PROCESS ELEMENTS OF KPI - KEY PERFORMANCE INDICATOR & HOW TO SET

Sharing & re-capping the knowledge of what had been learnt from my professional expertise in the portfolio of manufacturing that "How to Set KPI – Key Performance Indicator Targets in an Organization & how to go for it with simple script of processes mentioned below.

Key performance indicator, or KPI, targets help small-business owners identify where their companies can improve productivity. The KPI can be tailored to fit any company or a division within the company. Comparing your company's KPI to your leading competitors can give you a better idea of where you stand in your industry. Solid KPI numbers also indicate strength to potential investors, making it easier for the company to raise additional capital.

CHOOSING A KPI:

Select a metric that is relevant to an Organization’s primary business operations. It must be easily measured so it can help in analyzing performance. For example, a particular operation of sequence in manufacturing can do number of pieces each hour as its KPI, so choose a metric related production such as the defect rate which had been produced on that particular hour. Organization can set reasonable industrial benchmark as per the time study taken through Industrial Engineering dept., which can offer the measure for its processes.

SETTING A TARGET:

Once had the decided on an indicator to measure then set specific goals for employees to meet? Start with the industrial benchmark, if it is not at that level then raise the target by a reasonable increment. The employees should believe confidently that the new goal is easy achievable. Set a specific target date by which the necessary improvements must take place, it paves the way for setting up KPI’s to all the depts., of an Organization and this depts.., level targets allows to use friendly competition among depts., as motivation. By encouraging the depts., offer bonuses those had achieved the KPI’s targets as per deadlines and that is their shown performance.

RELEVANCE:

The KPI’s which had been chosen by the Company’s will indicates that it must be a central factor for its own success or failure. If the depts., in question could operate significantly below the industrial benchmark without affecting its overall productivity, then the KPI is not useful. The KPI should be able to predict future performance not just report historical data. It must also be a factor that the Company can control and for example: the seasonal sales may not be a good KPI because time – not the effort of the sales force – is the controlling factor.

RE-EVALUATE THE GOALS SET:

The continue monitoring of KPI’s target at regular intervals, if the condition change rapidly in the industry it may need to re-evaluate the goals set on every Quarterly and focusing on follow-ups can help in identifying the spot areas of reduced productivity before it become critical/complicated in solving problematic issues. The yearly analysis may be sufficient if the business is relatively stable and the Organization can allocate more resources to depts., and the Company can allocate more resources to depts., which are understaffed or provide additional training for struggling employees.

SUNDARAMURTHY VELMURUGAN – linkedin.com/in/sundaramurthy velmurugan 299586110 LEATHER PROFESSIONAL CONSULTANT from a2z Leather Professional Consultancy, PONDICHERRY

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