Key Performance Indicators (KPIs)

1215 Words Oct 8th, 2014 5 Pages
Key Performance Indicators (KPIs)
Key Performance Indicators (KPIs) are quantitative and qualitative measures used to review an organization’s progress against its goals. These are broken down and set as targets for achievement by departments and individuals. The achievement of these targets is reviewed at regular intervals.
KPIs are used to monitor the performance of a company, department, process or even an individual machine. They will also help shape the behaviors of employees within the company.
KPIs need to be flexible and reflect the changing goals of the organization. Goals change as the organization changes in reaction to external factors or as it gets closer to achieving its original goals.
Individual KPIs need to be
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When implementing new KPIs, having baseline data to measure improvements is very important. Progress on KPIs should be communicated at regular times to highlight emerging trends. As these trends emerge, corrective action can be implemented in a timely fashion. KPIs need to be communicated via multiple media.
The measures that are selected must be carefully specified to ensure they do not cause non-lean behaviors. In many cases there will need to be a selection of measures that balance quality and quantity factors to ensure the correct behaviors are encouraged.
Listed below are some examples of the behaviors and outcomes that measure in isolation can cause.
Measure in isolation Behavior Outcome
Production output Make more Overproduction
Machine efficiency Run machine longer
Run in most efficient sequence for machine Unnecessary stock
Customer orders late
Maintenance costs Reduction in maintenance activities to reduce costs Machine breakdowns
Cash flow performance Pay suppliers as late as possible Supplier deliveries XX unreliable
Creating KPIs
KPIs must be designed for each proposed change to the production process so that:
There is a base line measurement taken to establish a starting performance standard
There are measures developed to track the team 's performance
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