1. Trends in KPI management

Have you ever heard the term KPI management?
A KPI (Key Performance Indicator) is a quantitative representation of the degree of achievement of an important process CSF (Critical Success Factor) relative to a final numerical target (KGI).
KPI management is, as the name suggests, a method of managing the achievement of goals using KPIs.
In recent years, KPI management is an approach that has been adopted by all industries and occupations. The reasons why KPI management is adopted in various situations include the increasing complexity of business, the need for high productivity, and the diversification of team members. And there is no doubt that the need for KPI management will increase in today's rapidly changing society.

2. What are factory KPIs?

It is no different in the manufacturing industry. In recent years, there is a demand for management that utilizes KPIs at factories. So what is factory KPI management?
Digital utilization and efforts at production sites, such as smart factories, are increasing, but there are many cases where various KPIs are proliferating at each site and line, and there are many cases where it is necessary to reconsider factory KPIs.
Factory KPIs can be said to be indicators for quantifying the production efficiency of production sites that incorporate management indicators for each process as elements. Furthermore, the index must be an index that can judge relative goodness and badness across departments without being affected by differences in products and processes.

In fact, as we have supported smart factory projects in various industries, we have had many opportunities to consult with you about the setting of factory target indicators, that is, KPIs.

3. Actual situation of factory KPIs

What kind of KPIs are used in your factory?
At many production sites, KPIs are often different and not standardized depending on the type of product or process.
For example, in a manufacturing process where it is important to be in operation, the operating rate, total stoppage time, number of short stoppages / hours, etc. are used. may be Furthermore, in addition to the type of process, in the case of products with high manufacturing costs, the amount of disposal / price, energy consumption, etc. are also required, increasing complexity from a management perspective.

If KPIs are inconsistent like this, even if you try to practice KPI management, you will not be able to judge whether it is good or bad. I can't judge the relative goodness or badness, so I can't even set the priority of where to start. In particular, when it is necessary to have a common understanding of issues across departments, despite the need to form a consensus on the gap between understanding of the current situation and the ideal situation, the result is that each department perceives it differently. the challenges will be different.

4. Ideal form of KPI setting and operation at the production site

Then, how should we set and operate KPIs at the production site?
In general, it is said that the key to setting KPIs is to be "SMART".

"SMART" means
"S"Specific​
"M"Measurable​
"A"Achievable​
"R" is Relevant​
"T" is Time-bound​
pointing to

Here, I would like to focus on what should be kept in mind when considering KPIs for production sites.

First of all, what is important is that the KPIs for the production site incorporate and combine all of the aforementioned management indicators, which were different for each process, as elements. This makes it possible to set priorities based on relative comparisons using the production site KPIs as comprehensive indicators.
Next, it should be understood in conjunction with factory management KGI. Specifically, when managing to improve the KPI of the production site, when it comes to carrying out improvement activities to improve the production efficiency (KPI), how much will the productivity (KGI) improve? If a clear evaluation can be made based on whether or not a contribution has been made, all departments involved in production can work together to promote activities.

It is important that KPIs at production sites are combined with process indicators and linked with factory management KGIs.

Similar products and processes can be compared relative to each other's KPIs and performance values to prioritize improvements.

However, some of you may be wondering, "Isn't it possible to be aware of differences in products and processes?"
Differences in products and processes can be managed by setting blurring and target values. In products and processes that are completely different, by focusing on the magnitude of deviation in actual values, or the magnitude of the difference between target values and actual values, it is possible to determine the order of priority based on the magnitude of the difference. .

5. lastly

As smart factory initiatives progress, KPI management in factories is gaining more attention.

We hope that this article will serve as an opportunity for you to work on factory KPI management and aim for a better factory that contributes to the improvement of overall management with common indicators.

Supporting quick start & quick win of smart factory

"DSF Cyclone" is a service that enables the construction and utilization of hardware aspects (systems, data, indicators /KPIs) that are important in production activities.
If you are interested, please also refer to here

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