Definition of kp is november 2016

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Key Performance Indicators Introduction

Thinking win, Win, WIN

KPI – Key Performance IndicatorsDefinitions

Marek Piatkowski – November 2016

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Introduction - Marek Piatkowski Professional Background

Toyota Motor Manufacturing Canada (TMMC) - Cambridge, Ontario from 1987-1994

TPS/Lean Transformation Consulting - since 1994 Professional Affiliations

TWI Network – John Shook, Founder Lean Enterprise Institute (LEI) – Jim Womack Lean Enterprise Academy (LEA) – Daniel Jones CCM/CAINTRA – Monterrey, Mexico SME, AME, ASQ, CME

Lean Manufacturing Solutions - Toronto, Canada

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What are “Key Performance Indicators” - KPIs Key Performance Indicators (KPIs) are a set of quantifiable measures

that a company uses to gauge its performance over time KPIs are used to determine a company's progress in achieving its

strategic and operational goals, and also to compare a company's finances and performance against other businesses within its industry

Key Performance Indicators should be avital navigation instrument used by management to understand whether their business is on a successful voyage or whether is veering off the prosperous path

Whatever Key Performance Indicators are selected, they must reflect the organization's goals, they must be key to its success, and they must be quantifiable (measurable)

KPIs must be specific, measurable, achievable, relevant, time-bound and must have a clear target

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The difference between a KPIs and a Metrics

Every Company has Metrics?

How do you decide if a Metric Qualifies as a Key Performance Indicator?

... a KPI is a Metric but a Metric is not necessarily a KPI

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The difference between a KPIs and a Metrics

Without real KPIs an organization will not perform to its maximum

Developing the wrong KPI will create more harm than help

KPIs without clearly defined targets and review process serve no purpose and have no meaning

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Define the indicators

The indicators must be : Measurable and precise Based on company objectives Easy highlighting a need for corrective action Reflect the progress of the company Target on customers needs A vital information for the employees A mean to obtain the employees involvement

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KPIs echoes organizational goals KPIs are decided by management KPIs provide context (framework) KPIs create meaning for all organizational levels KPIs are based on real (authentic) data KPIs are easy to understand KPIs lead to actions

Characteristics of a good KPIs Process

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KPI Process – Collection and Review

KPI Process in NOT about Financial Metrics

Financial success is a result of driving a good KPI Process

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KPI Development Process

Specific Each KPI must focus on a specific

performance targetSM

TRA

Measurable Must be easy to measure and collect data

Attainable Each KPI must be reasonable and achievable

Realistic Each KPI must be a representative of the work

being done Time-based Each KPI must be measured in a specific

time period

Set clear Targets and Objectives

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KPI Process

KPI Process consist of four elements

1. Collecting the information (data)2. Charting the information3. Analyzing the information4. Taking immediate corrective action – if necessary

For every KPI Process we must define:

1. What information do we collect2. Who is responsible for each KPI3. When do we collect information, review and analyze 4. Where is the information to be collected5. Why do we want to collect this information6. How is the KPI process going to operate daily

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Types of KPIs Production Process KPIs – measure the efficiency or productivity of a

business process Input KPIs – measure assets and resources invested in to generate

business results Output KPIs – measure the financial and non-financial results of

business activities Leading KPIs – measure activities that have a significant effect on

future performance Lagging KPIs – indicators that reflect a success or failure after an

event, after it has been conducted Outcome KPIs – reflect overall results or impact of business activities

as a quantification of their performance Qualitative KPIs – a descriptive characteristic, an opinion, a property

or a feature

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What information do we collect – what do we measure?

True North

Strategy DeploymentHoshin Kanri

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What information do we collect – what do we measure?

