Many businesses use Key Performance Indicators (KPIs) to help them judge and monitor the performance of the business. They often use what I would call ‘output metrics’. These metrics tell the story of what happened, which is useful to know. They need to be included in a suite of measures, to give you the proper context, but don’t allow you to change the outcome.
Process KPIs are therefore metrics that tell you how key elements of your business processes are working. By understanding the performance in these areas you can adjust what you are doing today, with the idea of impacting tomorrow’s outcome. Managing the process helps you to define what the output metrics will be.
If you review your process map, and the questions you have designed for your sunrise meeting, you will probably start to see the type of process KPIs you have. Whilst many KPIs are numerical in nature, usually expressed as a percentage, they can be used digitally. The ‘yes’ and ‘no’ questions of the sunrise meeting are a good point. Each and every day that you hold this meeting you are asking for information. Effectively a ‘yes’ is a 100% result and a no is a ‘0%’ result. A ‘no’ should lead to immediate corrective action.
Being able to change how a process is being managed day to day allows you to effect the end results. Trying to get your production orders out of the door on time when you have bought your materials late, overloaded your workcentres and then started late is a tough call. Managing your purchasing activities so that you always mop up your purchasing actions is better. Ensuring queues are actively managed so that works orders start on time is better. A proper contract review process that appropriately loads your manufacturing capacity is better. Together the process is much, much better.
Recommended Actions
- Review your process map / sunrise agenda for the key processes.
- Decide how you want to measure each key step in the process. What would give you a meaningful answer?
- Find out what other supporting information you would need in order to have the ‘full picture’ before you make a decision. For example, on time delivery is easy when you have no orders!
- Build the KPIs into your other routines and processes.
Giles Johnston
Author of 'Business Process Re-Engineering', a practical plan to improve business performance.