Training Pack




                Key Performance Indicators - KPI’s
Aims & Objectives

Target Audience : Site Management to Team Leaders

Purpose of Module :To ensure employees have the skil...
Key Performance Indicators

Course Outline
•INTRODUCTION

•WHAT ARE KEY PERFORMANCE INDICATORS?

•CHARACTERSITICS OF A GOO...
Introductions



                         • Name

                      • Department

                   • Length of servi...
What are KPI’s




                 Flip Chart
Key Performance Indicators

 WHAT ARE KPI’s FOR?

•TO COMMUNICATE STATUS - ACTUAL v TARGET
      • PLANT LEVEL
      • BUS...
Key Performance Indicators

ESSENTIAL




• IMPORTANT TO THE VIEWER

• VITAL - AFFECTS THE BUSINESS

• CUSTOMER FOCUSED

•...
Key Performance Indicators



USEFUL


• CURRENT - UP TO DATE

• EASY TO UNDERSTAND

• IMPORTANT AND RELEVANT

• VIEWER CA...
Key Performance Indicators




IMMEDIATE
• URGENCY / OWNERSHIP

• RESPONSIBILITIES DEFINED

• DYNAMIC IMPROVEMENT PLAN

• ...
Key Performance Indicators

 WHAT ARE KPI’s NOT?

• GROUP OF METRICS
         • NOT EVERYTHING WE MEASURE IS A KPI !

• ST...
Key Performance Indicators

 CHARACTERISTICS OF GOOD KPI
• DYNAMIC
              • WELL MANAGED - ROTATE VITAL FEW
       ...
Key Performance Indicators

 Business KPI’s

• Safety Performance

• Quality Performance

• Cost Performance

• Delivery P...
Examples

    Actual Performance
   Plotted Against Target           Defects Per Assembly

                               ...
Examples

RAG Colour Coding

RED

 • Outside of target with no improvement
   or deteriorating trend.

AMBER

 • Inside of...
Examples

                             Scrap Cost 2004

 16000                                                     80
    ...
Examples

          How are we doingSchedule
          against the plan?
100%      Are we on target?
 90%
 80%
 70%
 60%
 ...
Examples

            External Supply Schedule Adherence
        What are we aiming for?
100%



80%



60%



40%



20%
...
Examples
                                       WIP
         9000                                                         ...
Examples

% TAKT ADHERENCE   Hrs Achieved / Hrs Planned x 100
   130



  125

  120


  115

   110


   105



  100

  ...
Examples
Performance Management Cascade
Step 1 - Team Leaders manage the Key Drivers of performance
• Are we fully manned to comple...
Performance Management Cascade

Step 4 - Head of Business reviews Weekly Performance
• Good informed                      ...
Performance Management Cascade


 Step 6 - Site Cost Performance consolidated. Manufacturing Director reviews Factory Mana...
What KPI’s do you think would be applicable to
your area




                     Flip Chart
How to Create and Manage KPI’s

                                         Identify
           Monitor Progress            C...
How to Create and Manage KPI’s

              Identify
            Customers       Determine
           and Suppliers   Pe...
How to Create and Manage KPI’s

                        Ease of recording data
                        Impact on business
...
How to Create and Manage KPI’s

               Identify
             Customers        Determine
            and Suppliers ...
Example
                  KPI : Key Performance Indicator

                   LOST HOURS (UNPLANNED WORK) PRE & POST
     ...
How to Create and Manage KPI’s

                      Identify
                    Customers        Determine
            ...
How to Create and Manage KPI’s

                                Identify
                              Customers        De...
How to Create and Manage KPI’s

                                   Identify
           Monitor Progress      Customers    ...
Typical KPI’s
     KPI - examples                           Target
Quality
   Defects                         1 Defects pe...
KPI’s

 SUMMARY

•Direct relationship to business plan

•Communicates progress against plan

•Drives continuous improvemen...
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Key Performance Indicators - KPI's

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Key Performance Indicators - KPI's

