Lean KPI’s – Key Performance Indicators and performance metrics


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SOURCE: http://www.leanmanufacture.net/kpi.aspx

Lean KPI’s and Process/performance metrics help managers, engineers and process improvement leaders in the following:

-Determining the current performance of the system or process being evaluated
-Determine the appropriate performance benchmark
-Evaluate the progress of lean and process improvement initiatives or Kaizen

At times they may not be tangible measures, and can take different names, or be specific to a process or industry, but their goal to explain performance is essentially the same. Most managers, operations consultants and process improvement leaders will have a wide variety of KPI’s and metrics which explain the performance of a business, operating strategy, supply chain strategy or manufacturing facility. Andon systems can be used to communicate KPI’s to production employees throughout a production plant. Although measuring performance and deriving it into its key drivers is beneficial in order to see what is happening or not happening , it is what we do with the results of this analysis what’s really important. As a line manager once said “It’s not just about data collection and analysis, but what you do with it”. Most managers and engineers can get caught up in the analysis part and fall short in both deriving strategies to improve and implementing these. This can also be the case, albeit a much costlier one, with using consultants and failing to carry through the action plan.
In the following pages below we define some of the most popular process, and business metrics which can help evaluate the current performance of your business, productive process, or value stream. These metrics can be applied to many types of businesses and organizations:

Process Efficiency KPI’s

Overall Equipment Effectiveness – OEE Rolled Throughput yield
Customer Lead time Downtime
First time through yield Plant Uptime
-Production Target Labour Productivity

Supply Chain Efficiency KPI’s

-On time delivery -Capacity Utilization -Unit costs
-Value Added -Days in inventory -Delivered cost
-Inventory Turnover -Inventory costs
-Value to weight ratio -Product stock outs

Quality KPI’s

-Defects per thousand -Customer satisfaction index
-Internal Quality Audit

Business KPI’s

– Market share – Return on Capital – Operating Profit
– Payback period -Discounted Payback period


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