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Hello sir,
In APM it’s often asked to reccomend KPIs with justification. In a question like this what is meant by justify. Does it mean we should explain how it is calculated or any other sort of explanation? Would really appreciate it if you could help on how to approach these types of questions which asks for justify KPIs chosen
Thanks in advance 🙂
‘Justify’ means you have to explain why the KPIs you have chosen are relevant and useful for the organisation. Often this will relate to the organisation’s mission or aims as explained in the question.
For example, if the question said that increasing market share was an aim, then you would be expected to have a KPI that measured that and your justification would be your explanation about why the KPI chosen helps with monitoring that.
Similarly, if tou were told that the company wanted to lower its cost per unit made, KPis can be chosen like:
Time taken per unit
Material cost per unit
Overhead absorption per unit
Efficiency variances.
Usually, the justification is easy…….if not then you have chosen a bad KPI which will not help the company achieve its objectives.
Generally, the name of the KPI tells you how it should be calculated so no further explanation is needed.
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