10 Jan Understanding Key Performance Indicators – Part 3
In this post, I explain how best to ensure the successful use of KPIs within a company, and how to improve results.
Ensure successful use of KPIs within the company
Now that the effort has been made to carefully select and produce your KPIs, it would be a waste not to use them. The use of KPIs need to be maintained within the business. Ensuring visibility and maintaining relevance will help to do this.
All staff should be aware of the KPI relevant to them, be it a senior manager level or an operative working on the shop floor. Visibility can be achieved in a variety of ways, which will be appropriate to different situations. For example:
- KPI reporting packages are available on various ERP and WMS system that can be tailored to the requirements of a manager. Using these systems, relevant data can be made easily available on the user’s configured home page or via custom reports designed for them.
- Alternatively, there are a variety of “dashboard” packages available, which provide a live representation of current performance. Often displays or indicators are fitted in operational areas, on production lines and around the warehouse to focus attention on performance for workers.
- Similarly, through the use of mobile technology such as scanning guns and mobile apps, summaries of performance can be provided at relevant stages in the process to keep minds focused.
- Routine meetings where performance is reviewed can act as an especially important tool. Reports on performance are produced as a requirement. If the statistics are being monitored, then performance will often improve.
Time spent gathering information on a KPI that is no longer relevant, is often wasted time. In addition, an irrelevant KPI can take attention away from a more important area of focus.
- Regularly review the use of your KPIs.
- You may wish to consider reviewing the KPI less frequently or change the targets surrounding it if relevance reduces.
- Ensure the decision is agreed prior to the removal of a KPI.
Use KPIs to improve results
There are many different approaches to improving results. Balloon One frequently undertakes consultancy projects for customers who want to improve performance, but are unsure where to start. The usual procedure in these circumstances is as follows:
- Understand current / historic performance – the first stage for most companies is to start collecting the right information in KPIs. If no information has been collected, historic data can be sought in key areas, to help identify where to improve.
- Analyse and benchmark performance – now that a true gauge of performance has been achieved, this can be analysed to see where improvement should be made. A benchmarking exercise is a beneficial approach in these instances, whereby company performance is compared against another similar company. This allows an indication of the benefits of different practices and equipment to become apparent. With a number of clients in similar industries, who are willing to share their data with us for benchmarking purposes, this is a key service we are able to provide to clients.
- Target area for improvement – once an area for improvement has been targeted, we usually start by reviewing and mapping the process in detail. When performing our review we generally look for the following:
- Waiting (time on hand)
- Unnecessary transport or conveyance
- Over processing or incorrect processing
- Excess inventory
- Excess motion
We also discuss the process with the relevant staff to gain their view on potential improvements.Just by having a fresh set of eyes reviewing the process, this exercise will often identify potential gains in productivity that are simple changes. In addition, this is often where the differences between the two companies involved in a benchmarking process become apparent and can help to identify changes required.
- Identify potential improvement – from the process review, potential improvements – be they in process, equipment or technology – will be analysed to understand the potential return on investment. A decision can then be taken as to what is the best course of action to follow.
- Take action and review results – once the improvement has been made, the results must be closely monitored to ensure the desired results have been achieved. If not, then further adjustment may be required.
- Continual improvement – many businesses task their operational staff with a budget to meet and a set of targets surrounding improvement in their area. This has shown to be an effective method of encouraging employee ownership of processes, continuously driving improvement.
This post about the successful use of KPIs concludes my series of blog posts on KPIs. The value that can be found through targeted reporting, review and improvement should not be overlooked. Balloon One has a vast amount of experience in helping companies to review and improve their operations. We have a dedicated team of supply chain consultants, with a proven track record. Get in touch to understand the successful use of KPIs and the benefits that we can bring to your company.