4 Vital Project Execution Indexes In Semiconductor Industry
When the economy is poor, we should focus on creating new business through new product pipelines. Regarding the execution status of new projects, we can look at several essential indexes.
When we talk about new project execution, the most important task for project managers is to generate innovative products for the company. On the other hand, the project team’s core value is how to support the product manager in the creation of these new products.
Today, I want to share several essential indicators for project execution. The first index is called a kickoff rate, the second is called an on-time rate, the third is called an ROI pass rate, and the fourth is called a new product gross margin.
1. Kickoff Rate
We made plans last year about what new projects we will do this year, and how many projects we’ve actually started. It is called a kickoff rate. Looking back on the 2021 project execution results and considering the kickoff rate, the project execution rate was only 60%. This is a low number. For example, in 2021, we planned to kick off ten projects. We expanded our team and budget to meet these increases. Still, it became clear that we were too optimistic and had essentially wasted resources in our optimistic outlook of completion.
We know the market is constantly moving, the customers are changing, and the competitors are changing. We will likely have to adjust the plan according to these changes, but we must continue reviewing this index. Let’s take control of these plans rather than having a disconnect between the project plan and the project execution. If the market disappears due to change, we will need to know how to adjust our index to properly reflect the circumstances. Careful examination of how the index is put together will ensure you can correctly use data realistically without wasting company resources.
2. On-Time Rate
The second index is the on-time rate. On-time rate means, assuming there are ten projects, how many projects are released on time according to our kickoff plan? It is to ensure execution is on pace with the index. Continually reflecting on the timing, execution rate, and the changing market information will help you make faster changes, which is vital.
For example, suppose in 2021, the project on-time rate is only 60%. In that case, this means that out of the ten projects, only six are on schedule for production, and the other four projects are behind schedule. We know this number is not very good, and here are some reasons. When we kick off a project, as a project manager, I’ll make sure that the schedule is achievable. Often a product manager asks for aggressive scheduling to push projects out faster. You have to be careful here. It’s easy to want to fulfill someone’s request, but accuracy could make or break your reputation. For instance, it could affect the project team’s commitment if we can’t control the schedule. The customer’s sample schedule will also be affected, along with the go-to-market results. Any sign of these factors could mean that your key data for creating your timeline is corrupted through change or not assessed fully from the beginning.
We hope that keeping these indicators in mind will help everyone commit to the timeline to accomplish the goals of the schedule.
3. ROI Pass Rate (Return On Investment)
The third one is the ROI pass rate. While examining the historical data and the industry criteria before setting a reasonable ROI, we set the ROI pass rate qualified threshold at 3X (triple). This indicator represents how many projects have good ROI benefits after we have invested the resources.
When we review the data for 2021, let’s suppose that the company-wide ROI pass rate is only 55%. That would mean that 45% of the projects’ ROI pass rate is less than triple. This is less than the target. Essentially, this is a large waste of resources. If we don’t execute 45% of the projects, we can save 45% of the financial and human resources. This would give us better control over the project schedule.
4. New Product Gross Margin
Each product line has different business types and product mixes. In reality, we do not define the same goal for all product lines. This is where great communication with each product manager and paying attention to the data, will be essential for continuous improvement. As we said before, the core mission of the project team is to generate an excellent product for the company. A successful product is determined by it’s impact on the gross margin.
Key Takeaway
These four indicators are something that we will continue to focus on. We can find ways to continuously improve these numbers so that these indicators can all be enhanced.
Many companies are trying to decide how to act and react in the current state of the economic situation across the world. We can ensure that overall spending is under control when we see where the data is leading us in our creation and completion of the projects. We must continue to expand the growth momentum, and reduce waste. That’s why we must have good project execution.
Thank you for taking the time to read this article.
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Have a nice day. :)
