How to build a Key Performance Indicator (KPI) - Consider Elevator Management

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What exactly is a KPI. This lesson was developed to help consider how to evaluate the effectiveness of a problem / solution proposal. Elevator Management is used, since it provides a topic almost all …

What exactly is a KPI. This lesson was developed to help consider how to evaluate the effectiveness of a problem / solution proposal. Elevator Management is used, since it provides a topic almost all can relate with. The focus is not to development an understanding of Critical Success Factors, but to concentrate on elements necessary in constructing a Key Performance Indicator (KPI) of a proposal's effectiveness.

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  • 1. KPI Focus Workshop Building a KPI is about collecting evidence
  • 2. WHAT Does KPI Mean? K”ONCERN- (WHAT AFFECTS RESULTS) PERFECT- (WHAT RESULT ARE INTENDED) S“I”GNAL- (INDICATE DIRECTION) KEY- (IMPORTANT / RELEVANT) PERFORMANCE- (DOING, Carrying Out, Executing) INDICATOR- (POINT OUT, TELL, SHOW) KPI is a formula to collect evidence/data that indicates if your management makes “performance” better or worse!
  • 3. Measuring Device Sample Size= 100 Mean= 40.1 cm Average= 40.0 cm STD σ = .073 # Bad products = 4 ● Before 3 months Reduce Process Variation 5%. ● Reduce QC reject 10% by October. Goals Is There a KPI Here? Requirements / Limits Analysis / Statistics Result XY=40.3cm Consequences
  • 4. MEASURE S.M.A.R.T. GOALS WITH M.R.T. KPI’s? Data captured / available (or, could be available) from the way you do business. (Does capturing Data cost more than the value it provides?) Critical Success Factors (CSF’s) identify the concern or necessary action to achieve your goal (ex. an issue that prevents you activity from being effective) . KPI’s follow that concern catching only the important information from your business metrics. M-What data can you use? R- Does it fit to CSF? T- Track progress (how often?)
  • 5. First we need to have activities we manage! Think of elevators in a tall building. ●What are activities of elevator management? ●What is “Good Performance” for an elevator? Lets Consider Elevator Management
  • 6. • Who are the different stakeholders? • How are their motivations different? • WHAT IS A GOOD ELEVATOR? Suppliers? Shoppers?Owners? Office Staff?Workers? A view of performance will change depending on who you serve?
  • 7. In your experience, what is a Bad Elevator? How can you observe this? What are the indicators of a performance problem? How can the problems/issues be observed or described to another person.
  • 8. Elevator Request The basic control cycle for the control of an elevator We have 8 lifts & 100 Floors ACTIVITY MANAGEMENT-
  • 9. ACTIVITY MANAGEMENT- ● Receive Pickup Requests  Prioritize and schedule cars ● Move vehicles (assets) to correct location. ● Load Cargo ● Review Destination Requests  Determine if there are interim stops to be made.  Prioritize and schedule cars ● Unload Cargo  Determine if you can load cargo from current location and deliver to another. ●Determine waiting location (If no request) ●Schedule repairs and maintenance Elevator Management Same as Transportation Management? What factors do you need to consider? ● Is a problem a control issue? ● Is it a design issue? ● Can you predict the issue? ○ Will better info help? ● Is there infrastructure you can’t change?
  • 10. What STRATEGY might... address/reduce these issues? Video Link http://www.schin dlerportna.com/t rafficmanageme nt/ Double-Decker Control App Add External Lift Grouping / Location Control System Conveyor / Milk Run Aromatherapy RFIDAccessControl RegenerativePwr. Anti-Graffiti Film
  • 11. Will Your Strategy Work? Addresses Objectives Solves Issues (CSF) Considers Factors Resources Are Available
  • 12. 1. Your management is:  Good at solving a concern?  Bad at solving a concern? 2. Your Strategy:  Made performance Better?  Made performance Worse? How can you provide evidence that: INDICATE /SIGNAL Direction is: Good/Bad Better/Worse re. RESULTS (over time...) What is a KPI? It is a formula to compare repeating activities
  • 13. What is a KPI? K= Critical Concern (counted or measured) P= Perfect Standard (input or output, standard) I= Indicator (Signal) Count or Measure the (CSF) Critical Success Factor Compare to a Standard It is a formula to compare repeating activities AND – Tell how often will you review the data?
  • 14. Some Elevator KPI Examples ●“Average Wait” per 1000 requests(weekly) = ∑Wait Time /1000 requests (review each week) ●Average Cleaning Cost (monthly) = ∑Cleaning Costs/Number of Cleanings (per month) ●Elevator System Availability(monthly) = (Total Time – Unavailable)/Total Time (per month) ●Watts per use (daily) = ∑Energy used / # of Trips (per day) (This is a cost measurement why not use cost to operate / trip?)
  • 15. COUNT OR MEASURE THE “K”ONCERN (C.S.F.) ● BINARY OR ABSOLUTE METRIC: Number meeting/breaking a standard or goal- ex.  # of Damaged Goods  # of On-Time Shipments  # of Error Free Transactions  # that meet the goal, requirement or limit (ex. # delivered in less than 3 days) ● COMPARATIVE METRIC: Incorporates more than one measurement-ex.  Average (sum of total / number in standard)  Variation (max – min)  Utilization (Used-Total Available)  Deviation (reality – expectation) (max/min-requirement)
  • 16. ● Outputs (results of work): ● Number of Product Produced or Shipped ● Number of Transactions ● Number of Kilometres Travelled ● Carbon Produced CO2 ● Number of Orders Processed ● Revenue Earned ● Inputs or Resources Used: ● Total requests ● m3 (square meters) of Warehouse or Transport Space ● Amount of Fuel or Electricity Consumed ● Month or Days or Hours or Currency Consumed ● When volume change (seasonality) is a concern use a level comparator: ● Per Unit (or) a set number of units-ex. #damage/1,000 units ● Per Transaction (or) a set number-ex. #complaints/100 requests COMPARE TO A STANDARD WHAT WOULD BE PERFECT?
  • 17. REVIEW! DATA captured / available (or, could be available) from the way you do business. (Will capturing data cost more than the value it could provide?) Critical Success Factors (CSF’s) identify the concern or necessary action to achieve your goal (ex. an issue that prevents you activity from being effective) . KPI’s follow that concern catching only the important information from your business metrics. M-easurement data available? R- elevat to CSF? T- Track progress (how often?) A KPI is a formula to create evidence that direction in a “CSF” is trending Good, Bad, Better, or Worse
  • 18. WHAT IS A GOOD KPI?
  • 19. Good Luck!