OEE and Key Performance Indicators

What are key performance indicators?

Key performance indicators are a type of performance measurement. OEE seeks to increase overall effectiveness and KPI’s help us measure it.

They are used to evaluate either a company’s overall performance or the performance of a certain aspect of their business. They are measure used in accordance with OEE (Overall Equipment Effectiveness).

In choosing KPI’s a business must have an extremely good understand of what is important to their particular organisation or industry. For example the Key performance indicator’s that are considered important to an IT support team will be entirely different to those of an accounts or Human Recourses team.

Assessment is essential

As with OEE constant re-assessment is an absolute must with any KPI’s and industries, standards and expectations change all the time. Business must take a pro-active approach to setting their Key Performance Indicator’s and involve as many staff members as possible. Those on the front line of organisations usually know what sells and what works better that anyone else.
Example KPI’s

- Amount of new customers acquired over a given period. If you set a benchmark as to what number of new customers indicated that you are doing well it will easy for you to measure your progress.

- Turnover. This is a fairly obvious one. Decide what amount of turnover in a given period will indicate that your business is performing well.

- Cycle time. How long should certain processes take? Decide what is optimal and then measure performance against it. If your cycle time KPI’s aren’t achieved then you can begin to ask yourself why and make necessary changes.

- Down time. Most companies would love to have absolutely no down time but this is completely unrealistic. Decide what your minimal amount of downtime that you can achieve is and set this as a KPI.

They must be quantifiable

OEE is more than just improving effectiveness; it is improving it to the benefit of everyone. Key performance indicators are exactly the same. They must never be to the detriment of a company’s employees, suppliers or customers. They must never be felt to be unobtainable. If they are then no one will bother trying to achieve something that they see as impossible.

Your key performance indicators must be quantifiable and realistic. Obviously as a company grows so will expectation and your KPI’s in turn. Reward you staff when you consistently meet your KPI’s so that they are seen as a good thing and not a bad.

For more information see OEE