaluate, adjust and regulate the activities of a company. It could be said that the objective of measuring systems is to provide the company with a right to achieve it and meet the set goals. All measurement system must meet the following objectives;
- Communicating the strategy
- Communicate goals
- Identify problems and opportunities
- Diagnose problems
- Understanding processes
- Define responsibilities
- Improve control of the company
- Identify initiatives and actions needed
- Measuring behaviors
- Facilitate delegation in people
- Integrating compensation with performance
The measurement system is to communicate, understand, guide and make the implementation of strategies, actions and results of the company. To control the management, you must define a system that is your own business. To do this you must to answer the following questions;
What are you going to control?
Define the topic you want to be driving under strategic control, for example, monthly billing, number of inventories of raw materials, number of items sold, variable costs, etc.Each objective should have an associated indicator to assess.
Define the indicator that will give you the information.Consider the data you need and how to obtain such data.An indicator is always a formula, that is, two or more data or multiply dividing.
Define the frequency of measurement i.e. how often to control.This period can be daily, weekly, monthly or yearly and will depend on the item you are measuring.For example, billing could be monitored weekly and inventories once a month.
Who controls it?
Assign responsibility for obtaining the data to a person who should make sure to have all the information and that this is true.May be your accountant, an assistant or yourself.
What is the goal or expected value?
Define expected values for each indicator, so that you know when there is good news or bad news.
What will you do with the results?
This is the most important part of the process that you define who will take the necessary actions, so that the goals defined in the indicators are met.All measurements make sense because they help you make well-founded decisions.
Do you need to make records?
Definitely yes. Having written the indicators reminds us all that we work in a company and what is the goal to which we must reach. To record what happens in time gives us information that will help us make better decisions for the future. To start a system management control, consider some practical recommendations;
- Define few indicators, take some time to learn the system well, and then you can start adding more indicators.
- For each topic or area of measurement e.g. sales, inventory, production, etc. define an indicator that is ‘integral’ i.e. that the measure will deliver global information area you want to monitor.
- Make sure you have accurate and timely information.
- If you are missing data, start by creating the necessary records.
A good management system, including measurement and control, must be oriented to the future, considering the significant dimensions of an activity with multiple objectives. Note that better control and monitoring of management is not always economically desirable.