Key Performance Indicators - KPI’s

Key Performance Indicators - KPI’s

Training Pack

Target Audience : Site Management to Team Leaders

Purpose of Module :To ensure employees have the skills to quantify impact, and provide timely direction for an individualscontribution ( at all levels) towards achieving overall business goals

Aims & Objectives :• How to define & measure our given business goals• Why have KPI’s• How clarity of objectives improves motivation and delivers performance• Standardised approaches to KPI’s• How to translate and cascade KPI’s at all levels• Explain links to Performance Management

Aims & Objectives

Course Outline•INTRODUCTION

•WHAT ARE KEY PERFORMANCE INDICATORS?

•CHARACTERSITICS OF A GOOD KPI

•EXAMPLES OF KPI’S

•THE KPI CASCADE PROCESS

•HOW TO CREATE AND MANAGE KPI’S

•SUMMARY

3

Key Performance Indicators

• Name

• Department

• Length of service

• Knowledge of Key Performance Indicators

Introductions

Flip Chart

What are KPI’s

•TO COMMUNICATE STATUS - ACTUAL v TARGET• PLANT LEVEL• BUSINESS LEVEL• WORK STATION LEVEL

•TO DRIVE IMPROVEMENT BY FACT NOT GUESSWORK

•TO HELP PRIORITISE IMPROVEMENT ACTIVITY

• A CONTINUAL HEALTH CHECK FOR THE BUSINESS

•TO CONNECT THE CUSTOMER TO THE PROCESS

WHAT ARE KPI’s FOR?


ESSENTIAL

• IMPORTANT TO THE VIEWER

• VITAL - AFFECTS THE BUSINESS

• CUSTOMER FOCUSED

• DRIVES IMPROVEMENT


USEFUL

• CURRENT - UP TO DATE

• EASY TO UNDERSTAND

• IMPORTANT AND RELEVANT

• VIEWER CAN CONTRIBUTE• HAS A STAKE• CAN HAVE AN EFFECT (good and bad)


• URGENCY / OWNERSHIP

• RESPONSIBILITIES DEFINED

• DYNAMIC IMPROVEMENT PLAN

• AUDIT PROCESS - ACTUAL V’s PLAN

• CLEAR OBJECTIVES

IMMEDIATE


• GROUP OF METRICS• NOT EVERYTHING WE MEASURE IS A KPI !

• STATISTICS•THESE CAN HELP DEFINE KPI’s

• WORK MEASUREMENT

• A TOOL FOR BLAME

• WALL PAPER

WHAT ARE KPI’s NOT?


• DYNAMIC• WELL MANAGED - ROTATE VITAL FEW• OWNED AND OPERATED BY LOCAL TEAM

• SIMPLE• EASY TO UPDATE - MANUAL

• VISUAL• LOCATED WHERE EASY TO SEE• CHANGES JUMP OUT AT VIEWER

• ENGAGING • RELEVANT - CREATES TALKING POINT

• STANDARD FORMAT• EASY FOR OUTSIDER TO UNDERSTAND

• FEEDBACK RECORDED AND ACTED UPON

CHARACTERISTICS OF GOOD KPI


Business KPI’s

• Safety Performance

• Quality Performance

• Cost Performance

• Delivery Performance

• People Performance


Defects Per Assembly

0100200300400500600

Jul

Sept

Nov Jan

Mar

May Ju

l

Sep

Nov

Machining Sub Assy Assembly Test 2001 Target

Target Improvement

Actual PerformancePlotted Against Target

Legend EasyTo understand

Visual Indicatorof

Performance Trend

Examples

Unambiguous Title

RED

• Outside of target with no improvementor deteriorating trend.

AMBER

• Inside of target but with deteriorating trend.• Outside of target but with improving trend.

GREEN

• Inside of target with improving or level trend.

RAG Colour Coding

Examples

Scrap Cost 2004

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2000

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JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

£

0

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No.

Of I

tem

s

Scrap Cost Scrapped Items Budget

YTD Scrap Cost: £34.0k

Examples

Schedule

0%10%20%30%40%50%60%70%80%90%

100%

Stage 1 Stage 2 Stage 3

How are we doingagainst the plan?Are we on target?

Examples

External Supply Schedule Adherence

0%

20%

40%

60%

80%

100%

23 24 25 26 27 28 29 30 31 32 33

Supplier 1 Supplier 3 Supplier 5Supplier 2 Supplier 4

What are we aiming for?

Examples

WIP

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1000

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Nov 99 Jun 00 Sep 00 Oct 00 Nov 00 36951 37043

£ '0

00

0

0.5

1

1.5

2

2.5

3

3.5

Stoc

k Tu

rns

WIP Value Product A WIP Value Product BWIP Budget Stock Turns

Examples

130

125

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105

100

95

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65

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55

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45

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25

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DAY

DATE

SHIFT

Hrs Achieved / Hrs Planned x 100Hrs Achieved / Hrs Planned x 100Hrs Achieved / Hrs Planned x 100Hrs Achieved / Hrs Planned x 100% TAKT ADHERENCE% TAKT ADHERENCE% TAKT ADHERENCE% TAKT ADHERENCE

Examples

Examples

&

Step 1 - Team Leaders manage the Key Drivers of performance• Are we fully manned to complete the workpackages?• Is overtime under control?• Are we hitting targets (Minutesto complete Operations)?

