The Keys to Performance

Transcription

1 Infor EAM The Keys to Performance Using Key Performance Indicators and To-Do Lists for Continuous Improvement

2 Table of Contents Introduction...3 Key Performance Indicators...3 To-Do Lists...5 Software as a Tool to Success...6 Conclusion...7 About Infor...7 2

3 Introduction Regardless of the operating environment manufacturing, transportation, government or municipality, regulated industry every business is greatly concerned with performance. Too often this concern is demonstrated by periodic attempts to gauge business success through onetime audits and sporadic surveys of selected business practices and characteristics. The result of such effort is a set of figures which may or may not have anything to do with actual company performance. In fact, companies often establish goals and measurements within their organizations that actually work against each other. Enterprises that employ recognized best practices determine their business strength, progress, and success in a much more organized manner: by establishing a concrete set of key performance indicators for their enterprise and by using critical to-do lists to help streamline business processes. Key Performance Indicators According to Wikipedia, Key Performance Indicators (KPI) are financial and non-financial metrics used to quantify objectives to reflect strategic performance of an organization. These indicators are used to show the current state of a company with respect to its core business goals and to reveal areas where improvement, change, and/or enhancement is needed to promote further progress toward those goals. At a more detailed level, KPIs represent a way to measure the value of activities and processes that are often difficult to measure. Examples of such factors include customer satisfaction, service efficiency, effects of internal leadership, and value of contact interaction. A large municipal transportation firm has set up a KPI that determines what equipment warranties will expire within a certain period of time. Specific equipment are listed on the KPI results each week, allowing the company to conduct inspections on the buses, rail cars, and support fixtures while they are still under warranty. Any required repairs for such equipment can then be performed prior to warranty expiration, thus providing for substantial repair savings and increased equipment reliability. Clearly a KPI can be practically any measurable business driver. That is both the strength and weakness of KPI construction and usage. Strength and weakness? Yes! Because there is no finite, standard list of KPIs, the assembly of a business KPI library is highly individual. Each business enterprise has different goals, different priorities, different methods of operation. Therefore, establishing and implementing a KPI library is much more than a chairman, president, or manager writing a list of measurable goals. Effective KPIs are never written in a vacuum. They always require consensus and buy-in from all the relevant players. This interaction helps to prevent the establishment of KPIs that work against one another because stakeholders can communicate their priorities and hash out potentially harmful conflicts before the KPI items are set in stone. 3

4 A well-known electric motor manufacturer tasked its departments with establishing KPIs for their operations. No interaction between departments was sponsored. The Maintenance Department set a KPI for quantifying equipment downtime with a goal of reducing the figure by 25% within a year. The Supply Department set a KPI for reducing overall parts inventory by 20%. Strangely, as the Supply Department reduced or eliminated parts from stockrooms, thus moving toward accomplishing its inventory reduction goal, the Maintenance Department experienced a marked increase in equipment downtime due to the unavailability of critical repair parts. Be aware that KPIs at the highest level represent company-wide measurable objectives; but not all KPIs reside in this enterprise-centric stratosphere. Best Practices methodology shows that top-tier KPIs are fed by numerous related and subordinate KPIs. These lesser KPIs relate to specific nutsand-bolts business factors that contribute to more localized performance success and that are of critical concern to mid-tier management. This is the primary reason why KPI generation must be coordinated with all stakeholders. Otherwise, the subordinate KPIs can conflict thus yielding false indications for the associated top-tier KPI. A nationally prominent service company has numerous contracts to service, maintain, and repair airport terminal spaces, gate systems, baggage handling equipment and the like. These contracts specify minimum response times for initiating repairs. This company has established a KPI that measures average response times for each service call received. This top-tier KPI is fed by records of specific response times for a variety of work types, service trades, and equipment designations. The company can use the primary KPI to gauge overall timely service execution success, and company middle managers can drill down into the subordinate KPIs to determine potential problem areas for improvement, to determine accuracy of late fees, and to gage individual business unit performance. In his PlantServices.Com article Leveraging the Metrics, David Berger tells us, selecting the right measures enhances your decision-making capabilities greatly. In turn, this leads away from the usual fire-fighting mentality and more toward a planned environment, with better control over assets. Moreover, choosing a small but powerful set of measures that trade off ensures that maintenance and operations personnel are motivated and aligned with what management has defined as success for asset performance management. Properly constructed KPIs can provide invaluable business intelligence for a broad spectrum of financial, performance, and improvement activities. 4

