Rise Above the Competition: 5 KPI Fundamentals to Winning in Operations Management

David Pate | August 1, 2016 | 

If anybody understands the importance of monitoring key performance indicators (KPIs) in pursuit of constant improvements, it’s the athletes that participated in the NFL Combine. They know that even small performance gains in key areas can change their destiny. After all, the difference between the glory of a becoming a top draft pick and obscurity is often measured in fractions of seconds or pounds of strength.

It’s no secret that constant performance improvements are also essential to competitiveness and improving profitability in manufacturing operations. But knowing performance improvements are important is one thing. The ability to use KPIs to effectively drive the actions to achieve goals is another entirely. Below are 5 KPI fundamentals toward identifying problem areas of your operations where improvement practices are needed.  Our analytics partner, Sisense, provides examples in tip #1 below as a guide to get you started.

5 things that winning organizations consider on key performance indicators (KPIs) to rise above the competition

  1. Aligning KPIs to desired results

    Athletes and manufacturing operations alike need to constantly find ways to get better. But when there are a lot of potential areas for improvement, just knowing where to begin is often difficult. That’s why potential success with KPIs starts with getting properly focused during the strategic planning process. The first step is correctly aligning business goals with critical business needs. Then you can benchmark where you are against the desired state. Only then does figuring out the “key” in KPI come in to play.

    Organizations and athletes who consistently win with KPIs understand that they can only do so much in any given year—and that they simply can’t do everything on an exceptional level. Leaders need to be careful that the KPIs they are setting drive the right behaviors. Too often, KPI’s are set around antiquated performance targets that run contrary to, or at least don’t support, the direction and desired results. They also know that figuring out why gaps exist can be tricky. That’s why they carefully set goals and choose KPIs accordingly each year. They are also quick to pull in experts or coaches for guidance when results fall short or they stop seeing progress. Dploy Solutions’ embedded analytics partner, Sisense, has provided several useful manufacturing KPI examples, when to use them, and how to get the most out of each in this blog.

  2. Setting the right metrics for the right level

    Reaching a goal is critical, for the athlete or the business. Businesses need to set their KPIs based on the level of the business. While you may measure financial performance at a business unit or company level, that doesn’t translate to the shop floor. Those metrics, while different, should absolutely support the top level ones.

    KPIs that provide leading indicators are particularly valuable because they enable the ongoing corrective actions needed to avoid month-end or year-end panics. Success with corrective actions, however, hinges on the right people getting the right metrics at the right time. In other words, although operational leaders need to align KPIs across the business, different levels of the business need different measurements.

  3. Making KPIs visual and visible to people that can effect change

    Gone are the days of retaining performance knowledge within a small subset of people. Video and computer analysis are critical tools to provide feedback on performance improvement opportunities to athletes. This is no different in the world of business operations. Today, businesses need to quickly disseminate data to the people who can quickly effect change. And timeliness and digestibility are critical aspect of KPIs. When people get the data they need in a timely manner in a format that makes sense for their job, they are simply far more likely to follow through on it. Top organizations rely on an integrated system that can quickly consolidate data and deliver KPIs in user-friendly KPI dashboards.

  4. Taking corrective actions based on the data

    Albert Einstein said, “the definition of insanity is doing the same thing over and over again, but expecting different results.” Winning athletes and leading business operations know that corrective actions in response to missed KPIs are essential. And the sooner you act, the better.

  5. Setting stretch goals

    Even though we’ve left this step until last, it could go first. The point is that mindset really matters; no NFL Football star ever reached full potential by being happy with his or her current ranking. And they know that they will work harder and have a much better chance at jumping ahead of the competition if they set goals that seem at least slightly out of reach. For manufacyturing operations, hitting goals too early gives stakeholders a good excuse for losing track of KPIs and focusing on other things.

Let the KPI games begin

World-class athletes and high-performing organizations rarely rest on their laurels. Sure they celebrate a win or hitting a goal, but they also quickly move on to the next challenge. Getting to the point where your entire organization can effectively use KPIs isn’t easy. It takes careful planning, the right KPI management software for sharing data, and hard work across the company. The KPI management and analytics capabilities within Dploy Solutions can facilitate these efforts. By delivering relevant data to employees at all levels via analytics, they can see what is positively or negatively impacting KPIs, they are able to drill down to uncover the root cause of problems and they have the online problem solving tools to drive improvement.  This level of data intelligence will empower better and faster decisions that drive business forward, to rise above the competition and improve profit margins.See what is impacting manufacturing KPIs

Ready to rise above the competition?  Contact the operations management experts at Dploy Solutions to get started with a winning KPI management and analytics strategy and solution.

David Pate
David Pate

A skilled business leader with experience in both process and discrete manufacturing. Learn More About David Pate.