Measurement Cost

Return on Measurement

Process Entropy

Process Efficiency

Group Inertia

Information Durability

Conversion Efficiency

 

Return on Measurement :
MMD™ utilizes Return on Measurement as the primary assessment of whether additional (or less) Measurement Cost should be deployed within the enterprise. Return on Measurement is not a straight static ratio, but rather a sensitivity analysis of a series of economic returns based on set increases or decreases of Measurement Cost inputs.

When a company starts up, processes are not fully developed and there can be significant economic inefficiencies in place. Using measurement, the inefficiencies can be identified and eliminated, creating a "return" on the measurement cost. All things being equal, a company which eliminates or reduces process inefficiency will recognize larger operating profits. As process inefficiencies become fewer over time, spending additional measurement resources no longer delivers the same value or return, and at some point only adds to overhead costs. Knowing when to stop spending on measurement is also a useful input for enterprises driving to optimal processes.

Examples and Case Studies:

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Copyright © 2012 Arbitor Associates, LLC. All Rights Reserved. Last modified: 8/12/2012