Quick Definition
Key Performance Indicators are measurements and metrics that support and facilitate achieving critical goals of the organization. KPIs are very important for understanding and improving manufacturing performance; both from the lean manufacturing perspective of eliminating waste and from the corporate perspective of achieving strategic goals.
Expanded Definition
Every company measures themselves to some degree. Often these measurements are based on historical information. While there is certainly value in historical analysis, it is a fundamental principle of Key Performance Indicators to be current or forward looking metrics. It is also critical that KPIs be closely aligned to strategic company goals and implemented in such a way as to support positive change.
Key Performance Indicators can be highly effective for exposing, quantifying and visualizing muda (the lean term for waste). The essence of lean manufacturing and the central theme of the Toyota Production System (TPS) is to eliminate waste – in other words, to relentlessly eliminate all activities that do not add value for the customer. Effective KPIs quantify waste, provide an early warning system for processes operating outside the norm, and offer important hints as to where improvement efforts should be focused.
Key Performance Indicators are also highly effective motivators. Motivation theory (i.e. organizational behavior) is a complex field with many diverse opinions; however, there is wide agreement that a central key to effective motivation is setting challenging but attainable goals (e.g. SMART goals, which are Specific, Measurable, Achievable, Realistic, and Time-Specific). SMART goals are excellent candidates for KPIs.
Effective KPIs can energize the plant floor – unleashing competitive spirit and promoting kaizen (the lean term for continuous improvement). How is this achieved? By providing both a “will” (a strong desire for improvement) and a “way” (effective tools). The “will” flows from a culture of trust. The goal isn’t simply to improve a number; it is to truly improve performance. Achieving this requires genuine buy-in from the plant floor. The “way” flows from KPIs that can be influenced and controlled by plant floor personnel. After all, if operators can’t influence the KPI what value does it provide for them? Collectively, this “will” and “way” create information democracy; empowering plant floor personnel with actionable information and a meaningful level of control over the process.
KPIs must also provide meaningful, reliable, and accurate information. Thus, it is important to carefully define and document the methodology of measurement before implementing a given KPI. Goals and desires are often vague, whereas Key Performance Indicators are very specific. And, since KPIs are indicators of progress and performance, it is vital that everyone that uses them be able to trust in their accuracy.
How Can Key Performance Indicators Help My Organization?
Can you imagine driving your car without a speedometer or gas gauge? Driving solely based on your rear-view mirror? This is exactly the situation that exists on most plant floors today. Effective KPIs enable managers and operators to keep their fingers on the pulse of the plant floor.
Here are five steps to creating and maintaining effective Key Performance Indicators for your manufacturing plant:
- Study the strategic goals of your company.
- Carefully select, define, and document KPIs that will drive the desired behavior.
- Create the “will” and the “way” as described above (e.g. educate, train, and listen).
- Begin using the KPIs to drive improved performance.
- Do it again. Lean is a continuous improvement process. That means your KPIs should evolve as needed to best match the current strategic goals of the company.
Vorne Products and KPIs (Key Performance Indicators)
A manufacturing truth – “you cannot change that which you do not measure”. Vorne visual displays provide real-time information to enhance manufacturing performance by delivering real-time display of KPIs.
We offer many visual display and production monitoring products to serve a variety of plant floor applications. The following product solutions are some of the most common.
| Virtual KPI Andon | |
|---|---|
| PROBLEM | We are still in the process of defining our key goals and although we need to expose those that we've settled on, are reluctant to do so because things may change. |
| STRATEGY | Expose KPIs just as soon as they are defined and provide this information to the people most likely to affect changes that enhance manufacturing performance. Display KPIs as deemed necessary to support change. |
| SOLUTION | XL400 Large Digital, XL600 Multi-line and XL800 Alphanumeric production monitors can be reprogrammed at any time to show any of the more than 100 real-time process variables. Additionally the XL Series products have a built-in Ethernet connection and can push this information over your network. Imagine seeing real-time production data via a simple web browser! |
| Real-time KPIs | |
| PROBLEM | We have just a couple KPIs that are critically important to us. |
| STRATEGY | Vorne visual displays support a wide variety of KPIs from a single variable such as run rate or downtime to more than 100 real-time KPIs including OEE. |
| SOLUTION | 87 Series
– Great for displaying up to three
KPIs such as count, rate and downtime or target count, actual count
and percent efficiency. |
Call us toll free at 1-888-DISPLAYS (1-888-347-7529). Our products deliver real-time KPIs that help you enhance manufacturing performance.
