KPIs stand for Key Performance Indicators. KPIs are the metrics that monitor the performance of business objectives against the set target/goal (desired result). In other words, KPIs measure a company’s performance/output against set objectives and targets.
Key Performance Indicators are generally used to measure performance on a daily, weekly, and monthly basis against a defined target or goal, but some others focus on achieving long-term goals.
KPIs vary from company to company and help every area of the business like Sales and Marketing, Finance, Production, Quality, and HR.
KPIs provide the targets for teams to measure progress to achieve desired results and help in better decision-making.
The Key Performance Indicator is one of the important tools of the Lean Manufacturing process and also fulfills the quality management system requirements.
Table of Contents
KPI Definition
A Key Performance Indicator is a measurable value that demonstrates how effectively an organization is achieving its desired key business objectives/goals.
KPIs Types
Key Performance Indicators are to be made in a company at multiple levels to evaluate their success and to achieve the desired target/goal effectively.
Key Performance Indicators are broadly classified as Higher Level and Lower Level KPIs.
- Higher Level KPIs – focus on the overall performance of an organization. These are generally CEO and director-level indicators. Also known as business-level KPIs.
- Lower Level KPIs – focus on the functional or departmental processes such as Production, Quality, HR, Purchase, Finance, Sales and Marketing. Also known as functional or departmental-level Key Performance Indicators.
The lower-level key performance indicators should be aligned with the higher-level key performance indicators.
Key Performance Indicators are also categorized as:
- Quantitative KPIs- that can be presented with numbers.
- Qualitative KPIs- that cannot be presented as a number.
- Leading Indicators- that can used to predict the outcome of a process. In simple, leading indicators Influence future performance.
- Lagging Indicators- that show/present the success or failure post hoc. In simple, lagging indicators analyze past performance.
- Process Indicators- that represent the process efficiency and productivity
SMART KPIs
Key performance indicators (KPIs) of a company should be SMART to achieve desired results for business success.
SMART KPIs means:
- S – Specific
- M – Measurable
- A – Attainable
- R – Relevant
- T – Time-bound
KPIs Examples | PQCDSM KPIs
In most organizations, Key Performance Indicators are generally monitored according to the PQCDSM approach, especially in the automotive and manufacturing industries.
Some of the important Manufacturing or PQCDSM or Functional KPIs are as follows:
PRODUCTIVITY KPIs
Focus: Productivity key performance indicators focus on process efficiency improvement.
- Production Plan Adherence
- OEE (Overall Equipment Efficiency)
- Capacity Utilization
- SMED ( Single Minute exchange of dies )- SMED performance is measured in total no. of setups in various time slots.
QUALITY KPIs
Focus: Product and process quality improvement, rejection, and customer complaints reduction.
- In-house Rejection/Scrap (unit of measurement in %age or PPM)
- In-house Rework (unit of measurement in %age or PPM)
- Customer Returns (unit of measurement in %age or PPM)
- Customer Complaints (unit of measurement in numbers)
- Cost of Poor Quality (unit of measurement in %age, and value)
- Vendor / Supplier rejection (unit of measurement in % or PPM)
- Warranty Return (unit of measurement in % or PPM)
- Straight Pass final quality gate (unit of measurement in % )
COST Key Performance Indicators
Focus: Process improvement cost reduction.
- Tooling cost
- Raw Material cost
- Consumable cost
- Energy/Electricity cost
- Fuel cost
- Labor cost
- Machine Breakdown cost
DELIVERY Key Performance Indicators
Focus: Reduction in delivery time, delivery of the right quantity at the right time.
- Customer Schedule Adherence
- On-Time Delivery- adherence to customer’s delivery commitments.
- Supplier/Vendor delivery performance monitoring.
SAFETY Key Performance Indicators
Focus: Reduction in human injury or accidents and better safety at the workplace.
- Accident severity– major or minor
- Accident frequency or reported
- Safety training hours
MORALE KPIs | HR Key Performance Indicators
Focus: To increase employee morale and competence level.
