Hi,

I am interested in setting our key performance indicators, and think I can set an average of the last 2 years results; e.g scrap cost as % of sales and ppm.
Is this sufficient?

Do I have to have one for ALL of my processes?

Rangotango

Hi,Do I have to have one for ALL of my processes?
Rangotango

My registrar says YES, my best guess "why" is Paragraph 0.2 Process Approach

d) continual improvement of processes based on objective measurement.

I look forward to what others have to say

I have worked on KPI's that address the four key areas in 8.4

Customer satisfaction which could be a survey, no of complaints

product conformity which could be warranty or an inspection result

process trends such as efficiency or utilisation or no of rejects

supplier performance - no of rejects

If you have a least one measure in each of these areas that is enough.

Section 0 is not a compliance requirement according to ISO. I've never had an assessor beat me over the head with it.

Try doing a search on the Cove for Metrice and Key Indicators...we've had many discusions on these topics before.

But do you need them for all your processes...let me answer by a question or two:


Why wouldn't you?
How do you know that your processes are under control if you are not measuring them?


My organization has a philosophy that there can be no Improvement without Routine. In other words, Improvement is impossible if your current processes are not stable and under control. How can you demonstrate this if you are not measuring those indicators for the key activities within the processes?

And if you can not demonstrate control...how can you demonstrate improvement?

Oh, welcome to the Cove, rangotango! :bigwave:

I have created a Indicator for any one of my processes!
But I remind that I have a small number of processes. Only the key processes for my organization.

So, I have indicators on:
1 - Purchaising
2 - Sales
3 - Research & Development (we do only Development)
4 - Production (a process that goes from planning to packing)
5 - Logistics
6 - Customer Perception Management

:bonk:

not trying to be a smart :ca: here, but no, you don't have to have ONE for ALL your processes, you need to have at least one for each of your processes. I wanted to make sure that this is understood, as there is a difference, and didn't want it to be misinterpreted as we are not all from the same place. I know what you really meant, but that doesn't mean it would translate well. Interuption over, back to the regularly scheduled discussion.

So the answer is ... it depends.

What do you call a process? If you're talking about a high-level business process (of which there are typically about 5-9 for any organization), then the answer is probably yes. If you're talking about the (sub)processes that combined make up the macro processes, then it's your decision.

Also, as someone mentioned, you will often have more than one objective/metric for any specific process. There are externally-focused metrics (effectiveness) and internally-focused metrics (efficiency). Often I think about quality (e.g., satisfaction of the customer of the process with what they receive), cost (productivity, etc.) and delivery (e.g., cycle time).

A key issue is to make sure that you don't have too many metrics. I've seen organizations with literally 120+ metrics, and believe me, they weren't managing them very well. All time in measurement, no time for management. The Pareto principle rules again.

Hi friends,

The first thing is to Identify Key Processes for the Organization.

It is based on the Type of Organization. For Eg. In manufacturing Organization the Key Processes would be

1- Planning
2- Purchase
3- Stores
4- Production
5- Quality
6- Engineering
7- Maintenance
8- Marketing etc.

Generally Any Organization will have certain Goals Such as “Achieve Turn Over of 100 % over Last Year, Reduce Customer returns etc,.then based on these Company Goals the Individual Key Performance Indicators for each Processes can be defined.

The key here is that the Individual Key Performance Indicators should be aligned and Linked towards the Company Goals to have real impact on the effectiveness of Key Performance Indicators.

For the above 8 Processes each Process can have 1 or 2 Key Performance indicators which has to be Monitored by the respective Process Owners with a fixed Frequency and reviewed by the Top Management .

Once every six Months these Key Performance indicators are to be reviewed and if needed to be changed as required.


With best Regards,

PSSKumar

Yes it is very critical to set KPI's against each process so you can measure the present and desired state of process. Setting Objectives and striving for results for each deptt in an organization will lead it towards prosperity.

you can set KPI's for your

Store Deptt : EOQ level keeping for inventory , utilization of dead stock etc..
Mercendising : Mgt of Fuzzy Front End. (reduce gap b/w manufacturer and customer , Add new customers)
Production : Lower the alterations rate (defects)
Purchasing : Within Budget
.
.
.
.
etc..

