Key Performance Indicators (KPIs) & Metrics Amit Chandak - - PowerPoint PPT Presentation

Amit Chandak

Key Performance Indicators (KPIs) & Metrics

Director Senior Experience Owner 10/09/2018

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Profile

Amit Chandak earned his LSSBB from USAA in 2016 and QAI Global Institute in 2011. Amit is pursuing a Master Black Belt designation from The Ohio State University and holds a Bachelor’s degree in Business as well as an M.B.A. Amit is currently working at USAA as Director of Experience Owners to formulate and execute Process Excellence, Agile and Risk Management strategies to deliver seamless members and employees experiences. Prior to USAA, Amit brings over 16 years Banking and Financial Service Industry (BFSI) experience – worked at Apple as an IT Project Manager, Process excellence & Business Reengineering consultant at Accenture, TCS and Wipro while working with various global clients across several business domains (Finance & Accounting, Investment Banking, Supply Chain, Consumer Banking, Insurance, HR etc) kcamit16@yahoo.com +1 210 240 1299

https://www.linkedin.com/in/amit- chandak-62b0996/

Presented by Amit Chandak at ASQ San Antonio Section 1404

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Agenda

• Difference Between KPIs vs. Metrics
• Types of Metrics
• Metric Test
• Challenges & Tips
• Identification Process & Tools

Presented by Amit Chandak at ASQ San Antonio Section 1404

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Key Performance Indicators (KPIs): Metrics vs. KPIs

• Measures components of an activities within a

process

• Aligns to core steps in the business process
• Informs KPIs
• Measures the completion of a specific

business objective (Output) or desired end state within a certain timeframe

• Includes thresholds of acceptability
• Informs key business decisions

Not all metrics are KPIs, but all KPIs are metrics

METRIC

Measurement of an activity’s performance

KEY PERFORMANCE INDICA

TOR (KPI)

Measure indicating a process's performance

Key Characteristics

Key Characteristics

Presented by Amit Chandak at ASQ San Antonio Section 1404

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Levels of Metrics METRIC

Measurement of an activity’s performance

KEY PERFORMANCE INDICA

TOR (KPI)

Measure indicating a process's performance

• Identify and Measure metrics at each level of

Organization

• Ensure metrics are tied at each levels; e.g.
• Profitability at Executive Level
• Cost per application at Manager Level
• Productivity or Handle Time at Employee Level

Key Characteristics

Metric Levels

Presented by Amit Chandak at ASQ San Antonio Section 1404

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Performance Measurement: Manage Inputs, Report Outputs

Speed Direction Altitude

Vital Few Outputs

What does the pilot control?

Leading Metrics

Lagging Metrics

Predict

Inputs

Throttle Rudder Elevator

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Types of Metrics: Leading (Input & Process) and Lagging (Output) Leading Metrics Predicts Performance (Output)

• Processing Time, Queue Time
• Exception Rate, Rework
• Backlog (Volume & Time)
• Utilization, Availability
• Average productivity per Agent
• Customer Complaints
• Skill – Cross Training
• Volume Received
• Timeliness (Delivery)
• NIGO
• Timeliness (Delivery)
• Accuracy
• Satisfaction (Customer & Emp)
• Cost of unit, Cost of Poor Quality
• Revenue
• Risk

On Time Quality Complete

Step 1 Step 2 Step 4 Step 5

On Time Quality Cost Satisfaction

Step 3

Inputs Process Output

Leading Metrics Lagging Metrics

Inputs Metric Process Metric Output Metric

Presented by Amit Chandak at ASQ San Antonio Section 1404

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The performance metrics chosen must be “S.M.A.R.T.” ▪

Is it clearly defined?

▪

Can it be easily generated without complex calculations? Specific

S ▪

Is it easy to collect the data needed?

▪

Can it be compared to other data?

▪

Can the measurement be defined in an unambiguous way? Measurable

M ▪

Can stakeholders influence it?

▪

Do we understand what drives the metric? Actionable

A ▪

If the metric changed, would anyone care?

▪

Does it tell the whole story from a value stream perspective? Relevant

R ▪

Can it be measured often enough to identify problems while they are still relevant? Time - bound

T

SMART Test

Presented by Amit Chandak at ASQ San Antonio Section 1404

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Specific

S

Measurable

M

Actionable

A

Relevant

R

Time - bound

T

Does Your Metric Qualifies SMART Test?

