Key Performance Indicator – or KPI – are measurements regarding different shop floor performances.
There is an inflation of key performance indicators (KPIs) in industry. In my last posts I have explained how KPIs are often wrong, and why bad and fudged KPIs are a huge waste. Yet, you cannot really run a larger corporation without KPI. In this post I will finally give some advice on (1) what you need to do to measure good KPI, and (2) how to avoid fudged KPI.
Modern manufacturing works with a lot of performance measures, often called key performance indicators (KPIs). Unfortunately, they are rarely accurate, and often even intentionally misleading. In my previous post I described some examples of commonly manipulated KPIs. In this post I would like to explain the ugly consequences of incorrect or manipulated KPIs. In a final post I will also show some ways that you can reduce this negative effect. But first, how do bad KPIs (and hence most KPIs) hurt your company?
Statistical measurements, usually called key performance indicators (KPIs) are found on pretty much every shop floor and in every company. Many management decisions are made based on KPI. Unfortunately, these numbers often are not reliable at all.
Mark Twain popularized the phrase “Lies, damned lies, and statistics.” Winston Churchill famously said, “I only believe in statistics that I doctored myself.” Hence, both men were wary of trusting numbers. You should be too!
Inventory is one of the seven types of waste. There is usually quite a significant cost associated with having inventory, usually much more than what traditional bookkeeping accounts for. Between 30% and 65% of the value of your inventory is spent every year as inventory-related costs! This post looks into more detail at the cost of this inventory.
Due to popular demand related to my two posts on “Make Your Plant Tour a Success!” and “How to Misguide Your Visitor – or What Not to Pay Attention to During a Plant Visit!,” I have created a checklist for a lean visit to a manufacturing shop floor for you to download. Take this checklist with easy-to-use metrics during your shop floor visit to make yourself independent of potentially misleading data given to you by the shop floor staff. Metrics include worker utilization, machine utilization, inventory reach and turnaround, and order & cleanliness.
In the previous post I talked about how to have a successful plant tour and how to get the most information out of the visit. Today’s post shares the tricks of the trade on what things the plant does NOT want you to know about.See through the ruse during a plant tour and discover how good the plant really is.
There are thousands of things to see during a plant tour. However, if you really want to know how good the plant is, there are a couple of tricks on what to watch during the tour. This post will give you a few quick but reliable metrics to estimate the performance of the plant.
Measuring the Overall Equipment Effectiveness (OEE) is one thing, but before you measure the OEE you should know when and where you actually need the OEE to improve your industry. This post describes what the OEE is good for and what it’s not.