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How Best to Identify KPIs

Six Sigma – iSixSigma Forums Forum Basics Welcome How Best to Identify KPIs

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  • #53885

    Patrick Goodrich
    Participant

    Can anyone with experience in identifying and capturing KPI’s offer perhaps a general methodology or approach to doing so ? Some people seem to think that budgeting and forecasting is the best way, I tend to disagree. I do believe there must be a systematic approach utilizing Lean & Six Sigma.

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    #191756

    Ken Feldman
    Participant

    One quick and simple way is to do a SIPOC of the process and then identify the most appropriate metrics from the Customer perspective of the Output followed by corresponding predictive measures from the Process and then Input characteristics that you want to be met by the Supplier. If you take a more strategic approach and identify the Strategic Metrics then you can cascade them down by process and function so that they are all linked from Strategic down to Operational and across all functions and processes. This gives you a huge matrix of potential KPIs to choose from.

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    #191767

    john berilla
    Guest

    Tons of information out there on this topic…Everything from Hoshin Planning to Balance Scorecard…One approach (depending on organizational level) would be to start with the financials if possible (assuming your firm is a for-profit)and spend some time building and understanding the business model relative to the industry. With this information you can more readily determine if you should be working on top-line (ie sales growth, pricing strength, etc) or bottom-line efforts (ie operational effectiveness)issues. Essentially, do you need to focus on what you do (value prop) or how you do it (productivity)? Good luck.

    Good luck.

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    #191773

    Patrick Goodrich
    Guest

    Thanks for the insights. How often is Sigma(z-score) used as a KPI after improvment efforts are implemented ? Or is the preferred method to use some form of percent change in order to convey the improvement or lack of to the average person not versed or trained in six sigma.

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    #191774

    Mike Carnell
    Participant

    Just a thought but before you jump to the KPI’s you might want to take a look at which are Key processes.

    Sigma has it’s place as a metric but this isn’t one where I like to use it that much. It isn’t really that well understood and it isn’t very sensitive. Personally I think dpu is generally the best understood and it moves relatively easy when you implement changes. People like to see results particularly results they understand.

    Just my opinion.

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    #191828

    Arcchana
    Guest

    My suggestion is to setup meetings with the process owners and make a note of each and every step involved in the task.It will then be easier to identify and freeze on the KPIs.

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    #192753

    Donesh
    Guest

    SIPOC is the best way to identify metrics and another way is IPO Metrics… which is Input process output metrics.

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    #192754

    K S Alok Ranjan
    Participant

    Hey buddy,

    I believe, if the KPI identification is not related to any specific six sigma project, then it should not be involved at all, running the risk of getting it complicated I think.

    There is a Mission and Vison of the org, always. That should drive the KPIs of employees from top down.

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    #192771

    MBBinWI
    Participant

    @patrickgoodrich – you need to go back to the basic definition of the term: Key Process Indicator. This should be a small set of variables that shows how the process is performing. Rarely is it a single item, as nearly every process has more than one objective. If you can write a mathematical function that describes the inputs to the process and how they get transformed to the outputs, then the outputs are the KPI’s and the inputs are the critical control factors.

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