How to develop key performance indicators for your process
what is KPI?
KPI is a tool that tells you where are you heading and whither your are going to reach your final goals or not, enables you to control your way and ensure achieving the desired plans. It works in the same way like the car dashboard which indicates your speed, your fuel, engine temperature, your direction, so you may control speed, direction , stops, and finally reach your destination.
To do that you have to follow certain steps.
- First of all you have to clearly define your commitments to your customer, most of times they are included on the agreement.
KPI mainly are designed to measure the EFFECTIVENESS and EFFICIENCY of the operation
– Delivery time
– Package conditions
– Documents associated to the shipment
– Technical specs
Secondly, for each commitment you have to measure the effectiveness of the process, i.e. to measure , the planned result against the actual result , in this example how many times you delivered shipments within 36 hr we will call it successful delivery, and how many times you delivered after 36 hrs and we shall call it failed delivery
Your achievement will be (successful deliveries / total deliveries) X 100%
Make sure that you are using the right way to record the event , for complicated system you may use measurement system analysis (MSA) technique. For the example here (delivery time), if the agreement set to delivery time ( date & hours ) , the recording system must measure the event in the format date & hour as well.
The confidence of the measuring system depends in the trust you gain from the organization, for this reason you have to keep the records ready at any time.
After collecting enough data over a time period, draw it on a suitable chart to see your performance over the time, set a target and take actions to achieve it.