Key Performance Indicators -...
Transcript of Key Performance Indicators -...
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?
Key Performance Indicators
ESSENTIAL
• IMPORTANT TO THE VIEWER
• VITAL - AFFECTS THE BUSINESS
• CUSTOMER FOCUSED
• DRIVES IMPROVEMENT
Key Performance Indicators
USEFUL
• CURRENT - UP TO DATE
• EASY TO UNDERSTAND
• IMPORTANT AND RELEVANT
• VIEWER CAN CONTRIBUTE• HAS A STAKE• CAN HAVE AN EFFECT (good and bad)
Key Performance Indicators
• URGENCY / OWNERSHIP
• RESPONSIBILITIES DEFINED
• DYNAMIC IMPROVEMENT PLAN
• AUDIT PROCESS - ACTUAL V’s PLAN
• CLEAR OBJECTIVES
IMMEDIATE
Key Performance Indicators
• 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?
Key Performance Indicators
• 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
Key Performance Indicators
Business KPI’s
• Safety Performance
• Quality Performance
• Cost Performance
• Delivery Performance
• People Performance
Key Performance Indicators
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
0
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JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
£
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No.
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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
0
1000
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9000
Nov 99 Jun 00 Sep 00 Oct 00 Nov 00 36951 37043
£ '0
00
0
0.5
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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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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
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Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec
- 2
- 1. 5
- 1
- 0 . 5
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1. 5
2
Period Variance (32.1) Period VarCumulative Actual Cumulative
Hours per Set
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
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Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec
Stage 1 Stage 2Stage 3 FALDi ti OBP
Cost Per Set
0
50
100
150
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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.
Performance Management Cascade
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Summary - All Categories
0
20,000,000
40,000,000
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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.
Performance Management Cascade
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
Score & PrioritiseKEY
PerformanceIndicators
IdentifyCustomers
and SuppliersDetermine
PerformanceDrivers
Form Team
Define LocalPerformance
Indicators
How to Create and Manage KPI’s
&
Score & PrioritiseKEY
PerformanceIndicators
Define LocalPerformance
Indicators
Ease of recording dataImpact on businessFrequency of occurrence
How to Create and Manage KPI’s
IdentifyCustomers
and Suppliers
Form Team
Determine Performance
Drivers
Score & PrioritiseKEY
PerformanceIndicators
Define LocalPerformance
Indicators
Develop FormatAnd Review
Process
Identify Ownersand Users
How to Create and Manage KPI’s
&
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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
Determine Performance
Drivers
Identify Ownersand Users
Score & PrioritiseKEY
PerformanceIndicators
Define LocalPerformance
Indicators
Develop FormatAnd Review
Process
Train Users
How to Create and Manage KPI’s
IdentifyCustomers
and Suppliers
CreateImprovement
Plan
Train Users
Form Team
Determine Performance
Drivers
Identify Ownersand Users
Score & PrioritiseKEY
PerformanceIndicators
Define LocalPerformance
Indicators
Develop FormatAnd Review
Process
Collect Data
How to Create and Manage KPI’s
CreateImprovement
Plan
Train Users
Form Team
Determine Performance
Drivers
Identify Ownersand users
Score & PrioritiseKEY
PerformanceIndicators
Define LocalPerformance
Indicators
Develop FormatAnd Review
Process
Collect Data
FormImprovement
Teams
IdentifyCustomers
and SuppliersMonitor ProgressTo Plan And TakeCorrective Action
How to Create and Manage KPI’s
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