How to align a Business Strategy to Operative KPIs

Q

QAMTY

Hi everybody

While tunning kpis in a manufacturing plant, trying to make it more productive (that kpis really be tied to profits and margin)s, several doubts came up.

Starting..

In my case, defined the policy, the objectives, and for objectives, several kpis for all the processes, but have doubts how tie them directly.

Maybe like a formulae

Profit = kpis (in production, sales, storage, maintenance, etc)

quality = kpis ( in production, inspection, etc.)


I have seen lot of businesses have an ISO just because a client asked them to have it if they be part of suppliers.

But I see, that they manage the business (profits, margins) separated from the ISO.

I mean they have apart (not into iso) the margins, profits,roi, etc.
but suchs aspects are not tied directly to operative kpi´s.


In my point of view, for a business to be profitable, all these issues must be managed together.


I have heard of Kaplan (scoreboard) which consider all the aspects
financial, processes, personnel, clients.


Please share your point of view in this regard

Thanks
 

howste

Thaumaturge
Trusted Information Resource
Re: How to align a business strategy to operative kpis?

In my point of view, for a business to be profitable, all these issues must be managed together.
I completely agree. For a long time I've promoted the integration of quality and business policy, objectives, and metrics. I posted this document here in 2008: https://elsmar.com/elsmarqualityforum/attachment.php?attachmentid=9623

I have used this over the years as an example of how to tie the policy, objectives, and metrics together. You can see that profitability and efficiency are included even though they are not generally considered as "quality" objectives. Well before ISO 9001:2015 required top management to demonstrate leadership by "ensuring that the quality policy and quality objectives... are compatible with the context and strategic direction of the organization" it made sense to merge quality and business needs. The part you don't see in the table is that the metrics are also tied to effectiveness of the various processes of the system.
 
Q

QAMTY

Re: How to align a business strategy to operative kpis?

Thanks Howste

Really, really, Very interesting document.

Could you share other paper accompanyng to this one.

of course not compromising confidenciality.

Or guide me where to find a book or any other stuff

Thanks
 

howste

Thaumaturge
Trusted Information Resource
Re: How to align a business strategy to operative kpis?

I just use turtle diagrams along with this for each process, and a process map showing the interactions between the processes (which is in the quality manual).
 
Q

QAMTY

Re: How to align a business strategy to operative kpis?

Howstle, thanks,let me try it.
Ideally, I can imagine a software with dashboard,with graphics,where dinamically we can simulate the business,lets say if I need this profit,what is the kpi I need in production to obtain it,or what is the maximum rejects of bad product,etc.of course simulated with available data from the business (rejects, cost man hour, cost of energy, maintenance,etc.) I Think I can try some software on the market.
Thank you so much
 
Q

QAMTY

Re: How to align a business strategy to operative kpis?

Howste
In your example, in the next:

through the use of efficient processes->Efficiency ->Production efficiency ->92% by 12/31/08

My question are:
1-You defined this objective to be reached by 12 31 08, and will be revised until you reach that date, ok? in order to be modified, but into the timeframe will not not be changed nor monitored?
2-By managing "production efficiency" you expect to manage this objective, ok?
but for production efficiency,this will be supported by:
I think, defining kpis on production processes,quality control process,etc., and these kpis will be monitored each month maybe, but only these kpis, it does not make sense to monitor objective, since this result is derived from the kpis.

Is it correct my assumption?
Thanks
 

Big Jim

Admin
Re: How to align a business strategy to operative kpis?

Howste
In your example, in the next:

through the use of efficient processes->Efficiency ->Production efficiency ->92% by 12/31/08

My question are:
1-You defined this objective to be reached by 12 31 08, and will be revised until you reach that date, ok? in order to be modified, but into the timeframe will not not be changed nor monitored?
2-By managing "production efficiency" you expect to manage this objective, ok?
but for production efficiency,this will be supported by:
I think, defining kpis on production processes,quality control process,etc., and these kpis will be monitored each month maybe, but only these kpis, it does not make sense to monitor objective, since this result is derived from the kpis.

Is it correct my assumption?
Thanks

First of all, if there isn't a goal attached, it isn't a quality objective. By definition, a goal IS an objective. And quality objectives need to be measurable.

There is nothing wrong with quality objectives and kpi being aligned so they do double duty.
 

howste

Thaumaturge
Trusted Information Resource
Re: How to align a business strategy to operative kpis?

1-You defined this objective to be reached by 12 31 08, and will be revised until you reach that date, ok? in order to be modified, but into the timeframe will not not be changed nor monitored?

The intent is that by the date specified (hopefully) the goal will be met. But objectives are intended to help the business, so they can be adjusted any time that the business needs to adjust them. If business conditions change in a way that the goal is no longer realistic, then the company could change the date or the number to be met. Of course if the number is met before the date, it could be revised upward.
 

Langley

Registered
Re: How to align a business strategy to operative kpis?


I completely agree. For a long time I've promoted the integration of quality and business policy, objectives, and metrics. I posted this document here in 2008: <LINK SNIPPED - Refer to OP for the link supplied by HOWSTE as I had to remove the link to allow me to post my question>

I have used this over the years as an example of how to tie the policy, objectives, and metrics together. You can see that profitability and efficiency are included even though they are not generally considered as "quality" objectives. Well before ISO 9001:2015 required top management to demonstrate leadership by "ensuring that the quality policy and quality objectives... are compatible with the context and strategic direction of the organization" it made sense to merge quality and business needs. The part you don't see in the table is that the metrics are also tied to effectiveness of the various processes of the system.

I would be very interested in reading this article - however the link is taking me to 'top' of the library. Can you provide the title of the document for me to search with and/or verify the link please?
 

unbalanced

Registered
I would be very interested in reading this article - however the link is taking me to 'top' of the library. Can you provide the title of the document for me to search with and/or verify the link please?
Try searching for "Example Quality Policy". A couple of attachments by howste should appear.
 
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