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What are key performance indicators?

businessnegoations19314770.jpgAn important component of measuring manufacturing production is known as key performance indicators. Key performance indicators (KPI) are used to measure the performance of different processes within a company, but are especially important in measuring the manufacturing process.Key performance indicators most often come in the form of scorecards and graphs. They look at performance over time, which is why it is typically displayed as a graph. Manufacturing companies that implement lean manufacturing or process improvement, often use Key performance indicators to measure their data. If you the manager of a manufacturing company it is important to understand what key performance indicators are and how to use them-

Key performance indicators are used in the manufacturing process, measure different functions. These can include but are not limited to:

  • The rate of production

  • The volume of production

  • The quality of production

Using graphs, these rates will be expressed as percentages, since they reflect changing values like units manufactured per day, and units manufactured per second. However, the data can be expressed in the form that is most beneficial to the specific needs of your business.

It is important to understand that manufacturing systems will not work properly if you do not have key performance indicators, along the way to measure them. In fact, there are many lean manufacturing experts that claim that any manufacturing system will only work as good as the key performance indicators that are designed, with it.It is important to understand that key performance indicators, allow for continuous improvement, to be made along the way. Here are some factors that should part of the criteria your key performance indicators should meet:

  • Key performance indicators must be related to something that is measurable (such as how to get from point A to point B)

  • Key performance indicators must represent management and the workforce

  • Key performance indicators must be used to improve the company in some way

  • Key performance indicators must be essential, immediate and useful

It is important to understand that, for some businesses, key performance indicators can become confusing quickly, especially when they do not have clearly defined measures. It is important to always make the measures visible, and easy to understand. It is important to always be focused on the fact that the key performance indicators, are being used to measure performance, and spot fluctuations in the process. If there are deviations or repetitions in the process, then the key performance indicators will identify them, and help you eliminate them before you waste more time, money, and raw goods on production.

Key performance indicators can help a business gain the information they need, in other areas far beyond the manufacturing process. Key performance indicators can also be used to determine why customers are buying more of your products, at certain times, and in certain regions. They can also help businesses, solve problems with customer concerns. For example, if you have had 12 days of strong sales, and then you have a slow day; key performance indicators, will help you track the buying trends to determine why people are buying, and why they aren't buying at other times. This makes key performance indicators useful for business projections, analysis, planning, and problem solving.

You can use key performance indicators in virtually any department of a business.You simply take a look at that department, and the data you want to organize. While there are other methods of solving problems, and identifying customer issues, key performance indicators always return fast and measurable results. The major benefit of using key performance indicators is that they provide you with visual tools, to help your business eliminate wastes, and increase productivity.

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