A Key Performance Index (KPI) is a measurable value that demonstrates
how effectively a company is achieving key business objectives. KPIs are
important for the plant floor because they are highly effective for exposing,
quantifying and visualizing muda (the Lean term for waste); and they are also
highly effective motivators. The essence of Lean manufacturing and the central
theme of the Toyota Production System are to eliminate waste — to relentlessly
eliminate all activities that do not add value for your customer. Effective
KPIs quantify waste; provide an early warning system for processes operating
outside the norm; and offer important hints to where improvement efforts should
be focused. KPIs also function as very effective motivators.
Motivation theory 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
Click to download E-book on KPI and lean tool
- Provide objective evidence where the actual progress towards plan vs actual
- Helps in better decision making
- Offer degree performance changes over time period
- It provide the indicators on how the current progress is ongoing towards objective
- Based on past data ,it helps in deriving the future process improvements and objectives and goals
- Can track efficiency, effectiveness, quality, timeliness, governance, compliance, behaviors, economics, project performance, personnel performance or resource utilization
- It provide balance between leading and lagging indicators(i.e., area of improvement )
Turtle diagram in KPI
Effective performance Index of a particular process can be
derived using turtle diagram
- Input: It measure attributes which are needed to perform a required task .The attributes are raw materials ,type of materials, quality of product, timeline
- Output: It shows the desired results. the output can be measurable or non-measurable but it should provide a meaningful to the user
- Process: It is a activity that focus on measures on how the efficiency, quality or consistency of specific process used to produce specified output. it also measures and control that how the process is made up. in process activity risk and opportunities are defined risk is categorized as potential occurrence it may be positive or negative effect, opportunity is a possible actions that can be taken For specified output
- Resource: It shows what are the item needed to perform a particular task or a process
- Skill required: It shows the level of skill needed to perform a particular task. the skill level differ depending upon the output and the task. depend upon the work experience come on Knowledge the skill level of a particular operator may differ
Example for KPI using turtle diagram
The below shows the example for turtle diagram for coffee making process
Example for KPI using graphs
Below shows the example of a performance rating in a
production line for the year of 2019
This is how the key performance index is calculated for all
the major task some of them are
- Departmental objectives
- Plan vs actual for continuous improvement
Plan vs actual for cost reduction activities
To monitor production control activities
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