Transcript Establishing KPI’s

ISO 9001:2000
Certified
Next Steps?
Where do we go from here?
How can we...
Align everyone to the corporate goals?
Provide a clear statement of our objectives,measures
and performance expectations?
Contribute as individuals daily to the company
objectives and success?
ANSWER?
Key Performance Indicators.
What Gets Measured Gets Done!
Key Performance Indicators
will:






Provide performance measurements for all
core processes.
Add value for our customers and the
company.
Support company objectives.
Provide performance goals for each
department.
Be owned, maintained, reviewed and acted
on by each department.
Provide balanced performance measures.
Establishing KPI’s
Using a SIPOC Diagram
SIPOC Diagram?

A SIPOC diagram is a Six Sigma tool used to
identify relevant elements of a process.

It is similar to Process Mapping, but provides
additional detail.

The SIPOC tool is particularly useful in identifying:
 Suppliers of the Inputs for the process?
 The process output requirements.
 The internal and external customers of the
process.
 The requirements of the internal and external
customers?
Step 1 -Flow Chart
• Start by Flow Charting the process.
• From the 30,000 ft level
• Only 5 or 6 steps are needed
Example: Placing a Purchase Order
Purchasing
Department
receives quote
request from
Customer Service
Purchasing gets
bids from
Approved
Suppliers
Purchasing
Selects
supplier
Purchasing
Obtains
work order and
creates PO
Engineering or
Quality reviews
and approves PO
Purchasing
sends PO to
the supplier
Step 2 - SIPOC



Supplier
Use a flip chart with headings (S-I-P-O-C)
written on it, or.
Use post-it notes posted to a wall.
Create an area that will allow the team to
post additions to the SIPOC diagram.
Input
Process
Output
Customer
Step 3-Breakdown the Process






Identify the Suppliers of the Inputs of the
Process.
Identify the Inputs required for the Process to
function properly.
List the name of the core process.
Identify the Outputs of the Process.
Identify the Customers that will receive the
Outputs of this Process.
Discuss with Facilitator, Team Leader and other
involved stakeholders for accuracy.
Step 4 - Add information to the
SIPOC Diagram
Example: Placing a Purchase Order
Supplier
Input
Customer Service
Work Order Information
Sheet
Purchase Requisition
Drawing/ Description
Quantity
Need Date
Supplier
Process
Output
Procuring needed
parts and or materials
to support production.
A Purchase Order
placed with an
Approved Supplier
Customer
Production
Stock Room
Customer Service
Step 5 - Add KPI Information

Process Owner

Key Performance Indicator

Source of Data

Measurement Method

Established Goal
Example: Placing a Purchase Order
Process Owner
KPI
Source of Data
(A. Evans)
Turn around time
for Purchase
Orders to
suppliers
Date of request on
Work order
information sheet
and date of PO
approval
Purchasing
Department
Measurement
method
Plotted line Chart
for Average time to
place an order
Plotted weekly
Established Goal
48 Hours to get
supplier quote and
place an order.
Completed SIPOC Diagram
with KPI Information
Supplier
Input
Customer Service
Work Order Information
Sheet
Purchase Requisition
Process
Output
Customer
Procuring needed
parts and or materials
to support production.
A Purchase Order
placed with an
Approved Supplier
Stock Room
Production
Customer Service
Drawing/ Description
Quantity
Need Date
Supplier
Purchasing
Department
receives quote
request from
Customer Service
Purchasing gets
bids from
Approved
Suppliers
Purchasing
Selects
supplier
Purchasing
Obtains
work order and
creates PO
Process Owner
KPI
Source of Data
(A. Evans)
Turn around time
for Purchase
Orders to
suppliers
Date of request on
Work order
information sheet
and date of PO
approval
Purchasing
Department
Engineering or
Quality reviews
and approves PO
Measurement
method
Plotted line Chart
for Average time to
place an order
Plotted weekly
Purchasing
sends PO to
the supplier
Established Goal
48 Hours to get
supplier quote and
place an order.
Action and Follow-up

After the process has been broken down and the elements
identified using SIPOC. The KPI's can be monitored and
acted upon using the model shown below.
Supplier
NOTE: Actions may be
taken on the Inputs and /
or the process.
Controlling the inputs and
the process is key in
ensuring an acceptable
output
Input
Process
Output
Take Action
for
Improvement
Develop Key
Process Indicators
(Review KPI’s)
Quality
Improvement
Meetings
Measure Key
Process Indicators
Customer
Connection to
Company Objectives
Individual
Customer Benefits
Company goals
Faster
On Time
Reduce time to release shipping documentation?
Service
Delivery
Reduce time to release a Shop Order?
Key Performance Indicators
Reduce Shop Throughput Time?
Reduce time to place a purchase order
Reduce time to create a CAD Drawing
Higher
Quality
Increase
Internal and
External
Quality
Reduce defect rate?
Reduce outgoing defect rates /Final Inspection?
Reduce Scrap?
Improve Supplier Quality?
Lower
Costs
Reduce
Reduce Rework Costs?
Rework
Reduce Costs due to Shop Order Errors
Reduce Non Value Added Process Steps?
Reduce
Reduce Material Usage?
Waste