Training Pack. Key Performance Indicators - KPI s

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Key Performance Indicators - KPI’s

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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

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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

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• Name

• Department

• Length of service

• Knowledge of

Key Performance Indicators

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Flip Chart

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•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?

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ESSENTIAL

• IMPORTANT TO THE VIEWER

• VITAL - AFFECTS THE BUSINESS • CUSTOMER FOCUSED

• DRIVES IMPROVEMENT

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USEFUL

• CURRENT - UP TO DATE • EASY TO UNDERSTAND

• IMPORTANT AND RELEVANT • VIEWER CAN CONTRIBUTE

• HAS A STAKE

• CAN HAVE AN EFFECT (good and bad)

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• URGENCY / OWNERSHIP

• RESPONSIBILITIES DEFINED • DYNAMIC IMPROVEMENT PLAN

• AUDIT PROCESS - ACTUAL V’s PLAN • CLEAR OBJECTIVES

IMMEDIATE

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• 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?

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• 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

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Business KPI’s

• Safety Performance • Quality Performance • Cost Performance • Delivery Performance • People Performance

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Defects Per Assembly 0 100 200 300 400 500 600 Jul

Sept Nov Jan Mar May Jul Sep Nov

Machining Sub Assy Assembly

Test 2001 Target

Target Improvement Actual Performance

Plotted Against Target

Legend Easy To understand Visual Indicator of Performance Trend

Examples

Unambiguous Title

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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.

RAG Colour Coding

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Scrap Cost 2004 0 2000 4000 6000 8000 10000 12000 14000 16000

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

£ 0 10 20 30 40 50 60 70 80 No. Of I tems Scrap Cost

Scrapped Items Budget

YTD Scrap Cost: £34.0k

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Schedule 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Stage 1 Stage 2 Stage 3

How are we doing against the plan? Are we on target?

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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 5

Supplier 2 Supplier 4

What are we aiming for?

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WIP 0 1000 2000 3000 4000 5000 6000 7000 8000 9000

Nov 99 Jun 00 Sep 00 Oct 00 Nov 00 36951 37043

£ '00 0 0 0.5 1 1.5 2 2.5 3 3.5 Stoc k Tur ns

WIP Value Product A WIP Value Product B

WIP Budget Stock Turns

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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 Hrs Achieved / Hrs Planned x 100 Hrs Achieved / Hrs Planned x 100Hrs Achieved / Hrs Planned x 100 Hrs Achieved / Hrs Planned x 100

% TAKT ADHERENCE % TAKT ADHERENCE% TAKT ADHERENCE % TAKT ADHERENCE

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&

Step 1 - Team Leaders manage the Key Drivers of performance

• Are wefully mannedto complete the workpackages?

• Isovertimeunder control?

• Are we hitting targets(Minutes

to complete Operations)?

Step 2 - Manager holds daily

Team 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

J an Feb M ar A pr M ay J un J ul A ug Sep Oc t Nov Dec

Step 3 - Assembly Managers review Weekly Performance

withManagers.

• Cost accountability introduced. Focus on shift by shift performance.

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&

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 A pr M ay Jun Jul Aug Sep Oct Nov Dec P e r i o d

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 k A dded V al ue Out Of J i g T r ai ni ng Di s r upt i on - E x t er nal Di sr upt i on - I nt er nal B udget For ec as t (Lean)

Step 4- Head of Business reviews Weekly Performance

• Good informed debate resulting from upward cascade of Team Leaders’ performance • Countermeasure plans if targets not being met

Stg 01 Build 4 0 6 0 8 0 10 0 12 0 14 0 16 0 18 0 YT D9 1 01 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 02 1 2 2 2 3 2 4 2 5 2 6 2 7 2 8 2 9 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 V ar i anc e t o 32. 1 Week V ar i ance t o 32. 1 Ref r esh Cumul at i v e A c t ual Cumul at i v e B udget 32. 1 For ecas t 32. 1 Ref r es h

