Operational KPIs - Definitions November 2016

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Operational KPIs Definitions

Thinking win, Win, WIN

Operational KPIDefinitions

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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What information do we collect – what do we measure?

SAFETY QUALITY DELIVERY PRODUCTIVITY COST PEOPLE

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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:

No industrial accidents - no fires, explosions and damages cause by sub-standard machinery, equipment, storage racks, tools and operating procedures.

SafetySAFETY QUALITY DELIVERY PRODUCTIVITY COST PEOPLE

ZERO industrial accidents

Weekly Safety Committee audits reportsSafety 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:

Internal Quality – all processes, machinery, tooling and equipment producing good parts

Zero quality defects 100% First Time through Quality – FTTQ 100% First Pass Yield - FPY

Equipment Quality Performance - EQP FTTQ – daily FPY - daily


Internal Quality KPIs

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Target Condition:

Targets:

KPIs:

All internal scrap properly labeled (type of a problem and location) and removed from the production area


ZERO scrap

Pieces of Scrap – daily Main causes of Scrap – Pareto daily


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Target Condition:

Targets:

KPIs:

Internal Quality – no defective parts passed to the next process

Zero defects passed to the next process

Number of defects found in the next process – daily



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Target Condition:

Targets:

KPIs:

Operators performing quality checks and using this information to get to the Root Cause of the problem

Zero defects found by the Operator

Pareto of major root causes of rejects and scrap - daily



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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:

Finished Good inventories “Customer Ready” available 24 hours prior to scheduled shipment

100% FG availability

Number of SKUs not meeting the 24 hour target



Inventory Management

KPIs

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Target Condition:

Targets:

KPIs:

All Finished Goods inventories managed and controlled by Plan-for-Every-Part

PFEP updated and controlled on monthly basis Min/Max Levels for every part Monthly Sales and Operations Meeting

FG - Number of “zero level” SKUs FG - Number of SKUs below MIN level FG - Number of SKUs above the MAX level FG - Inventory turns (days)




KPIs

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Target Condition:

Targets:

KPIs:

All Purchased Parts inventories managed and controlled by Plan-for-Every-Part

PFEP updated and controlled on monthly basis Min/Max Levels for every part Monthly Sales and Operations Meeting

Purchased Parts - Number of “zero level” SKUs Purchased Parts - Number of SKUs below MIN

level Purchased Parts - Number of SKUs above the

MAX level Purchased Parts - Inventory turns (days)




KPIs

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Target Condition:

Targets:

KPIs:

No parts shortages in production lines - Production Schedule issued only after verifying that parts are available. ZERO Production Schedule changes due to

parts shortage

Number of Production Schedule changes due to parts shortage – daily

Number of Material Shortage Incidents - daily




KPIs

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Target Condition:

Targets:

KPIs:

All data required to create Capacity Planning up-to-date and residing in the MRP System

Information Accuracy - Cycle Times, Changeover Times, PM requirements, Manpower Requirements – Current

Schedule attainment - Daily



Production Planning KPIs

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Target Condition:

Targets:

KPIs:

Accurate Production Schedule issued to Manufacturing (Operations) daily

Production Schedule based on Capacity Planning

No changes to Production Schedule

Number of Daily Production Schedule Changes



Production Planning 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

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Target Condition:

Targets:

KPIs:

Manufacturing performing to defined Operating Standards

All Operating Standards in place and up-to-date

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

Cycle Times Efficiency – daily Changeover/Setup times (number and

duration) - daily


Manufacturing KPIs

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Target Condition:

Targets:

KPIs:

Equipment availability and performance meeting World Standards

EA - Equipment Availability = 90% EEP - Equipment Efficiency Performance =

95% EQP - Equipment Quality Performance = 99% OEE - Overall Equipment Availability = 85%

EA - Unplanned Downtime - frequency and duration

EP - standard run time vs actual run time EQP – number of defective (scrap) units

produced vs total number of units produced OEE = EA x EEP x EQP


Maintenance KPIs

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Target Condition:

Targets:

KPIs:

Maintenance of equipment performed on regular and scheduled basis

ZERO Equipment Breakdown

Planned Maintenance - maintenance schedule attainment

Repair Efficiency - MTBF

Maintenance Response Time (number and duration) – MTTR

Tooling Availability – TA Autonomous Maintenance performed by

Operators - TPM


Maintenance KPIs

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Target Condition:

Targets:

KPIs:

Logistic, transportation and delivery costs under the Budget

No additional costs for premium shipments No penalties for missed deliveries No additional costs for expediting purchased

parts or finished goods products

Premium shipments costs – monthly Missed shipments costs – monthly Expediting costs - monthly

CostSAFETY QUALITY DELIVERY PRODUCTIVITY COST PEOPLE


Costs KPIs

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Target Condition:

Targets:

KPIs:

All Operating costs under the Budget

ZERO variance between the planned financial outcomes (Budget) and the actual financial outcomes (Actual)

Cost of Materials - weekly Factory Wages - weekly Cost of Overtime - weekly Cost of Scrap - weekly


Operating Costs KPIs

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Target Condition:

Targets:

KPIs:

All Administrative costs under the Budget

ZERO variance between the planned financial outcomes (Budget) and the actual financial outcomes (Actual)

Admin Salaries - weekly Benefits - weekly Services and Supplies - weekly


Administrative Costs KPIs

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Target Condition:

Targets:

KPIs:

People feel proud and enjoy working for our company

Perfect Attendance ZERO Turnover Rate Positive Employee Surveys

Attendance – daily Absenteeism – planned and unplanned - daily Lateness - daily Turn over rate - terminations and resignations

- weekly

PeopleSAFETY QUALITY DELIVERY PRODUCTIVITY COST PEOPLE

People - HR KPIs

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Target Condition:

Targets:

KPIs:

A “right” number of people available to work every day

ZERO variation to the Manpower Plan Manpower requirements based on

Standardized Work calculations

Manpower Control (Current Vs Planned) - daily Number of production employees vs Target -

daily Number of admin employees vs Target - daily


HR/Operational KPIs

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Target Condition:

Targets:

KPIs:

All employees involved and participating in problem solving and process improvement activities

One suggestion per employee per month 100% participation in Quality Circles activities Each employee participating in a Kaizen event

at least once per year

Number of Suggestions Participation in a Suggestion Program Participation in Quality Circles Cross-functional Training Matrix


People - HR KPIs

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Target Condition:

Targets:

KPIs:

People performing their work according to defined standards and expectations

Roles and Responsibilities defined for all employees

100% compliance by all employees

All roles and responsibilities up-to-date Performance Reviews Employee performance improvement


People - HR 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


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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Changing the World. One Transformation 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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Operational KPIs - Definitions November 2016

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