Consideration of

KAIZEN KPI (Key Performance Indicator)

Kiyoshi Adachi

JICA KAIZEN Expert

at KAIZEN Institute of Zambia (KiZ)

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Objectives

KAIZEN is to do “ Continuous Improvement” .

Statistical data analysis is required to monitor the long range KAIZEN effect and trend.

We are focusing on “Continuity” and “Effect” of improvement activities as important measurement parameters of KAIZEN programme.

Clear definition with practical measurement methods of KPI (KeyPerformance Indicator) ensures continuous monitoring of the activitiesand easy calculation of cost-benefit.

And it will help develop African countries’ KAIZEN competence toward international business competition.

This discussion is to consider about these KPIs definition.

Measurement should not be difficult but to be meaningful.2

1. Unit Number and Participants Number

QC Circle, Challenge Team or Project Team, whatever it is called, KAIZEN performing unit number should be recorded and participants number of each unit should also be recorded.

Then we will have following statistic data.

2019 2020 2021

KAIZEN Unit Number aa bb cc

KAIZEN Total Participants Number ddd eee fff

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2. Continuity

The most of QCCs in Japan measure their continuity years since the QCC established year. Even there were very active years or not active years, even the circle members were changed and circle level was degraded they continuously count the year as for continuity.

Same method is proposed to measure the KAIZEN “Continuity” years.

The QCC established year should be recorded and count the KAIZEN “Continuity” years since then.

“Continuity is Power”

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3. Control DataKAIZEN activities are applied in many areas such as

Process Time Reduction, Material Reduction, Quality Improvement,

Productivity Improvement, Cost Reduction and so on.

Measurement parameter should be clearly defined to control KAIZEN objectives.

“If you can not measure it, you can not control it”

Example of KPI

Process Time : Time (seconds, minutes, hours, etc.) from IN to OUT

Material Usage : Amount of Material (gram, meter, liter, piece, etc.) / Product, Process

Quality : Defect Count, Defect Ratio(%), Process Capability(Cp, Cpk)

Productivity : Product Amount / (Day, Shift, Week, Month)

Cost : Local Currency → US $ 5

4. KAIZEN RatioKAIZEN activities are applied in many areas such as

Process Time Reduction, Material Reduction, Quality Improvement,

Productivity Improvement, Cost Reduction and so on.

Once JDS (Japan Development Service), supporting KAIZEN project at EKI,

proposed a definition of “KAIZEN Ratio”. JICA management recommended

to use same measurement method, which is in following equation.

a) Case of KAIZEN Target > KPI(before)

KAIZEN Ratio =❴ (KPI(after) – KPI(before)) / KPI(before)❵ x 100(%)

b) Case of KAIZEN Target < KPI(before)

KAIZEN Ratio =❴ (KPI(before) – KPI(after)) / KPI(before)❵ x 100(%)

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4.1 KAIZEN Ratio (Example)

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5

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before

after

targetKAIZEN Ratio = 50%

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target

KAIZEN Ratio = 120%

before

after

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7

20

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target

KAIZEN Ratio = -30%

before

Case : KAIZEN Target > KPI (before)

4.2 KAIZEN Ratio (Example)

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Case : KAIZEN Target < KPI (before)

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55

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before

after target

KAIZEN Ratio = 50%

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target

KAIZEN Ratio =60%

before

after

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0

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target

KAIZEN Ratio = -30%

before

5. Target Achievement RatioAll KAIZEN activities are setting KAIZEN target.

As the result of KAIZEN activities the improvement amount e.g. (KPI(after) – KPI(before) comparing to the targeting amount e.g. (Target - KPI(before)) should be evaluated.

a) Case of KAIZEN Target > KPI(before)

Target Achievement Ratio

=❴ (KPI(after) – KPI(before)) / (Target - KPI(before))❵ x 100(%)

b) Case of KAIZEN Target < KPI(before)

Target Achievement Ratio

=❴ (KPI(before) – KPI(after)) / (KPI(before) - Target)❵ x 100(%)

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5.1 Target Achievement Ratio (Example)

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Case : KAIZEN Target > KPI (before)

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15

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before

after

target

Target Achieve Ratio = 50%

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target

Target Achieve Ratio = 120%

before

after

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target

Target AchieveRatio = -30%

before

5.2 Target Achievement Ratio (Example)

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Case : KAIZEN Target < KPI (before)

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55

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before

after target

Target AcheiveRatio = 100%

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target

Target AchiveRatio = 120%

before

after

1011

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target

Target AcheiveRatio = -20%

before

6. KAIZEN Effect in CostCost calculation by using “KAIZEN Ratio ” is more important in actual business.

Improvement result in any area such asProcess Time Reduction, Material Reduction, Quality Improvement,

Productivity Improvement, Cost Reduction and so on.

could be converted in US $ value.

It is the real effect of KAIZEN result.

Cost saving amount through the year should be calculated in US $

and shown in the report.

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7. KAIZEN Completion Report Number

Output of KAIZEN activities should be summarized in KAIZEN Completion Report.

Above discussed KPIs should be included in the report.

The KAIZEN Completion report number in a year is one of important KPI to be measured.

2019 2020 2021

KAIZEN Completion Report Number hh kk mm

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8. QCC Level IdentificationThe QCC Level Identification method, which was developed by Toyota group and commonly used in worldwide QCC activities, is to measure intangible effect of KAIZE but very useful to measure employees’ development and workplace development.

It is recommended to include this measurement in the KAIZEN Completion Report.

14QCC Member Skill Level

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By using common KPIs, KAIZEN status of Pan-African

countries easily be reviewed.

And it will help develop African countries’ KAIZEN

competence toward international business competition

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