KPI System Introduction
- 1. Key Performance Indicators (KPIs) Introduction
- 2. KPI Introduction2 How well a business is driving toward its objectives and strategies is measured by Key Performance Indicators (KPIs) Dashboard gauges are large and well lighted to improve visibility Windshields are clean and clear to improve transparency
- 3. KPI Introduction3 KPIs provide problem detection in a visual form that can be instantly interpreted Metric Indicator Is this condition normal or abnormal? This condition is instantly recognizable as abnormal
- 4. KPI Introduction4 KPIs should be simple, easy to interpret and show actual vs. target information WW52 PART # MISSES In Thousands WW52 PART # MISSES In Thousands WW52 PART # MISSES Trend vs. Target, Q4 Goal: =>95% Simple but not easy to interpret Easy to interpret, but no performance to target information Simple, easy to interpret, and clear performance to target information Category Part # Committed to Customers Actual Deliveries Server XYZ123 2.488 0.098 Server XYZ125 101.013 93.811 Laptop ABA123 90.933 18.922 Laptop ABB123 68.145 49.471 Laptop ABC034 0.422 0.42 Laptop ABC135 5.744 4.935 Laptop ABC136 3.376 3.101 Laptop ABC137 2.655 2.608 Laptop ABC138 4.54 4.3 Laptop ABC139 6.1 5.2 Laptop ABC140 3.2 3 Laptop ABC141 5.5 1.9 Laptop ABC142 0.4 0 Svr Sample XYZ998 0.5 0.3 Svr Sample XYX102 0.3 0.2 Lpt Sample ADD101 0.15 0.15 295.466 188.416
- 5. Safety is an all encompassing way of being and safety KPIs should reflect a mindset of “everybody goes home as good or better than when they arrived to work.” KPI Introduction5 Operational KPIs fall into one of five categories: Safety Quality, Delivery, Cost, Motivation COST QUALITY DELIVERY SERVICE MOTIVATION QDCM KPIs provide a balanced view of the company’s operations COST QUALITY DELIVERY SERVICE MOTIVATION If focus is not placed the KPIs equally, the company’s operations will suffer - e.g. quality suffers if cost and delivery are the sole focus
- 6. KPI Introduction6 KPIs tie the company’s strategic objectives to all operational levels Level 1 (CEO/COO) Level 2 (EVP) Level 3 (VP/Dir) Level 4 (Ops/Dept.) Product Development Concept Review to New Product Introduction D2.1 Quarterly Days First Last Name Sales & Distribution Production complete to Customer D2.3 Quarterly Days First Last Name Production New Product Introduction to Production Complete D2.2 Quarterly Days First Last Name Plant Readiness Formula goes here D2.2.1 Quarterly Days First Last Name Development Testing Formula goes here D2.2.2 Quarterly Days First Last Name Production Samples Formula goes here D2.2.3 Quarterly Days First Last Name Full Production Formula goes here D2.2.4 Quarterly Days First Last Name Production Phase Out Formula goes here D2.2.5 Quarterly Days First Last Name Product ABC Formula goes here D2.2.4.1 Quarterly Days First Last Name Product BCD Formula goes here D2.2.4.2 Quarterly Days First Last Name Product CDE Formula goes here D2.2.4.3 Quarterly Days First Last Name Product DEF Formula goes here D2.2.4.4 Quarterly Days First Last Name Product EFG Formula goes here D2.2.4.5 Quarterly Yes/No First Last Name Objective 1: Profitably achieve at least 30% unit and revenue share by 2010 Measures time from product definition to volume threshold First Last Name Time to Market D2 Quarterly Days Sample KPI Tree
- 7. KPI Introduction7 A well defined set of KPIs will meet this quality assurance checklist KPI is SMART (Specific, Measurable, Attainable, Relevant, Time-bound) KPI definition has all framework items completely documented KPI is simple and interpretable Whomever is responsible for the target has direct influence on the KPI (resource assignment) Extraordinary factors are eliminated (extraordinary depreciation, natural disasters, etc) KPI is hard to manipulate KPI QUALITY ASSURANCE CHECKLIST
- 8. KPI Introduction8 KPIs drive improvement behaviors and culture change, which result in better targeting and control Without KPIs, out of control and off target With KPIs, improvement and culture change begin Resulting in better targeting and control
- 9. 9 KPIs provide the basis for a management process that is a complete cycle of target setting, planning, execution, and reflection of results. Financial Perspective Customer Perspective Strategic Perspective Innovative Perspective Targets Set for Key Performance Indicators (KPIs) Inputs Results – Reflection to Identify Continuous Improvement Opportunities Project Plans and Resource Allocation Nego- tiation Process Execution and Improvemen t Drives The Strategic Planning Cycle (Hoshin Kanri) KPI Introduction
- 10. KPI Introduction10 Data and a reporting forum together provide direction for improvement KPIs The right level of management reporting Decisions that ensure the direction is consistent with the company’s objectives
- 11. KPI Introduction11 There are three common roadblocks to an effective KPI system Pride of authorship Killing the messenger Fear of losing control Source: Real Numbers, Cunningham & Fiume
- 12. KPI Introduction12 Management holds the key to breaking down barriers and building a successful KPI system Understand that all processes contain waste! Put tools in place to permanently fix problems, not blame Empower those closest to the problem to fix it Source: Real Numbers, Cunningham & Fiume