Key performance indicators (KPIs) measure how well a business is achieving its objectives. KPIs should be simple, easy to interpret and show actual performance compared to targets. There are five categories of operational KPIs: safety, quality, delivery, cost, and motivation. A well-defined set of KPIs that are specific, measurable, attainable, relevant and time-bound can drive improvement and culture change within an organization to help it better target objectives and control performance.

1. Key Performance Indicators (KPIs)
Introduction

2. KPI Introduction2
How well a business is driving toward its
objectives and strategies is measured by Key
Performance Indicators (KPIs)
Dashboard
gauges are
large and well
lighted to
improve
visibility
Windshields
are clean and
clear to
improve
transparency

3. KPI Introduction3
KPIs provide problem detection in a visual
form that can be instantly interpreted
Metric Indicator
Is this condition
normal or
abnormal?
This condition is
instantly recognizable
as abnormal

4. KPI Introduction4
KPIs should be simple, easy to interpret and
show actual vs. target information
WW52 PART # MISSES
In Thousands
WW52 PART # MISSES
In Thousands
WW52 PART # MISSES
Trend vs. Target, Q4 Goal: =>95%
Simple but not
easy to
interpret
Easy to interpret,
but no
performance to
target information
Simple, easy to
interpret, and clear
performance to target
information
Category Part #
Committed to
Customers
Actual
Deliveries
Server XYZ123 2.488 0.098
Server XYZ125 101.013 93.811
Laptop ABA123 90.933 18.922
Laptop ABB123 68.145 49.471
Laptop ABC034 0.422 0.42
Laptop ABC135 5.744 4.935
Laptop ABC136 3.376 3.101
Laptop ABC137 2.655 2.608
Laptop ABC138 4.54 4.3
Laptop ABC139 6.1 5.2
Laptop ABC140 3.2 3
Laptop ABC141 5.5 1.9
Laptop ABC142 0.4 0
Svr Sample XYZ998 0.5 0.3
Svr Sample XYX102 0.3 0.2
Lpt Sample ADD101 0.15 0.15
295.466 188.416

5. Safety is an all encompassing way of being and safety KPIs should
reflect a mindset of “everybody goes home as good or better than
when they arrived to work.”
KPI Introduction5
Operational KPIs fall into one of five categories: Safety
Quality, Delivery, Cost, Motivation
COST
QUALITY
DELIVERY
SERVICE
MOTIVATION
QDCM KPIs provide a balanced
view of the company’s operations
COST
QUALITY
DELIVERY
SERVICE
MOTIVATION
If focus is not placed the KPIs
equally, the company’s
operations will suffer - e.g.
quality suffers if cost and
delivery are the sole focus

6. KPI Introduction6
KPIs tie the company’s strategic
objectives to all operational levels
Level 1
(CEO/COO)
Level 2
(EVP)
Level 3
(VP/Dir)
Level 4
(Ops/Dept.)
Product Development
Concept Review to New Product
Introduction
D2.1
Quarterly
Days
First Last Name
Sales & Distribution
Production complete to Customer
D2.3
Quarterly
Days
First Last Name
Production
New Product Introduction to
Production Complete
D2.2
Quarterly
Days
First Last Name
Plant Readiness
Formula goes here
D2.2.1
Quarterly
Days
First Last Name
Development Testing
Formula goes here
D2.2.2
Quarterly
Days
First Last Name
Production Samples
Formula goes here
D2.2.3
Quarterly
Days
First Last Name
Full Production
Formula goes here
D2.2.4
Quarterly
Days
First Last Name
Production Phase Out
Formula goes here
D2.2.5
Quarterly
Days
First Last Name
Product ABC
Formula goes here
D2.2.4.1
Quarterly
Days
First Last Name
Product BCD
Formula goes here
D2.2.4.2
Quarterly
Days
First Last Name
Product CDE
Formula goes here
D2.2.4.3
Quarterly
Days
First Last Name
Product DEF
Formula goes here
D2.2.4.4
Quarterly
Days
First Last Name
Product EFG
Formula goes here
D2.2.4.5
Quarterly
Yes/No
First Last Name
Objective 1: Profitably achieve at least
30% unit and revenue share by 2010
Measures time from product definition to
volume threshold
First Last Name
Time to Market
D2
Quarterly
Days
Sample KPI Tree

7. KPI Introduction7
A well defined set of KPIs will meet this quality
assurance checklist
 KPI is SMART (Specific, Measurable,
Attainable, Relevant, Time-bound)
 KPI definition has all framework items
completely documented
 KPI is simple and interpretable
 Whomever is responsible for the target
has direct influence on the KPI (resource
assignment)
 Extraordinary factors are eliminated
(extraordinary depreciation, natural
disasters, etc)
 KPI is hard to manipulate
KPI QUALITY ASSURANCE CHECKLIST

8. KPI Introduction8
KPIs drive improvement behaviors and culture
change, which result in better targeting and
control
Without KPIs,
out of control
and off target
With KPIs,
improvement
and culture
change begin
Resulting in
better targeting
and control

9. 9
KPIs provide the basis for a management process that is
a complete cycle of target setting, planning, execution,
and reflection of results.
Financial
Perspective
Customer
Perspective
Strategic
Perspective
Innovative
Perspective
Targets Set
for Key
Performance
Indicators
(KPIs)
Inputs
Results – Reflection to Identify Continuous
Improvement Opportunities
Project Plans
and
Resource
Allocation
Nego-
tiation
Process
Execution
and
Improvemen
t
Drives
The Strategic Planning Cycle (Hoshin
Kanri)
KPI Introduction

10. KPI Introduction10
Data and a reporting forum together provide
direction for improvement
KPIs The right level of
management
reporting
Decisions that ensure
the direction is
consistent with the
company’s objectives

11. KPI Introduction11
There are three common roadblocks to an
effective KPI system
Pride of
authorship
Killing the
messenger
Fear of
losing
control
Source: Real Numbers, Cunningham & Fiume

12. KPI Introduction12
Management holds the key to breaking down
barriers and building a successful KPI system
Understand that
all processes
contain waste!
Put tools in place to
permanently fix problems,
not blame
Empower those
closest to the
problem to fix it
Source: Real Numbers, Cunningham & Fiume