Goals, kpis, operating systems and management report Maria Asuncion A. Ortiz

Defining and Clarifying Key Terms and Concepts

A (KPI) Key performance indicator A KPI is a measurable value that demonstrates how effectively an organization is achieving a business objective. KPIs are used to evaluate success at reaching targets. Precisely defined KPIs are more measurable, progress and setbacks easier to detect and track improvements and savings realizable

KPI and business metric A Business Metric is a quantifiable measure that is used to track and assess status of a specific business process. Every area of business has specific metric to monitor. Marketers track campaign and program stats Sales teams monitor new opportunities and leads Executives look at big picture financial metrics

MONITORING Metric AND KPIS To be useful, KPIs need to be identified, agreed, monitored and reported on If KPIs change in real-time, must be monitored real-time Effective dash boards are critical in this regard.

Relevance of KPI and Defining our KPIs

Relevance: KPI and defining our kpis Employees represent both an organization’s biggest expense and most valuable asset. To survive and prosper in today’s business, financial measures are not enough for managing up non-financial measures are essential

Relevance: KPI and defining our kpis Non-financial performance measures include speed of response to clients and internal customers customer satisfaction and brand preference forward looking measures such as employee satisfaction employee retention succession planning corporate citizenship to local host environment

Relevance: KPI and defining our kpis KPIs are our company’s measurable goals this is typically tied to an organization’s strategy this is essential elements in our performance tools in Shimizu essential for targets setting and evaluation and in between the half year evaluations guides us in our monthly, weekly, daily, hourly grind it serves us our internal compass - self-directing us

achieving goals translated into kpis Most goals are achieved not by a single person But by multiple people within and across an organization Experts agree cascading and aligning goals across multiple owners creates a shared accountability vital to company’s success The company uses the KPI as the foundation to analyze, track and base key strategic decisions regarding staffing, resources and use

Assigning and Implementing kpis Implementing KPIS in a balanced manner includes Company’s vision Vision translated into measurable operational goals These are all communicated to employee These are linked, to individual goals translated to KPIs These KPIs are monitored, reported and assessed on an established periodic basis Internal processes are established to meet or exceed strategic goals and all-customer expectations

Operating System and Performance Management

PERFORMANCE GOALS & TARGETS SETTING SYSTEM CONCEPT FORECAST PERFORMANCE GOALS & TARGETS SETTING Communication Communication (VARIANCE) FOLLOW-UP/ REPORT PLAN Communication ASSIGN Communication

S M A R T SMART GOALS Specific Measurable Agreed Realistic Trackable Quantity, quality, and time are defined and related Has a unit of measure If a person does not agree to work toward the expectation(s), it is NOT his or hers! It must be a reasonable expectation Must be able to follow up and report on the results on a regular basis Specific Measurable Agreed Realistic Trackable And, Most Importantly, Must be COMMUNICATED!

GOALS ROLL DOWN Top Executive Manager/Mid Managers Supervisor Workers Plan Follow-Up/ Report Assign Variance Workers REVIEW MEETING Top Executive Weekly Shift/Hourly Daily

SMARTER GOALS : OBJECTIVES Quantity, quality, and time are defined and related Has a unit of measure If a person does not agree to work toward the expectation(s), it is NOT his or hers! It must be a reasonable expectation Must be able to follow up and report on the results on a regular basis Specific Measurable Agreed Realistic Trackable And, Most Importantly, Must be COMMUNICATED!

MANAGEMENT REPORT MANAGEMENT REPORT What‘s in there? KPI - Key Performance Indicators by Project, Department Delegated to Persons in-charge COMMON KPI Attainment = Actual / Plan Productivity = Output / Input Efficiency = Earned Hours / (Input Work Hours – Lost Time) Yield = Output Volume / Input Volume Utilization = Actual Operating Hour / Plan Operation Hour Earned Hours = Volume * Standard Time Lost Time e.g. Machine Breakdown

MANAGEMENT REPORT WHAT’S THE USE Communications Tool Key Indicators (Performance, Volume) Allows you to use facts when you are following-up Allows you to be proactive in taking corrective and improvement actions Allows you to CELEBRATE SUCCESS in a timely manner Allows you to make reference for company audits, claims, defense, strategic planning

SAMPLE KPIS ON MANAGEMENT SUMMARY THE 8 MAJOR DEPARTMENTS Marketing Sales Purchasing or Procurement Production Inventory Quality Assurance Human Resource Finance

SAMPLE KPIS ON MANAGEMENT SUMMARY Marketing % Market share / % Penetration Pricing Discounts Margin Cost of Sales Customer service levels Product Distributions

SAMPLE KPIS ON MANAGEMENT SUMMARY Sales New business (money / volume) Existing business (money / volume) Forecast accuracy Equivalent visits / day Number of phonecalls / successful calls Quota attainment Geographical coverage Delivery times Late deliveries

SAMPLE KPIS ON MANAGEMENT SUMMARY Purchasing Average credit days Balance of suppliers (ABC Rating) Number of tenders Monthly purchase variance against financial Weekly Operating Cost

SAMPLE KPIS ON MANAGEMENT SUMMARY Production 1st of 2 Planning accuracy / attainment Hours worked Overtime hours Hours earned Equivalent units produced Productivity ratios % Performance / % efficiency Capacity / machine utilization

SAMPLE KPIS ON MANAGEMENT SUMMARY Production 2nd of 2 Downtime Bottleneck capacities % Yield and % scrap Setup times Production lead times / throughput times Internal customer service Assets management Energy consumption

SAMPLE KPIS ON MANAGEMENT SUMMARY INVENTORY CONTROL (RAW MATERIALS, WIP, FINISHED GOODS) : Levels in units / value Usage of raw material Weeks of coverage / rotations Delivery lead times Critical parts availability Number of items out of stock Obsolete stock Wastage / leakage % Cost of stock

SAMPLE KPIS ON MANAGEMENT SUMMARY QUALITY % Failure in Testing of Raw Materials % Rework % Scrap Number of errors / cost of errors Returns

SAMPLE KPIS ON MANAGEMENT SUMMARY Finance Founding (availability of money, rotation of assets, etc) % Added value (marginal contribution) Profits before taxes Days outstanding accounts receivables Days outstanding accounts payable

SAMPLE KPIS ON MANAGEMENT SUMMARY Finance Budget variances Interest rates Credit management ratios (authorized payments conditions) Specific cost levels (e.g. transport costs) cost)

SAMPLE KPIS ON MANAGEMENT SUMMARY Human Resources Number of people % Absenteeism starter leaver net effect Training indicators Remuneration indicators (cost per man hour) Career development indicators Employee relations and after service indicators

Assignment List all Key Performance Indicators (KPI) that you use to measure and monitor your job and work area performance and success which support the company goals