Poor measure Timeliness: Number of wires submitted by EOD SLO.  ▪ All terms are clear

▪

Computing this is simple addition  ▪ The data is straightforward to collect  ▪ The employee / unit is in control on whether they deliver on time

▪

Cannot tell whether there were any wires that were late

▪

The number can be calculated at any time  SMART measure Timeliness: % of wires submitted by EOD SLO.  ▪ No change  ▪ No change  ▪ No change

▪

The score incorporates the total number of wires 

▪

No change 

Presented by Amit Chandak at ASQ San Antonio Section 1404

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Specific

S

Measurable

M

Actionable

A

Relevant

R

Time - bound

T

Poor measure Quality: Number of errors in customer submissions per year



▪

Errors are clear

 ▪

The data is straightforward to collect

▪

Does not provide context (e.g. if 3 fail is that a lot or a little)

▪

Associates cannot prevent customers from submitting error filled materials

▪

One year is required before a poorly performing process for detection will be noticed SMART measure Quality: % of errors that are not caught in the initial screen



▪

No change

 ▪

No change

▪

The % indicates the volume

• f undetected to detected

errors

 

▪

Associates are able to control the quality of their screening

▪

The number can be computed as any point



Does Your Metric Qualifies SMART Test?

Presented by Amit Chandak at ASQ San Antonio Section 1404

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Watermelon Effect

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Process Integration – Backward and Forward

Marketing Acquisition Fulfillment Service Design Raw Materials Production Distribution Integrate your KPIs to get optimal business results

Presented by Amit Chandak at ASQ San Antonio Section 1404

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Best Practices for Identifying Metrics and KPIs

Define End to End Process

1 Brainstorm Metrics 2

Distinguish KPIs vs. Metrics

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Measure & Specification Limits

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• Identify Metrics (from list created in Step 2) and

document additional details to enable data collection

• Baseline information and specification limits
• Identify most important indicators of

successful Process performance

• Identify Input-Process-Output metrics
• Brainstorm operational metrics that will help

monitor and manage the process

• Develop SIPOC or High-level process maps
• Identify customer (internal/external) and

suppliers

Identify and Remediate Gaps

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• Identify measurement gaps in

current state and remediate accordingly

Presented by Amit Chandak at ASQ San Antonio Section 1404

Data Collection Plan

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Process Name: Pizza Delivery Process Owner (PO): Pizza Store Manager LoB:

Suppliers Inputs Input Requirements Process Outputs Customer Requirements Customers

Who Provides the inputs? Materials, Information, Ideas, Labor How does the Process Owner want the inputs?

Starts with: Hunger Documents, Information,

Services, Decisions How does the Customer want the outputs? Who Uses or Benefits from the Output?

Store Manager (PO) Store Manager (PO) Hungry customer Store Manager (PO) Menu options Order venue (phone, digital, ,com) Delivery information (name, address) Stated delivery Service Level Agreement (SLA= 45 minute delivery) Full menu options Order venue (phone, digital, ,com) Accurate information (name, address) Time order is entered

Order Pizza

Documented order Order is in queue Estimated delivery time Delivery information Order recorded Order is in queue Accurate delivery lead time estimate Accurate delivery information Baker Baker/Hungry customer Hungry customer Driver (Task Owner) Order Taker (Activity Owner) Order Taker (Activity Owner) 3rd Party supplier Pizza store Manager (PO) / Baker (Activity Owner) Documented order Order in queue Ingredients Standard operation procedures (SOP) Accurate order First-in-first-out (FIFO) order Fresh ingredients available Ingredients added in proper proportions

Assemble Pizza

Assembled pizza Pizza assembled accurately per

• rder (100% of the time)

Hungry customer Baker (Activity Owner) Store Manager (PO) Baker (Activity Owner) Assembled pizza Pizza oven Time in oven Assembled pizza accurate Pizza oven at baking temperature

Bake Pizza

Baked pizza ("done") Thoroughly baked pizza / not burnt Pizza visually appealing Hungry customer Scheduler (Activity Owner) Scheduler (Activity Owner) Store Manager (PO) Store Manager (PO) Estimated delivery time Time in delivery queue Volume of deliveries in queue Thermal carrier Delivery route Delivery driver Delivery information and vehicle On time delivery Minimize queue time Minimize queue volume Insulates content (keeps pizza hot) Efficient route Available delivery driver Delivery staff Reliable delivery vehicle

