What is the key difference between Effectiveness and Efficiency Indicator?

 

We all have the ability. The difference is how we use it: Stevie Wonder

Introduction

In society, both young and old generation have their distinct role and purpose. The younger generation brings new ideas, energy, and innovation while the older generation brings maturity, foresightedness, and compassion. Can a society sustain without anyone of them?

Objective

Both Effectiveness and Efficiency indicators have their distinct meaning and purpose. Both are equally important for the organization for their sustained success and fulfilling customer requirements. By understanding the key difference, it can be effectively implemented throughout the organization.

Definitions: ISO 9000: 2015

Efficiency (Cl 3.7.10): Relationship between the results achieved and the resources used.

Effectiveness (Cl 3.7.11): Extent to which planned activities are realized and planned results are achieved.

Detailed Information

As per ISO 9001: 2015 and IATF 16949: 2016, both Effectiveness and Efficiency have their specific meaning and intent.

Example of Effectiveness

  1. Number of pieces planned and produced
  2. Number of pieces rejected vs target
  3. Number of training conducted vs its plan

Example of Efficiency

  1. Inventory Turnover Times
  2. Cost of Poor Quality
  3. Sales per person

The key difference between Effectiveness and Efficiency:

S.No. Effectiveness Efficiency
1 Related to Customer Related to Organization
2 Focus on the Result Focus on the Process
3 Being effective is about doing the right things Being efficient is about doing things right
4 Focus is on Means and Ends Focus is on Inputs and Outputs
5 Related to time Derive maximum output (ROI- Return on Investment)
6 The extent to which something is successful in providing the desired result. State of attaining the maximum productivity, with least effort spent

Who is more important for the organization?

  1. Both have their unique purpose
  2. The organization needs both effectiveness and efficiency indicator
  3. Achievement of the target is important and effective utilization of the resources is also important

Present Challenges:

  1. How often we read the definitions written in ISO 9000: 2015 & IATF 16949: 2016 and try to interpret it?
  2. How often the organization is clear about the effectiveness and efficiency indicators?

References:

ISO 9001: 2015

IATF 16949: 2016

ISO 9002: 2015

ISO 9000: 2015

Industry Experts

This is the 95th article of this Quality Management series. Every weekend, you will find useful information that will make your Management System journey Productive. Please share it with your colleagues too.

Your genuine feedback and response are extremely valuable. Please suggest topics for the coming weeks.

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Vishal Dhaygude
Vishal Dhaygude
1 year ago

Please give practical examples with calculations