KPI (Key Performance Indicator) are measurements that show critical data necessary for implementing more efficient performance standards among all levels of a corporation. This is not only beneficial from a lean manufacturing aspect, but also the corporate level of reaching their set strategic goals. The ultimate goal of Key Performance Indicators is to focus the business scorecard activities to revenue, costs and cash. If this is done effectively, it results in profits! KPI differ by industry, of course. For example: • Retail – The average dollars per sale is a good KPI. • Manufacturing & Distribution – Tracking of inventory turns. • Telemarketing/Customer Service – Calls made per hour/shift. • Managers – Employee turnover.

KPI help bring the Motivation theory into play. There are many different opinions about organizational behavior; However, many agree that there is a true value in giving your employees SMART (Specific, Measurable, Achievable, Realistic and Time-Specific) goals. This will bring a competitive spirit to the floor as well as promote Kaizen (lean term for continuous improvement). Often times, companies offer bonus programs in order to encourage their employees to improve their KPI without affecting the overall quality. Lean manufacturers can utilize KPI to expose, quantify and visualize Muda (Lean term for waste). The goal of Lean manufacturers is to eliminate waste in order to avoid any actions that do not provide value to the customer.

How can KPI help your organization? In order to determine how your company can benefit from KPI, you need to ask yourselves a series of questions. What are your overall strategic goals? Which KPI are most important in your industry? Implement SMART goals. Find a lean, agile software vendor. Start simple! Continuous improvement is a continuous process. Your KPI goals will change as your company grows.

Cambridge Manufacturing Journals


Manufacturing.gov