Deliver Pizza

Pizza delivered On time delivery (45 minutes from order) Hot pizza Correct toppings Hungry customer

Ends with: Eat Pizza

Step 1 - Define End to End Process using Gold SIPOC

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Steps 2 - Data Collection Plan

Date Captured Associated CTQ Category Metric Name Operational Definition Math Formula Unit of Measurement Description of Business Insight / Objective

XX/XX/XX CTQ from the VOC Is the metric related to Time, Cost, Quality, or Member Experience? What should the metric be called? Should be easy to understand. How would you describe the metric so there is no ambiguity on what you are intending to measure? How would you calculate the measure? For instance, would it be a sum of all products, a ratio, the difference between two values, etc. e.g., #, $ , % What would this metric enable you to do? What will it be used for?

Presented by Amit Chandak at ASQ San Antonio Section 1404

Step 2. Brainstorm operational metrics that will help monitor and manage the process, and identify KPIs that depicts performance.

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Steps 3 - Data Collection Plan

KPI? Other Conditions / Filters to record Included in a report / dashboard? Name of report / dashboard Current Data Source & Location How is the data collected? Who collects the data? What Frequency?

Yes / No What other types of filters would be needed to make this data more meaningful? For instance, would you need to be able to filter by product or by employee? Is the measure being captured in a report/dashboard today? If the measure is captured in a report, please list the name of the report . Where is the data being stored? Is the data being captured manually

• r automatically?

List the name of the individual or system. What frequency is the data collected ?

Presented by Amit Chandak at ASQ San Antonio Section 1404

Step 3. Identify Metrics (from list created in Step 2) and document additional details to enable data collection

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Step 4 - Data Collection Plan

Industry Benchmark Baseline Target State Lower Spec Limit Upper Spec Limit Data Available Notes on Data Availability

What is the current performance of the metric in the industry? What is the current performance of the metric? What is the target state? (Should be informed by VOM / VOB). What is the lower limit? What is the upper limit? (There might not be an upper limit) Yes, No, Partially Available Note as GAP if data not available

Presented by Amit Chandak at ASQ San Antonio Section 1404

Step 4. Once data is gathered, enter in baseline information and specification limits.

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CoSA: Process Owner: Pizza Store Manager Process Name: Pizza Delivery Last Update:

3X3 Matrix

Y Y

(Output, Lagging, Reactive)

X1

(Input, Leading, Predictive)

X2

(Input, Leading, Predictive)

X3

(Input, Leading, Predictive)

Y1 Quality: Pizza toppings correct Accurate order taken Pizza assembled per order Ingredients available Y1 Quality: Hot pizza Delivery Lead Time Thermal carrier efficiency Time in delivery queue (wait/delay time after baking) Y2 Speed: On Time Delivery (45 Minutes) Order queue time Time in delivery queue Delivery route efficiency Y3 Cost: Cost per pizza Defect rate Delivery efficiency (routing) Missed delivery commitment

3 x 3 Matrix

• Vital few vs Trivial many – Defining and monitoring the vital few is essential so team is

focused

• Identify 3 most important Lagging Metrics (KPIs) and 3 most influential Leading Metrics
• Proactively control the inputs that significantly impacts the output metric

Presented by Amit Chandak at ASQ San Antonio Section 1404

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Best Practices for Classifying Metrics

To Be Retired To Be Migrated To Be Developed

Associated Risk Impact to Customer Associated Risk Impact to Customer

Next Steps:

• Document as-is process for tracking

and reporting the metrics/KPIs

• Create streamlined process for

reporting metrics/KPIs Next Steps:

• Meet to determine gaps in obtaining

metrics/KPIs not currently in production

• Develop interim state method

for obtaining metric/KPI Next Steps:

• Communicate decision to retire

metrics/KPIs to stakeholders who are responsible for their production

Gap Remediation Strategies – (Step 5 of 5)

Presented by Amit Chandak at ASQ San Antonio Section 1404

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Continue The Cycle

What get measured, gets reviewed and improved!

Identify Measure Improve Sustain & Recycle

Presented by Amit Chandak at ASQ San Antonio Section 1404

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Presented by Amit Chandak at ASQ San Antonio Section 1404