Step 2 - Manager holds dailyTeam Leader review by work package• Actions timely and focused • Support given when needed

Stage 1 Jig Board

Minutes to

complete Op 1

Minutes to

complete Op 2

Manhours (Shift B)

2 , 0 0 0

2 , 2 0 0

2 , 4 0 0

2 , 6 0 0

2 , 8 0 0

3 , 0 0 0

3 , 2 0 0

Jan Feb M ar Apr M ay Jun Jul A ug Sep Oct Nov Dec

Step 3 - Assembly Managers review Weekly Performance withManagers.• Cost accountability introduced. Focus on shift by shift performance.

Performance Management Cascade

&

Stg 01 Cost Per Set

4 0

4 5

5 0

5 5

6 0

6 5

7 0

7 5

8 0

8 5

9 0

Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec

P e r i od

Direct Indirect NPO Disruptio

Stg 01 Hours per Set

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1 3 5 7 9 11 13 15 17 19 2 1 2 3 2 5 2 7 2 9

W e e kAdded Val ue Out Of J i g T r ai ni ngDi sr upt i on - Exter nal Di sr upt i on - Int er nal BudgetFor ecast (Lean)

Step 4 - Head of Business reviews Weekly Performance• Good informed

debateresulting fromupward cascadeof Team Leaders’performance

• Countermeasureplans if targetsnot being met

Stg 01 Build

4 0

6 0

8 0

10 0

12 0

14 0

16 0

18 0

YTD 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

W e e k

( 1. 2 )

( 1. 0 )

( 0 . 8 )

( 0 . 6 )

( 0 . 4 )

( 0 . 2 )

0 . 0

0 . 2

0 . 4

0 . 6

0 . 8

1. 0

Week Var i ance to 32.1 Week Var i ance t o 32.1 Ref r eshCumul at i ve Actual Cumul at i ve Budget 32.1For ecast 32.1 Ref r esh

Production Volume

0

50

100

150

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- 2

- 1. 5

- 1

- 0 . 5

0

0 . 5

1

1. 5

2

Period Variance (32.1) Period VarCumulative Actual Cumulative

Hours per Set

2,000

2,500

3,000

3,500

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4,500

5,000

5,500

6,000

6,500


Stage 1 Stage 2Stage 3 FALDi ti OBP

Cost Per Set

0

50

100

150

200

250

Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov DecActual Disruption

Budget (32.1) Forecast

Step 5 – Senior Management Team reviews Monthly performance• Senior level escalation plans.


&

Summary - All Categories

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

200,000,000

-1,500,000

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

M onthly +/1 Forecast +/- to budget Cumulat ive actualCumulat ive budget Cumulat ive forecast

Step 6 - Site Cost Performance consolidated. Manufacturing Director reviews Factory Manager Performance.• Forecasts of cost performance compiled to ensure corrective actions taken to achieve “Budget”.• Risks & Opportunities monitoring and control.


Flip Chart

What KPI’s do you think would be applicable to your area

IdentifyCustomers

and Suppliers

FormImprovement

Teams

CreateImprovement

Plan

Train Users

Monitor ProgressTo Plan And TakeCorrective Action

Form Team

Determine Performance

Drivers1

Identify ownersand users

Score & PrioritiseKEY

PerformanceIndicators

Define LocalPerformance

Indicators

Develop FormatAnd Review

Process

Collect Data

PLAN

ContinuousImprovement

Cycle

DOCHECK

ACT

How to Create and Manage KPI’s



IdentifyCustomers

and SuppliersDetermine

PerformanceDrivers

Form Team


Indicators


&




Indicators

Ease of recording dataImpact on businessFrequency of occurrence


IdentifyCustomers

and Suppliers

Form Team


Drivers




Indicators


Process

Identify Ownersand Users


&

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1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7

A GB HC ID JE KF L

M

Blue Shift = TWOwner: Red Shift = DJ

Location: X:\Broughton\A340-600\Lean Manufacturing\Stage 00\Std Documents\Lost Hours KPI

LOST HOURS (UNPLANNED WORK) PRE & POSTKPI : Key Performance Indicator

Unplanned Absence

28 29 30 31

Tooling

Internal

Days

LeanHandling

OSS

Week

SupplierLogistics

Engineering

MCC

Shop Support

MaintenanceTrefnTAC

QualityMSE

1

2

3

4

5

Example

IdentifyCustomers

and Suppliers

Form Team


Drivers





Indicators


Process

Train Users


IdentifyCustomers

and Suppliers

CreateImprovement

Plan

Train Users

Form Team


Drivers





Indicators


Process

Collect Data


CreateImprovement

Plan

Train Users

Form Team


Drivers

Identify Ownersand users




Indicators


Process

Collect Data

FormImprovement

Teams

IdentifyCustomers

and SuppliersMonitor ProgressTo Plan And TakeCorrective Action


KPI - examples TargetQuality

Defects(Defects per unit)Errors(errors per unit)

DeliverySchedule adherence(Hours delta to plan)Cycle Time(Hours per Unit)

CostManning(man hours per set)(Cost per unit)

PeopleSkill LevelTraining Hours

0 delta (nil Hours behind or ahead of plan)

To be agreed

1 Defects per unit

2 errors per unit

270 hours per unit

£5,000 per unit

Key performance indicators need to be simple and focused

75% people trained to Practitioner Level40 hrs per man per year

Typical KPI’s

•Direct relationship to business plan

•Communicates progress against plan

•Drives continuous improvement

•Visual - provokes a response

•Effective - simple and easy to understand

•Ownership - relates to everyone

•Up to date - dynamic management

SUMMARY

KPI’s