  1. 1. Training Pack Key Performance Indicators - KPI’s
  2. 2. Aims & Objectives 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 individuals contribution ( 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
  3. 3. Key Performance Indicators 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
  4. 4. Introductions • Name • Department • Length of service • Knowledge of Key Performance Indicators
  5. 5. What are KPI’s Flip Chart
  6. 6. Key Performance Indicators WHAT ARE KPI’s FOR? •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
  7. 7. Key Performance Indicators ESSENTIAL • IMPORTANT TO THE VIEWER • VITAL - AFFECTS THE BUSINESS • CUSTOMER FOCUSED • DRIVES IMPROVEMENT
  8. 8. 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)
  9. 9. Key Performance Indicators IMMEDIATE • URGENCY / OWNERSHIP • RESPONSIBILITIES DEFINED • DYNAMIC IMPROVEMENT PLAN • AUDIT PROCESS - ACTUAL V’s PLAN • CLEAR OBJECTIVES
  10. 10. Key Performance Indicators WHAT ARE KPI’s NOT? • 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
  11. 11. Key Performance Indicators CHARACTERISTICS OF GOOD KPI • 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
  12. 12. Key Performance Indicators Business KPI’s • Safety Performance • Quality Performance • Cost Performance • Delivery Performance • People Performance
  13. 13. Examples Actual Performance Plotted Against Target Defects Per Assembly Unambiguous Title Visual Indicator 600 of 500 Performance Trend 400 300 200 100 Legend Easy To understand 0 Jul Jul Mar May Jan Nov Sept Sep Nov Target Improvement Machining Sub Assy Assembly Test 2001 Target
  14. 14. Examples RAG Colour Coding RED • Outside of target with no improvement or 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.
  15. 15. Examples Scrap Cost 2004 16000 80 YTD Scrap Cost: £34.0k 14000 70 12000 60 No. Of Items 10000 50 £ 8000 40 6000 30 4000 20 2000 10 0 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Scrap Cost Scrapped Items Budget
  16. 16. Examples How are we doingSchedule against the plan? 100% Are we on target? 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Stage 1 Stage 2 Stage 3
  17. 17. Examples External Supply Schedule Adherence What are we aiming for? 100% 80% 60% 40% 20% 0% 23 24 25 26 27 28 29 30 31 32 33 Supplier 1 Supplier 3 Supplier 5 Supplier 2 Supplier 4
  18. 18. Examples WIP 9000 3.5 8000 3 7000 2.5 6000 Stock Turns 2 £ '000 5000 4000 1.5 3000 1 2000 0.5 1000 0 0 Nov 99 Jun 00 Sep 00 Oct 00 Nov 00 36951 37043 WIP Value Product A WIP Value Product B WIP Budget Stock Turns
  19. 19. Examples % TAKT ADHERENCE Hrs Achieved / Hrs Planned x 100 130 125 120 115 110 105 100 95 90 85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 DAY DATE SHIFT
  20. 20. Examples
  21. 21. Performance Management Cascade Step 1 - Team Leaders manage the Key Drivers of performance • Are we fully manned to complete the workpackages? • Is overtime under control? Stage 1 Jig Board • Are we hitting targets (Minutes to complete Operations)? Minutes to complete Op 1 Step 2 - Manager holds daily Team Leader review by Minutes to work package complete Op 2 • Actions timely and focused • Support given when needed Step 3 - Assembly Managers review Weekly Performance withManagers. • Cost accountability introduced. Focus on shift by shift performance. Manhours (Shift B) 3,200 3,000 2,800 2,600 2,400 2,200 2,000 Jan Feb M ar A pr M ay Jun Jul A ug Sep Oc t Nov Dec &
  22. 22. Performance Management Cascade Step 4 - Head of Business reviews Weekly Performance • Good informed Stg 01 Cost Per Set 90 debate Stg 01 Hours per Set 85 resulting from 4,500 80 4,000 18 0 Stg 01 Build 75 1. 0 upward cascade 3,500 70 0.8 16 0 65 of Team Leaders’ 3,000 14 0 60 0.6 0.4 performance 2,500 12 0 55 50 0.2 0.0 2,000 45 (0.2) 10 0 1,500 40 (0.4) • Countermeasure 80 1,000 Jan Feb M ar Apr M ay Jun Jul Aug (0.6) Sep Oct Nov Dec plans if targets 60 500 P e r i od (0.8) ( 1. 0 ) not being met 40 0 1 3 5 Direct 7 9 11 13 15 Indirect 17 19 21 23 NPO ( 1. 2 ) 25 27 29 Disruptio YTD 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Week V ar iA dded o 32. 1 anc e t V al ue W eek Out OfWeek V ar i ance t o 32. 1 Ref r esh ai ni ng Ji g Tr Week Cumul at i v e A c tupt i on - E x t er nal Di s r ual Di sr upt i on - at i v e nal Cumul I nt er B udget 32. 1 B udget For ecas t 32. 1ec asrt es h For Ref (Lean) Step 5 – Senior Management Team reviews Monthly performance Production Volume • Senior level escalation plans. 350 2 Hours per Set 6, 500 300 1. 5 1 250 250 6, 000 Cost Per Set 0. 5 5, 500 200 0 5, 000 200 150 4, 500 -0 . 5 150 4, 000 100 -1 3, 500 50 - 1. 5 100 3, 000 0 -2 2, 500 50 J an Feb M ar A pr M ay Jun Jul A ug Sep Oc t Nov Dec 2, 000 & Period Variance (32.1) Period Var J an Feb M ar A pr M ay 0 Cumulative ug Sep Oc t Nov J un J ul A Actual Dec Cumulative Jan ActualA pr FebM ar M ay J un Nov Dec J ul Disruption A ug Sep Oc t Stage 1 Stage 2 Budget (32.1) Stage 3 Forecast FAL Di ti OBP
