KPIs trump KPDs: It's time to attain visibility into your most valuable metrics

True operational decision-making must be rooted in timely metrics that go beyond a few static data points. Compared to key performance indicators (KPI), which present calculated result metrics that you can’t impact, key performance drivers (KPD) provide actionable information.

03/31/2009



Having the right information when you need it is critical to operational performance, but often there is a gap. It could be that the information is old, hidden, locked in a spreadsheet, or simply incomplete.

True operational decision-making must be rooted in timely, relevant key performance metrics that go beyond a few static data points. A comprehensive, real-time picture of your operational health comes from multiple data sources within value streams that span multiple functional areas. This provides visibility into performance information that goes beyond a key performance indicator (KPI), which is a result or an outcome.

More valuable is a key performance driver (KPD). Compared to KPIs, which present calculated result metrics that you can’t impact, KPDs provide actionable information.

For example, Overall Equipment Effectiveness (OEE) is calculated as a function of availability, throughput, and quality. Your OEE percentage is interesting and may tell you something about how your equipment is performing, but it is an outcome and you can’t take action to improve OEE based on that measure alone.

Only through the lens of a KPD can the OEE metric be broken down into the root cause of the problem. Was the availability score affected by unplanned maintenance, breakage, operator error? Was throughput impeded by a delay in raw materials? Did quality suffer because of a faulty setting? With the ability to drill down to this level of detail, operations can respond and improve the factors involved.

Another metric is Total Productive Maintenance (TPM), or equipment reliability. The goal is to keep equipment running as close to 100-percent reliability as possible, but myriad factors—including failure rate, repair times, and operator training—are components in the equation. Each element can be affected by having access to actionable information and responding quickly. Parts that have a high incidence of failure can be ordered ahead of need and perhaps replaced on a preventive-maintenance schedule. Operators can receive additional training on how to use equipment and the periodic maintenance requirements.

KPDs, presented together with KPIs, allow you to not only monitor outcomes, but also to analyze and take action to improve performance drivers and hence results. When forming a KPD plan, consider four criteria:

1. It’s not just about the KPI, which in and of itself is merely a rearview look. Determine the underlying KPDs that can highlight the specific cause of the issue and which, when improved, will contribute to improving the KPI result.

2. To find the KPDs most correlated with your KPIs, look “upstream”—that is, to prior steps in the value stream.

3. Don’t try to measure and manage your KPDs in isolation. KPDs must be determined and analyzed in context of value stream or business process.

4. KPDs must be available in “right-time” to support proactive, continuous improvement instead of limited ad hoc improvement.

As your KPDs develop, keep in mind that your organization should have timely notification of alerts. The ability to drill into and analyze performance drivers using an intuitive, interactive dashboard ensures critical data is presented in the right context for quick decision-making.

KPDs should be consistent across the business and use a single definition of the source data, but at the same time be cross-functional, spanning value streams across sales, finance, manufacturing, supply chain, distribution partners, customer service, product development, IT, and HR as appropriate.




About the author: Wayne Morris is CEO of myDIALS , a SaaS-enabled solutions supplier that is pioneering a new standard in operational performance management.







No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
The true cost of lubrication: Three keys to consider when evaluating oils; Plant Engineering Lubrication Guide; 11 ways to protect bearing assets; Is lubrication part of your KPIs?
Contract maintenance: 5 ways to keep things humming while keeping an eye on costs; Pneumatic systems; Energy monitoring; The sixth 'S' is safety
Transport your data: Supply chain information critical to operational excellence; High-voltage faults; Portable cooling; Safety automation isn't automatic
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Maintaining low data center PUE; Using eco mode in UPS systems; Commissioning electrical and power systems; Exploring dc power distribution alternatives
Synchronizing industrial Ethernet networks; Selecting protocol conversion gateways; Integrating HMIs with PLCs and PACs
Why manufacturers need to see energy in a different light: Current approaches to energy management yield quick savings, but leave plant managers searching for ways of improving on those early gains.

Annual Salary Survey

Participate in the 2013 Salary Survey

In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.

Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.

2012 Salary Survey Analysis

2012 Salary Survey Results

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.