5 To-Do Lists Everyone is familiar with to-do lists. At home, such lists are referred to as honey-do lists lists of habitual tasks to be performed in a timely manner in order to promote a well maintained household and a happy spouse. In business, to-do lists take the form of action items whose routine performance contributes to the smooth operation of the enterprise. Most often such lists involve core practices like processing invoices, screening and approving purchase orders, assigning work order tasks, recording preventive maintenance operations, and the like. Timely execution of these activities contributes to overall business efficiency. While to-do listing is not new, businesses tend to place greater importance upon their use and execution. This is because the accomplishment of list items is nearly always critical to business success. As a result, the proper assembly of to-do lists has become a business operation in itself. Rather than a casual jotting down of routine action items, there has been a move toward quantifying to-do lists. In some cases this drive toward quantification has led to a new set of KPIs that cover to-do items. This is carrying to-do list construction in a wrong direction. Ideally, a to-do list should tell an individual the number of items that have been assigned to that person, what those items are, and when the accomplishment of those items is required. You can see that the efficient management of to-do lists will greatly enhance the efficiency of any business enterprise. 5

6 Software as a Tool to Success The discussion on Key Performance Indicators and To-Do Lists carries with it the notion that a company must devote substantial resources simply to manage these performance-enhancing tools. In times past this was indeed the case. Companies hired staff personnel to facilitate KPI and To-Do List operation. With the advent of databases and especially with the development of software that is capable of quickly mining information from databases, KPI and To-Do List management has become relatively simply and oh so much more productive. There are any number of software applications that promise clean and efficient KPI and To-Do List (sometimes called In-Box) management. The best applications incorporate full-featured asset performance management functionality as well as methods for setting up and documenting KPI and To-Do List performance. A company must be careful in selecting such software. While all offerings do indeed provide for some sort of KPI or To-Do List management, the most effective offerings provide both and with certain specific features that promote top-notch results: For KPI Management < Comes with preformatted set of commonly used KPIs that may be employed out-of-the-box < Easy construction of even complex KPIs including assistance for behind-the-scene SQL queries to take maximum advantage of database information < Ability to create subordinate KPIs to feed top-tier KPIs including ability to apportion subordinate KPI weighs for the top-tier elements < Dedicated space on a home page screen that provides a concise display of KPI results < Facility to assign evaluation thresholds to KPI results such that the home page display provides visual indication of normal versus abnormal results (the more evaluation gradients that are available Excellent, Above Average, Average, Below Average, Poor, etc. the better) < Option for individual users to tailor their home pages so that only the KPIs of concern to the user will be displayed on his/her page < Ability to drill down from the home page KPIs to reveal results of associated subordinate KPIs < Allow the transmission of an , pager, or telephone message to notify a user that a KPI has reach a critical (i.e., failure) value and needs attention For To-Do List Management < Comes with preformatted set of commonly used to-do items that may be employed out-of-the-box < Easy construction of even complex to-do items including assistance for behind-the-scene SQL queries to take maximum advantage of database information < Ability to create to-do items that are expressly assigned to specific individuals or to predetermined groups within the organization < Dedicated space on a home page screen that provides a concise display of to-do list results < Option for individual users to tailor their home pages so that only the to-do items of concern to the user will be displayed on his/her page < Links from the user s home page to the operating screen where to-do items are accomplished < Allow the transmission of an , pager, or telephone message to notify a user that a KPI has reach a critical (i.e., failure) value and needs attention 6

7 Conclusion Key Performance Indicators and To-Do Lists provide the opportunity for a company to more fully utilize information already available within the organization to promote greater efficiency, stronger performance, and continuous improvement all directed toward accomplishing company-wide business objectives for stronger asset performance. The use of quality software applications converts a time-consuming manual process for KPI and To-Do List management into a simplified, effective source of priceless business intelligence that can directly and positively impact a company s bottom-line goals. Cooperative creation of KPI and To-Do items is crucial; so is selection of the right software. When KPIs and To-Do lists are established carefully, a business will certainly realize a remarkable return on investment. About Infor Infor delivers business-specific software to enterprising organizations. With experience built-in, Infor s solutions enable businesses of all sizes to be more enterprising and adapt to the rapid changes of a global marketplace. With more than 70,000 customers, Infor is changing what businesses expect from an enterprise software provider. For additional information, visit 7

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