Production Volume 0 50 100 150 200 250 300 350

J an Feb M ar A pr M ay Jun Jul A ug Sep Oc t Nov Dec

- 2 - 1. 5 - 1 - 0 . 5 0 0 . 5 1 1. 5 2

Period Variance (32.1) Period Var

Cumulative Actual Cumulative

Hours per Set

2, 000 2, 500 3, 000 3, 500 4, 000 4, 500 5, 000 5, 500 6, 000 6, 500

J an Feb M ar A pr M ay J un J ul A ug Sep Oc t Nov Dec

Stage 1 Stage 2

Stage 3 FAL

Di ti OBP

Cost Per Set

0 50 100 150 200 250

Jan FebActualM ar A pr M ay J un J ul DisruptionA ug Sep Oc t Nov Dec

Budget (32.1) Forecast

Step 5– Senior Management Team reviews

Monthly performance

• Senior level escalation plans.

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&

Sum m ary - All Categories

0 20, 000, 000 40, 000, 000 60, 000, 000 80, 000, 000 100, 000, 000 120, 000, 000 140, 000, 000 160, 000, 000 180, 000, 000 200, 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 Cumulative actual

Cumulative budget Cumulative 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.

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Flip Chart

What KPI’s do you think would be applicable to

your area

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Identify Customers and Suppliers Form Improvement Teams Create Improvement Plan Train Users Monitor Progress To Plan And Take

Corrective Action Form Team Determine Performance Drivers1 Identify owners and users

Score & Prioritise KEY Performance Indicators Define Local Performance Indicators Develop Format And Review Process Collect Data PLAN Continuous Improvement Cycle DO CHECK ACT

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Score & Prioritise KEY Performance Indicators Identify Customers and Suppliers Determine Performance Drivers Form Team Define Local Performance Indicators

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&

Score & Prioritise KEY Performance Indicators Define Local Performance Indicators

Ease of recording data Impact on business

Frequency of occurrence

How to Create and Manage KPI’s

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Identify Customers and Suppliers Form Team Determine Performance Drivers

Score & Prioritise KEY Performance Indicators Define Local Performance Indicators Develop Format And Review Process Identify Owners and Users

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& 30 29 28 27 L 26 25 24 23 22 21 H 20 19 18 G 17 16 15 14 B 13 12 11 10 9 8 7 A 6 5 4 3 2 1 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 A G B H C I D J E K F L M Blue Shift = TW

Owner: Red Shift = DJ

Location: X:\Broughton\A340-600\Lean Manufacturing\Stage 00\Std Documents\Lost Hours KPI

LOST HOURS (UNPLANNED WORK) PRE & POST KPI : Key Performance Indicator

Unplanned Absence 28 29 30 31 Tooling Internal Days Lean Handling OSS Week Supplier Logistics Engineering MCC Shop Support Maintenance Trefn TAC Quality MSE 1 2 3 4 5

Example

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Identify Customers and Suppliers Form Team Determine Performance Drivers Identify Owners and Users

Score & Prioritise KEY Performance Indicators Define Local Performance Indicators Develop Format And Review Process Train Users

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Identify Customers and Suppliers Create Improvement Plan Train Users Form Team Determine Performance Drivers Identify Owners and Users

Score & Prioritise KEY Performance Indicators Define Local Performance Indicators Develop Format And Review Process Collect Data

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Create Improvement Plan Train Users Form Team Determine Performance Drivers Identify Owners and users

Score & Prioritise KEY Performance Indicators Define Local Performance Indicators Develop Format And Review Process Collect Data Form Improvement Teams Identify Customers and Suppliers Monitor Progress

To Plan And Take Corrective Action

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KPI - examples _Target

Quality Defects

(Defects per unit) Errors

(errors per unit) Delivery

Schedule adherence (Hours delta to plan) Cycle Time

(Hours per Unit) Cost

Manning

(man hours per set) (Cost per unit) People

Skill Level Training 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 Level 40 hrs per man per year

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•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