The method you have to adopt for setting objectives & KPI's is

Accessment Accessment of present situation (STRATEGIC PLANNING ANALYSIS)
Baseline : Baseline the problems (using SWOT Analysis)
Components : the problem impects and how can we overcome the problem (measure the problem impects)
Down to Specific :define a strategy or KPI's to overcome the problem
Evaluate: Evaluation of the results

IN END BLACE SCORE CARD CAN BE DESIGNED TO EVALUTE COMPANY'S PERFORMANCE.....





AHSAN SALEEM

Hi friends,

It is wonderful if we can have measurement for all processes. However the point that needs to be kept in mind is the necessacity and availability of resource for measurements.

I have seen many cases in which the measurements have become a routine for review at the Top management level without adequate analysis and action plan.

The simple fact that is to be kept in mind is " any measurement without proper analysis and action plan to improve the same is not useful" and this should drive the selection of process for measurements.

For any new user it would be better to identify the Key processes that are very essential for the Organisation and and set measurements for those processes, and sufficient resource to be made available to do a proper analysis of the measurement with Action plan to be arrived to improve the process.

With best regards,

PSSKumar

Rocky,
I know this not part of your original question, but based on experience with our auditors, when you do KPIs for each area, make sure of the following:

They are relevent to the area (many times goals set by management had nothing to do with the area involved).

They are something the area can control (we had a case where our final finishing department's KPI was number warehoused as a percent of number built. There was another step in the process between building and finishing, which had losses finishing could not control).

If the goals on the KPIs are not being met, have an action plan in place (documented) to meet or exceed the goals.

Hope this helps,

Dan

It is my understanding that you must have some method of evaluating the effectiveness of the key processes your organization has identified. However, there is nothing that states that each process must have a "unique" method or metric. As I understand it, you may have some common metrics that can be used to tell the effectiveness of several processes. For example: customer satisfaction, on-time delivery, cost of poor quality, PPMs, etc. The important thing would be that you know which metrics relate to which processes and that these metrics are infact valid.

With the processes listed above I would first identify any bottlenecks in the process, fix them, then move on to more detailed monitoring of process behaviour. In manufacturing this is usually driven by results of the product approval process.

Al...

It is my understanding that you must have some method of evaluating the effectiveness of the key processes your organization has identified. However, there is nothing that states that each process must have a "unique" method or metric. As I understand it, you may have some common metrics that can be used to tell the effectiveness of several processes. For example: customer satisfaction, on-time delivery, cost of poor quality, PPMs, etc. The important thing would be that you know which metrics relate to which processes and that these metrics are infact valid.
I agree Gary. At our plant, we have several production departments (i.e. processes) that use the same metric and in many cases the same three metrics. In many cases we use process cost, which directly affects all employees since it is directly tied to our gainsharing program. We also use waste and ticket attainment. We have never had a problem with an auditor using this approach as long as the employees can explain how their job affects the metrics.

It is my understanding that you must have some method of evaluating the effectiveness of the key processes your organization has identified. However, there is nothing that states that each process must have a "unique" method or metric. As I understand it, you may have some common metrics that can be used to tell the effectiveness of several processes. For example: customer satisfaction, on-time delivery, cost of poor quality, PPMs, etc. The important thing would be that you know which metrics relate to which processes and that these metrics are infact valid.


Your point is well stated. But the point of cl 4.1.e is to (measure or monitor) the effectiveness of each process. If we only have a few "key metrics," they won't measure the effectiveness of each process. If you want to improve your processes, you must manage and measure them.

Otherwise, we have not gained anything from the process approach.

I have worked on KPI's that address the four key areas in 8.4

Customer satisfaction which could be a survey, no of complaints

product conformity which could be warranty or an inspection result

process trends such as efficiency or utilisation or no of rejects

supplier performance - no of rejects

If you have a least one measure in each of these areas that is enough.

Section 0 is not a compliance requirement according to ISO. I've never had an assessor beat me over the head with it.


I am not sure how this method would meet the intent, nor the requirements, as stated in clause 4.1 a-c-e.