SAFETY QUALITY DELIVERY PRODUCTIVITY COST PEOPLE

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Financial KPIs Revenue from Sales Profit / Losses Sales / Orders Quantity Invoiced (shipped) Operations

Operating Costs Cost of Materials Factory Wages Equipment Cost (Depreciation) Cost of Overtime Cost of Scrap

Admin Salaries and Benefits Total Costs

FinancialKPIs


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Sales and Marketing KPIs Forecast Accuracy – short term and long term Number of units sold Average unit sales price Sales events/promos results Number of new Customers Number of new orders received Number of sales per employee Number of Customer complaints, returns, etc. Sales efficiencies

Sales and Marketing

KPIs


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Production (Manufacturing) KPIs Process management

Production Schedule Attainment Process Stability - Reduction of Variation

Lost production time due to equipment problems

Lost production time due to manpower shortages

Lost production time due to material shortages

Overtime hours Manufacturing Efficiency

Number of Units (Parts) produced per Man Hour (PPH)

Changeover/Setup times (number and duration)

Manufacturing KPIs


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Production (Manufacturing) KPIs Maintenance / Engineering

Equipment Uptime / Downtime (frequency & duration) - OEE

Equipment Utilization, machine efficiency

Repair Efficiency - MTBF Maintenance Response Time (number and duration) - MTTR

Planned Maintenance Availability of Tooling TPM - Autonomous Maintenance performed by Operators

Quality Number of Customer complaints, returns, etc.

FTTQ - First Time Through Quality in PPM

Scrap / Rework / Repairs Quality Audits

Manufacturing KPIs


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Supply Chain Management KPIs Customer Deliveries

On Time Deliveries Number of Premium Shipments Number of Missed Shipments Incomplete Transactions Total Customer Lead time – number of days to deliver an order to the

customer Inventory Management

Number of Material Shortage Incidents Inventory Turns (days) - Raw Materials, WIP and Finished Goods

Information Accuracy Obsolete Inventory

Supplier Assessment and Evaluation

Supply Chain Management

KPIs


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Human Resources KPIs People

Manpower Control (Current vs Planned)

Number of production employees Number of admin employees Attendance / Lateness Turn over rate / Terminations / Resignations Employee Survey Number of Improvement Suggestions Cross-functional Training Matrix

Safety Number on Near-Misses Number of Accidents

People – HRKPIs


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Target Condition:

Targets:

KPIs:

Nobody gets hurt in our factories, including - our employees, customers and visitors.

SafetySAFETY QUALITY DELIVERY PRODUCTIVITY COST PEOPLE

ZERO lost time accidents

Zero recordable incidents

Zero near misses

Green Cross – daily

Safety KPIs

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Target Condition:

Targets:

KPIs:

Customer Quality - all products shipped to our Customer meet their quality expectations 100%.

Zero Customer returns Zero Customer complaints Zero Warranty returns and repairs

Daily Quality Q – Customer Quality Number of Customer complaints - weekly Number of warranty returns – weekly Number of mislabelled shipments

QualitySAFETY QUALITY DELIVERY PRODUCTIVITY COST PEOPLE

External Quality KPIs

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Target Condition:

Targets:

KPIs:

All our products shipped delivered to the Customer on-time and in the right quantity

100% on time deliveries 100% correct quantity shipped

Delivery D Number of shipments – daily Number of On-Time shipment – daily Number of Missed Shipment – daily Number of Late shipments – daily Number of Short shipments – daily Number of Premium shipments

- daily

Supply Chain Management


Customer Delivery KPIs

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Target Condition:

Targets:

KPIs:

Planned production requirements achieved every day.

100% daily Production Schedule Attainment

Daily Volumes – Planned vs Actual Lost production time due to equipment

problems Lost production time due to manpower

shortages Lost production time due to material

shortages Overtime hours

ProductivitySAFETY QUALITY DELIVERY PRODUCTIVITY COST PEOPLE

Manufacturing KPIs

Box score

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Roles and Responsibilities

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Information and Meeting Centers: To display and update all date and information related to

Team’s activities To conduct review meetings To review progress of continuous improvement activities To provide a place for operators and Team Leaders to work on

the administrative aspect of their job: updating charts, summarizing results, writing and completing forms and reports


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Information Centers: All KPIs displayed Information updated daily Roles and responsibilities clearly identified Visual controls in place


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Changing the World. One Kaizen at a timeThis presentation is an intellectual property of W3 Group Canada Inc.

No parts of this document can be copied or reproducedwithout written permission from:

Marek PiatkowskiW3 Group Canada Inc.iPhone: 416-235-2631

Cell: 248-207-0416

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