EX 23-23 nonfinancial performance measures

Diamond Inc. is an Internet retailer of woodworking equipment. Customers order  woodworking equipment from the company, using an online catalog. The company  processes these orders and delivers the requested product from its warehouse. The company wants to provide customers with an excellent purchase experience in order to expand the business through favorable word-of-mouth advertising and to drive repeat business. To help monitor performance, the company developed a set of performance measures for its order placement and delivery process:

Average computer response time to customer “clicks”
Dollar amount of returned goods
Elapsed time between customer order and product delivery
Maintenance dollars divided by hardware investment
Number of customer complaints divided by the number of orders
Number of misfilled orders divided by the number of orders
Number of orders per warehouse employee
Number of page faults or errors due to software programming errors
Number of software fixes per week
Server (computer) downtime
Training dollars per programmer

a. For each performance measure, identify it as either an input or output measure related to the “order placement and delivery” process.

b. Provide an explanation for each performance measure.

Answer:
a. and b.
Input 
Measure 
Output 
Measure 
 
Explanation 
 X A measure of the speed of the 
ordering process. If the speed is 
too slow, we may lose customers. 
 X An important measure of customer 
satisfaction with the final product 
that was ordered. 
 X An important overall measure of 
process responsiveness. If the 
company is too slow in providing 
product, we may lose customers. 
X  A driver of the ordering system’s 
reliability and downtime. The 
maintenance dollars should be 
divided by the amount of hardware 
in order to facilitate comparison 
across time. 
 X An extreme measure of customer 
dissatisfaction with the ordering 
process. 
 X Incorrectly filled orders reduce the 
customer’s satisfaction with the 
order process. A measure of output 
quality of the process. 
X  This measure is related to the 
capacity of the warehouse relative 
to the demands placed upon it. 
This relationship will impact the 
delivery cycle time. 
 X The page errors will negatively 
impact the customer’s ordering 
experience. It’s a measure of 
process output quality. 
X  Software bugs reduce the 
effectiveness of the order 
fulfillment system; thus, fixes are 
an input that will improve the 
performance of the order fulfillment 
system. 
Server (computer) downtime X  A measure of computer system 
reliability. 
Training dollars per programmer X  Trained programmers should 
enhance the software’s 
responsiveness and reliability.