Having Trouble Identifying KPI for Process

[matthewjd24]

Hello, I am creating the process map for our very small CNC machine shop and I'm having trouble with KPIs. This is the current map. I'm having trouble identifying a KPI for manufacturing, as manufacturing and purchasing are closely related. I can't really use On-Time Delivery, because issues with purchasing could cause us to be late. I can't really use Product Quality, because again issues with purchasing could impact Product Quality. I'm wondering if you have any ideas on how to approach this and what processes/KPIs your organization uses. Should I just combine the two? Thanks!

 

[Funboi]

I think you’re overthinking this. All processes are, to greater or lesser degree interdependent. Yes, if a supplier is late, manufacturing may be late, but you are not considering when the clock starts running. As far as quality goes, the reasons for poor quality will make it obvious where the issue lies. If the raw material caused scrap, you can’t assign that TO manufacturing. But if the parts were made wrong, that MUST be assigned to manufacturing because its obviously not a supplier issue. Don’t over think it.

 

[matthewjd24]

I think you’re overthinking this. All processes are, to greater or lesser degree interdependent. Yes, if a supplier is late, manufacturing may be late, but you are not considering when the clock starts running. As far as quality goes, the reasons for poor quality will make it obvious where the issue lies. If the raw material caused scrap, you can’t assign that TO manufacturing. But if the parts were made wrong, that MUST be assigned to manufacturing because its obviously not a supplier issue. Don’t over think it.

I appreciate the help. I'm just trying to come up with a KPI that is a useful way to measure how effectiveness of the process and is reasonably measurable. We track nonconformances, but we don't categorize them by 'purchasing' or 'manufacturing' nonconformances, so we have a bit of work to do if we want to base the KPI off of something like that. But now that I think about it, it is a good idea.

 

[Funboi]

Looking at your map, it seems to be part of the problem. These are functions, not processes.

 

[matthewjd24]

This is pretty close to the example Process Interaction Map that was given to us during SAI Global AS9100 Lead Auditor training. I'm open to hearing other ways to approach it though.

 

[Funboi]

Usually, there’s a disclaimer about not being anything but an example - not a good one necessarily. It’s an auditor course, not a how to create a QMS course. Different target audience, possibly wrong people to ask…

Each process should be identified and documented: input(s), output(s), resources, controls and what’s measured. The sequence/interaction can be high level, but that ain’t that.

 

[Scanton]

We are a sub contract manufacturer and we use machine uptime and scrap (in DPM) as our KPI's as when paired together they are good indicators.
Couple these with what the job is worth against what you actually spent, how long the job should take to make against how long it actually took (including set up) and you should have a good idea of how you (and your suppliers) are performing.

 

[Paul Simpson]

Firstly, I'd agree that separating purchasing and manufacturing could lead to issues in determining the overall effectiveness of the company processes. If you fail to deliver a product on time in full (OTIF), your customer won't care if it is purchasing's fault or manufacturing's fault.

I'd recommend you document your processes at the top level and set KPI's here. If you are not meeting 100% OTIF you can then drill down to decide what proportion of the failures to meet the objectivve (and KPI) are down to purchasing and what proportion to manufacturing and each function can use problem solving tools to resolve the issues.

Below is a simple diagram I established for a consulting organisation that I worked for. All the top level processes are recorded as 'doing' words and the core proces in yellow was tracked. As you can see, the 'doing' piece drilled down into a range of lower level processes and activities.

 

[Steve Prevette]

I would suggest (actually Dr. Russ Ackoff's push) to measure the flow in the arrows between the boxes in the diagrams, not the boxes themselves. We have "product returns" between Manufacturing and Customer as an example. So what is the rate of returns? Percent of returns? Why are the returns made? You could even ask - after a customer returned items, did they stay on as a customer or stopped purchasing from you. What was the cost to the company of the returns taking into account shipping, processing, and rework or scrap.