  23. 23. Performance Management Cascade 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. Summ ary - All Categories 200, 000,000 1, 500,000 180, 000,000 1, 000,000 160, 000,000 140, 000,000 500, 000 120, 000,000 100, 000,000 0 80, 000,000 -500,000 60, 000,000 40, 000,000 -1,000, 000 20, 000,000 0 -1,500, 000 M onthly +/1 Forecast +/- to budget Cumulative actual Cumulative budget Cumulative forecast &
  24. 24. What KPI’s do you think would be applicable to your area Flip Chart
  25. 25. How to Create and Manage KPI’s Identify Monitor Progress Customers Determine To Plan And Take and Suppliers Performance Corrective Action Drivers1 Form Improvement Form Team Teams ACT PLAN Create Define Local Improvement Continuous Performance Improvement Plan Cycle Indicators CHECK DO Score & Prioritise KEY Collect Data Performance Indicators Train Users Identify owners Develop Format and users And Review Process
  26. 26. How to Create and Manage KPI’s Identify Customers Determine and Suppliers Performance Drivers Form Team Define Local Performance Indicators Score & Prioritise KEY Performance Indicators
  27. 27. How to Create and Manage KPI’s Ease of recording data Impact on business Frequency of occurrence Define Local Performance Indicators & Score & Prioritise KEY Performance Indicators
  28. 28. How to Create and Manage KPI’s Identify Customers Determine and Suppliers Performance Drivers Form Team Define Local Performance Indicators Score & Prioritise KEY Performance Indicators Identify Owners Develop Format and Users And Review Process
  29. 29. Example KPI : Key Performance Indicator LOST HOURS (UNPLANNED WORK) PRE & POST 30 29 28 27 L 26 25 1 24 23 22 21 H 20 19 18 G 17 16 15 4 14 B 13 12 11 5 10 9 8 7 A 6 5 4 3 2 1 Days 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 28 29 30 31 Week OSS A MCC G Logistics Internal B Supplier Trefn H Maintenance C TAC I MSE D Quality J Engineering Shop Support E Tooling K 3 Handling F Lean & L Unplanned Absence M 2 Blue Shift = TW Owner: Red Shift = DJ Location: X:BroughtonA340-600Lean ManufacturingStage 00Std DocumentsLost Hours KPI
  30. 30. How to Create and Manage KPI’s Identify Customers Determine and Suppliers Performance Drivers Form Team Define Local Performance Indicators Score & Prioritise KEY Performance Indicators Train Users Identify Owners Develop Format and Users And Review Process
  31. 31. How to Create and Manage KPI’s Identify Customers Determine and Suppliers Performance Drivers Form Team Create Define Local Improvement Performance Plan Indicators Score & Prioritise KEY Collect Data Performance Indicators Train Users Identify Owners Develop Format and Users And Review Process
  32. 32. How to Create and Manage KPI’s Identify Monitor Progress Customers Determine To Plan And Take and Suppliers Performance Corrective Action Drivers Form Improvement Form Team Teams Create Define Local Improvement Performance Plan Indicators Score & Prioritise KEY Collect Data Performance Indicators Train Users Identify Owners Develop Format and users And Review Process
  33. 33. Typical KPI’s KPI - examples Target Quality Defects 1 Defects per unit (Defects per unit) Errors (errors per unit) 2 errors per unit Delivery Schedule adherence 0 delta (nil Hours behind or ahead of plan) (Hours delta to plan) Cycle Time To be agreed (Hours per Unit) Cost Manning 270 hours per unit (man hours per set) (Cost per unit) £5,000 per unit People Skill Level 75% people trained to Practitioner Level Training Hours 40 hrs per man per year Key performance indicators need to be simple and focused
  34. 34. KPI’s SUMMARY •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
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