QAD Philosophy

Our Vision—The Effective Enterprise

At QAD, we have a vision to assist every manufacturing company to perform at their best, and to become an ‘Effective Enterprise’. We define an Effective Enterprise as one where every business process is working at peak efficiency and perfectly aligned to the company’s strategic goals. The pursuit of this vision drives the products that we develop, and the approach we take when we engage with our customers.

The business processes and measures that companies strive to achieve in pursuit of the Effective Enterprise differ among companies. For any company to become an Effective Enterprise, it is important that they can define the best practices for their business processes, and measure the efficiency of each business process. To assist in this, QAD has developed solutions, services and metrics that encompass best practices, deliver clear measurement, and can be deployed, simply.

QAD Enterprise Applications, our enterprise resource planning suite, has been developed around best practices in business processes. The deployment methodology of QAD—and our partner ecosystem—has been designed to simplify implementation of our solutions and to measure the efficiency of the new processes. QAD’s customer engagement approach ensures that we continuously engage to help you become an Effective Enterprise.

Key Performance Indicators

Companies typically have a well-defined set of strategic goals that they strive to achieve. The successful achievement of these goals relies on the effective performance of many processes within their business. Both the complexity and interdependence of these business processes makes it challenging to know precisely where opportunities for improvement may exist, unless you are measuring the process effectively. Hence, to improve business processes, it is critical that you define the correct metrics.

To assist customers in measuring the efficiency of their business processes, QAD has developed a suite of performance indicators, which we call: "QAD Effective Enterprise Key Performance Indicators (KPIs)". QAD Effective Enterprise KPIs focuses on the main areas of performance that manufacturers need to measure to ensure their businesses are working at peak efficiency. There are many different models used to define KPIs within a business (e.g. Dupont Model, Balanced Scorecard, etc.), all of which are valid ways of measuring different process elements. With QAD Effective Enterprise KPIs, QAD provides a single suite of indicators, which may leverage elements from many existing metrics you currently measure.

QAD Effective Enterprise KPIs consists of 10 high-level KPIs. Each high-level KPI is a summarized composite measure from comprehensive sets of underlying metrics, or secondary metrics. Lower-level business processes and practices affect each of these secondary metrics.

For each of the underlying business processes, QAD has defined best practices that support them. We have mapped these best practices to the QAD functionality that supports them within QAD Enterprise Applications.

Delivery In-Full On-Time

Description

Delivery In-Full On-Time (DlFOT) is a measurement of the number of order lines that are delivered in the quantity ordered by the customer and in the time committed to the customer. This metric gives a good composite indicator of your inventory management, demand planning and fulfillment processes. The definition of “in-full” and “on-time” varies depending on different definitions or service levels agreed upon with a customer. In-full may vary based on whether it means “by order”, “by line”, or “by unit”. On-time may vary based on whether it has allowance for delivery-early and delivery-late (e.g. allow up to one day early, one day late, etc.).

Common Metrics (Top 4)

1. % Delivery Performance in Full by Order/Line
2. Forecast Accuracy
3. Delivery Schedule
4. Inventory Accuracy

More Delivery In-Full On-Time common metrics.

Best Practice (Top 6)

1. S&OP - Planning & Scheduling
2. Warehouse Efficiency & Cycle Counting
3. Electronic Supply Chain Collaboration
4. Manufacturing Execution
5. Bar Coding & RFID
6. Automatic Trade Documentation & Compliance

More Delivery In-Full On-Time best practices.

Supplier Performance

Description

Supplier Performance is an indicator that evaluates performance of suppliers, usually against a set of metrics that cover areas such as: the relative cost of products, quality of products against agreed specifications, engineering, and purchasing, based on an agreed set of measurements to drive continuous improvement in value and operations.

Common Metrics (Top 4)

1. Delivery Schedule Adherence
2. Cost of Poor Quality
3. Ratio of Price Paid to Price Quoted
4. Purchase Price Variance (Standard Costing)

More Supplier Performance common metrics.

Best Practice (Top 5)

1. Improve Planning
2. Manage Supply Chain
3. Collaborative Messaging
4. Manage Quality
5. Manage Pricing, Discounts and Rebates

More Supplier Performance best practices.

Manufacturing Efficiency

Description

Manufacturing Efficiency is a measurement (usually expressed as a percentage) of the actual output to the standard output expected. Efficiency measures how well something is performing relative to existing standards. In contrast, productivity measures output relative to a specific input (e.g., tons/labor hour).

Common Metrics (Top 4)

1. Throughput Ratio
2. Capacity Utilization
3. Scrap & Yield Ratio
4. Warranty and Return Costs

More Manufacturing Efficiency common metrics.

Best Practice (Top 5)

1. Actual Units vs. Planned Units
2. Forecasting
3. Kanban & Lean Principles
4. Preventive Maintenance
5. Improve Quality

More Manufacturing Efficiency best practices.

Manufacturing Schedule

Description

Manufacturing Schedule is a measure of the accuracy of a manufacturing schedule against requirements (i.e., how well you are scheduling to build the right thing at the right time in the right quantity).

Common Metrics (Top 4)

1. Schedule Agility
2. Schedule Achievement
3. Component Availability
4. Manufacturing Cost Variance

More Manufacturing Schedule common metrics.

Best Practice (Top 6) 

1. Manage Supply Chain
2. Manage Outsourced Manufacturing
3. Inventory Visibility
4. Operational Metrics
5. Improved Planning and Scheduling
6. Effective Communication with Supply Chain

More Manufacturing Schedule best practices.