- Total Employee Involvement (TEI) – Encourage involvement of the employees through Suggestion schemes (e.g. suggestion /employee, Suggestion/month).
- Enhance the Competence & Skill of employees (e.g. Training plan adherence, Training hours/ employee, Training effectiveness)
- Employee Absenteeism
- Employee Attrition Rate
Some other Functional or Departmental KPIs are:
STORE Key Performance Indicators
- Inventory Turnover Ratio (ITR)
- Red Inventory (Direct/Indirect)
- Gray Inventory (Direct/Indirect)
- Green Inventory (Direct/Indirect)
MAINTENANCE Key Performance Indicators
- PM Plan adherence
- Mean Time To Repair (MTTR)
- Mean Time Between Failure (MTBF)
- Breakdowns Hours
KPI for Sales | Marketing
- Customer Schedule vs Actual
- Customer Satisfaction Index (CSI)
- Customer Rating
- Customer Retention
- Sales Growth Rate
Financial Key Performance Indicators
- EBITDA
- Net Profit
- Gross Profit
- Profit Margin
- Revenues Growth
- Revenue Per Client (RPC)
Continual Improvement Key Performance Indicators
QMS | EHS KPIs
- Internal Audit Plan adherence
- MRM Plan adherence
- Non-conformance closure-100% adherence
You’ll also like:
Dead written subject material, Really enjoyed examining.
Keep functioning ,splendid job!
An impressive share, I just given this onto a colleague who was doing a little analysis on this. And he in fact bought me breakfast because I found it for him.. smile. So let me reword that: Thnx for the treat! But yeah Thnkx for spending the time to discuss this, I feel strongly about it and love reading more on this topic. If possible, as you become expertise, would you mind updating your blog with more details? It is highly helpful for me. Big thumb up for this blog post!
Hello there, I found your site by way of Google at the same time as looking for a similar topic, your website came up, it seems great. I have bookmarked it in my google bookmarks.
Some genuinely nice and useful info on this site, too I believe the design contains excellent features.
Dead written subject matter, thanks for selective information.
What¦s Going down i am new to this, I stumbled upon this I have discovered It positively helpful and it has aided me out loads. I am hoping to contribute & aid different customers like its helped me. Good job.
The core of your writing whilst sounding reasonable at first, did not really work well with me after some time. Somewhere throughout the sentences you were able to make me a believer unfortunately just for a very short while. I however have got a problem with your jumps in logic and one would do well to fill in all those breaks. In the event that you can accomplish that, I could certainly end up being impressed.
Spot on with this write-up, I truly suppose this web site needs far more consideration. I’ll probably be again to learn rather more, thanks for that info.
Do you have a spam issue on this blog; I also am a blogger, and I was wanting to know your situation; we have developed some nice methods and we are looking to swap methods with others, please shoot me an e-mail if interested.
Hello! Do you know if they make any plugins to safeguard against hackers? I’m kinda paranoid about losing everything I’ve worked hard on. Any tips?
I conceive you have mentioned some very interesting details, regards for the post.
I like this web site because so much useful material on here : D.
What i do not realize is in truth how you’re not really much more well-appreciated than you may be right now. You are very intelligent. You realize thus significantly with regards to this subject, produced me individually consider it from numerous various angles. Its like men and women are not interested unless it is one thing to do with Girl gaga! Your own stuffs great. All the time take care of it up!
Great website! I am loving it!! Will come back again. I am taking your feeds also.
I like the efforts you have put in this, thanks for all the great posts.
Wonderful work! This is the type of information that should be shared around the net. Shame on the search engines for not positioning this post higher! Come on over and visit my web site . Thanks =)
Hi my friend! I want to say that this post is amazing, nice written and include approximately all significant infos. I’d like to see more posts like this.
I am continually searching online for ideas that can benefit me. Thx!
Amazing blog! Is your theme custom made or did you download it from somewhere? A theme like yours with a few simple adjustements would really make my blog jump out. Please let me know where you got your theme. With thanks