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Key Performance Indicatorsby Arda Akoglu
PASSION FOR EXCELLENCE
KPIs on Arda
46 years old
01Married 22 years
023 children
033 degrees, 2 cert.
046 jobs in 20 years
05
How to develop effective
KPIs
Common KPI Errors
How to Use KPIs
Effectively
What are KPIs?
How t develop effective
KPIs
Common KPI Errors
How to Use KPIs
Effectively
What are KPIs?
How to develop effective
KPIs
Common KPI Errors
How to Use KPIs
Effectively
What are KPIs?
What are KPIs?
What are KPIs?
• KPI – Key Performance Indicator
• KPIs are metrics that are important &relevant
• All KPIs are metrics, but not allmetrics are KPIs
• KPIs are the right set of metrics thatdrive action
What are KPIs?
• Providing a way to measureperformance in relation to strategicgoals & objectives
• Well-designed KPIs are vitalnavigational instruments
• Useful decision-making tools
What are KPIs?
• KPIs create visibility for goals &targets
• KPIs help create alignment betweencompany strategy & actions
• KPIs drive Continuous Improvement
How to develop effective
KPIs
Common KPI Errors
How to Use KPIs
Effectively
What are KPIs?
Common KPI Errors
Common KPI Errors
• Measuring data that is NOT relevant
• Measuring TOO MUCH data
• Measuring data with NO CONTEXT
• Lack of clear GOALS or TARGETS for KPIs
Common KPI Errors
Examples of Metrics:
• Order Fill Rate: 91%
• Accounts Receivable: $1,200,750
• Sales YTD: $2,345,780
• Production Output: 24,500 L.
Common KPI Errors
• Not taking ACTION against what KPIsshow
• Not knowing who is ACCOUNTABLE foreach KPI
• Lack of COMMITTMENT to a long-termprogram
How to develop effective
KPIs
Common KPI Errors
How to Use KPIs
Effectively
What are KPIs?
How to develop effective KPIs
Most people use statistics the waya drunkard uses a lamp post, more for support than forillumination
How to develop effective KPIs
Net Profit Net Profit Margin Gross Profit Gross Profit
Margin Operating Profit Operating Profit Margin EBITDA Revenue Growth
Rate
Total Shareholder
ReturnEconomic Value
AddedReturn on
InvestmentReturn on Cap
Employed Return on Assets Return on Equity Debt/Equity Ratio
Cash Conversion Cycle
Capacity Utilization Rate
Process Waste Level
Order Fulfillment Cycle Time On Time In Full Inventory Shrink
RateInventory
Turnover RatioSupplier Lead
TimeProject Schedule
Variance
Project Cost Variance Time to Market First Pass Yield Rework Level Quality index Process
DowntimeMachine
DowntimeRevenue per
Employee
Employee Engagement
Level360 Feedback
ScoreCarbon Footprint
Energy Consumption
Supply Chain Miles
Waste Reduction Rate
Waste Recycling Rate Inventory Level Price/Earnings
Ratio
Customer Complaints
Customer Engagement Six Sigma Level Customer
Turnover Rate Conversion Rate Clout Score Brand Equity Market Growth Rate
Search Engine Ranking
Customer Profitability
Score
Online Engagement
LevelCustomer
Turnover RateSavings Due to Improvements Training ROI
Salary Competitiveness
Ratio
Employee Satisfaction
Index
Overall Equipment
EffectivenessEarned Value
MetricReturn on Innovation
First Contact Resolution
Human Capital Value Added Bounce Rate NCR count CAR count
How to develop effective KPIs
• Aligned with strategy
• Define questions that need answers
• Identify the data requirements
• Evaluate existing data
How to develop effective KPIs
• Determine the right measurementmethodology and frequency
• Assign ownership
• Find the best way to communicate KPIs
• Review for effectiveness
How to develop effective
KPIs
Common KPI Errors
How to Use KPIs
Effectively
What are KPIs?
Measurement is the first step that leads to control and eventually to improvement
~ H. James Harrington
• Company culture and commitment
• Aligned with strategy
• Well designed structure from top tobottom
• Continuous monitoring and revision(if needed)
Manufacturing Metrics
Mfg. on-time Delivery
RM Scrap %
PM Scrap % Cost Savings
Std. Cost Variance Critical Equip. Utilization Rate
Supplier on-time Performance
Supplier Redundancy
Logistics Metrics
Order Fill Rate On-time Delivery
Inventory Accuracy Inventory Turns
Inbound Freight % On-time Shipping
Fleet Efficiency Outbound Freight %
Order Fill Rate On-time Delivery
Inventory Accuracy Inventory Turns
Inbound Freight % On-time Shipping
Fleet Efficiency Outbound Freight %
Mfg. on-time Delivery
RM Scrap %
PM Scrap % Cost Savings
Std. Cost Variance Critical Equip. Utilization Rate
Supplier on-time Performance
Supplier Redundancy
Manufacturing Metrics Logistics Metrics
Order Fill RateMfg. on-time Delivery
Cost Savings
Operations Metrics
On-time DeliveryInventory TurnsStd. Cost Variance
Order Fill Rate
On-time Delivery
Mfg. on-time Delivery
Cost Savings
Operations Metrics
Std. Cost Variance Inventory Turns
SUMMARYWhat are KPIs?
KPIs are the right set of metrics that drive action
SUMMARYHow to Develop Effective KPIs
Aligned with strategy
SUMMARYHow to Use KPIs Effectively
Well designed structure from top to bottom
SUMMARYCommon KPI Errors
Lack of clear GOALS or TARGETS for KPIs
Arda Akoglup: 778-228-4739e: [email protected]: www.verbum.ca PASSION FOR EXCELLENCE