Definition of kp is november 2016

1Marek.Piatkowski@Rogers.com
Key Performance
Indicators
Introduction
Thinkingwin, Win, WIN
KPI – Key Performance Indicators
Definitions
Marek Piatkowski – November 2016

Key Performance
Indicators
Introduction
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
http://twi-network.com

Key Performance
Indicators
Introduction

Key Performance
Indicators
Introduction
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

Key Performance
Indicators
Introduction
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

Key Performance
Indicators
Introduction
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

Key Performance
Indicators
Introduction
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

Key Performance
Indicators
Introduction
 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

Key Performance
Indicators
Introduction
KPI Process – Collection and Review
KPI Process in NOT about Financial Metrics
Financial success is a result of driving a good KPI
Process

Key Performance
Indicators
Introduction
KPI Development Process
 Specific
 Each KPI must focus on a specific performance targetS
M
T
R
A
 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

Key Performance
Indicators
Introduction
KPI Process
KPI Process consist of four elements
1. Collecting the information (data)
2. Charting the information
3. Analyzing the information
4. Taking immediate corrective action – if necessary
For every KPI Process we must define:
1. What information do we collect
2. Who is responsible for each KPI
3. When do we collect information, review and analyze
4. Where is the information to be collected
5. Why do we want to collect this information
6. How is the KPI process going to operate daily

Key Performance
Indicators
Introduction
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

Key Performance
Indicators
Introduction
What information do we collect – what do we measure?
True North
Strategy Deployment
Hoshin Kanri

Key Performance
Indicators
Introduction
What information do we collect – what do we measure?
SAFETY QUALITY DELIVERY PRODUCTIVITY COST PEOPLE

Key Performance
Indicators
Introduction
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
Financial
KPIs

Key Performance
Indicators
Introduction
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

Key Performance
Indicators
Introduction
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

Key Performance
Indicators
Introduction
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

Key Performance
Indicators
Introduction
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

Key Performance
Indicators
Introduction
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 – HR
KPIs

Key Performance
Indicators
Introduction
Target Condition:
Targets:
KPIs:
Nobody gets hurt in our factories, including - our employees, customers
and visitors.
Safety
 ZERO lost time accidents
 Zero recordable incidents
 Zero near misses
 Green Cross – daily
Safety KPIs

Key Performance
Indicators
Introduction
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
Quality
AFETY QUALITY DELIVERY PRODUCTIVITY COST PEOPLE
External Quality
KPIs

Key Performance
Indicators
Introduction
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
QUALITY DELIVERY PRODUCTIVITY COST PEOPLE
Customer
Delivery KPIs

Key Performance
Indicators
Introduction
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
Productivity
COST PEOPLE
Manufacturing
KPIs

Key Performance
Indicators
Introduction
Roles and Responsibilities

Key Performance
Indicators
Introduction
 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

Key Performance
Indicators
Introduction
 Information Centers:
 All KPIs displayed
 Information updated daily
 Roles and responsibilities clearly identified
 Visual controls in place

Key Performance
Indicators
Introduction
Changing the World. One Kaizen at a time
This presentation is an intellectual property of W3 Group Canada Inc.
No parts of this document can be copied or reproduced
without written permission from:
Marek Piatkowski
W3 Group Canada Inc.
iPhone: 416-235-2631
Cell: 248-207-0416
Marek.Piatkowski@rogers.com
http://twi-network.com

Key Performance
Indicators
Introduction
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Definition of kp is november 2016

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