Information Technology (IT) Effectiveness

Description

Information Technology (IT) Effectiveness is defined as a combination of two key attributes: efficiency of IT operations (Operational Efficiency) and the competitive advantage the business gains through IT-enabled solutions (IT Innovation). Operational Efficiency is measured as the cost of the deployment, management and support of IT systems in the business, at a requisite level of availability, together with the alignment of those IT systems to support business process and operational needs. IT Innovation is measured as the gains in competitive advantage an enterprise enjoys resulting from business improvements enabled by IT solutions.

Common Metrics (Top 5)

1. IT Budget / Total Revenue %
2. % Availability of Critical Systems
3. % Move/Add/Change Requests Completed within Service Levels
4. Number of New Projects / Enhancements
5. Actual Benefits vs. Projected Benefits

More IT Effectiveness common metrics.

Best Practice (Top 5)

1. Value Realization Tools and Techniques
2. Low cost Delivery Centers
3. Outsourcing
4. Cost / Benefit Analysis for Projects
5. Continuous Learning / Training Programs for Staff

More IT Effectiveness best practices.

Supply Chain Effectiveness

Description

Supply Chain Effectiveness is a measurement of how well all elements (products & services) of the supply chain—from raw materials to end-customers—are performing against the expectations set or existing standards (if available).

Common Metrics (Top 4)

1. Time to Market
2. Procurement Efficiency
3. Delivery Efficiency
4. Transportation Efficiency

More Supply Chain Effectiveness common metrics.

Best Practice (Top 6)

1. Implement Supplier Performance
2. Increase Inventory Visibility
3. Reduce Production Lead Time
4. Track On Time Order Fulfillment
5. Select Carriers by Least Cost per Shipment / Rate Using Actual Rates
6. Carrier / Route Optimization

More Supply Chain Effectiveness best practices.

Inventory Effectiveness

Description

Inventory Effectiveness measures the process of having the right part at the right place at the right time, with minimal investment that meets the customer requirements. Inventory is influenced by lead times, variability of supply, variability of demand, product complexity, service level agreements, product substitution, obsolescence and life cycles, material costs, carrying costs, investment strategies, cost of money, warehousing space and logistics (locations, distances, transportation methods).

Common Metrics (Top 4)

1. Forecast Accuracy
2. Inventory Accuracy
3. Delivery Schedule Adherence
4. Total Carrying Costs of Inventory

More Inventory Effectiveness common metrics.

Best Practice (Top 6)

1. Deploy S&OP Feedback Loop
2. Leverage Sophisticated Forecasting Methods
3. Automated Cycle Count
4. Improve Planning and Scheduling
5. Manage Overall Material Costs
6. Manage Pricing, Discounts and Rebates

More Inventory Effectiveness best practices.

Financial Compliance

Description

The goal of Financial Compliance is to ensure that all accounting transactions are treated in accordance to Generally Accepted Accounting Practices (GAAP) prevailing for the relevant country, and that all transactions are recorded accurately and can be audited. Additionally, Financial Compliance addresses controls and separation of duty in pursuit of the aforementioned, to ensure only authorized personnel can perform actions and, that where it would be improper, they are prohibited from doing so (e.g. avoiding the ability of an employee to both set up vendors and make payments to vendors).

For QAD, the goal is also to ensure that Financial Compliance is delivered in the most effective and economical manner possible automating processes and embedding controls within IT systems.

Common Metrics (Top 5)

1. Days Sales Outstanding
2. Days Payables Outstanding
3. Operating Cash Flow / Sales Ratio
4. Security Supports Segregation of Duties
5. System Supported Audit Trails

More Financial Compliance common metrics.

Best Practice (Top 5)

1. Enable Customer Initiated Payment Systems
2. Pricing and Discount Accuracy on Invoice
3. Enable Electronic Payments
4. Central Financial Data Repository
5. Enhanced Controls

More Financial Compliance best practices.

Industry Compliance

Description

Industry Compliance is a set of metrics associated with regulations related to the industry, geography of operation, or market that the customer serves. Some of these regulations take the form of guidelines put in place by: industry bodies, internationally certified and recognized standards, and regional/geographic regulations. Typically, compliance to regulations requires that processes are deployed in a controlled and documented fashion. Often, compliance requires auditing or validation by an outside party.

Common Metrics (Top 4)

1. Financial Compliance
2. Quality
3. Environmental & Sustainability
4. Industry Compliance

More Industry Compliance common metrics.

Best Practice (Top 4)

1. Separation of Duties, Controls and Audit Trails for Financial Compliance
2. Documented Processes and Deviation Tracking for Quality
3. Materials Management Business Processes Documented and Mapped
4. Analysis of All Other Regulatory Impacts

More Industry Compliance best practices.

Asset Utilization

Description

Asset Utilization is a measure of actual use of fixed assets divided by the available use of fixed assets. Fixed Assets enable direct product development, transformation, and delivery of a company’s products or services, as well as indirect support, and, typically, have greater than one year of service life. The supporting processes and best practices ensure availability of the fixed assets, optimized usage of the fixed assets, minimized costs, and maximized service life. It is implicit and assumed that the output of the fixed asset is required (there is demand), timely (meets requirements), and of acceptable quality.

Common Metrics (Top 4)

1. Production Yield %
2. Overall Equipment Effectiveness
3. Fixed Asset Downtime %
4. Maintenance Spend %

More Asset Utilization common metrics.

Best Practice (Top 6)

1. Design for Quick Changeover
2. Product Design for Minimal Setup
3. Effective MRO Management
4. Preventive Maintenance
5. MTBF (Mean Time Between Failures) Tracking
6. Integrated ERP and Maintenance Systems

More Asset Utilization best practices.

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