Key Performance Indices and Key Activity Indicators

In World Class Manufacturing the focus is on continuous improvement. As organizations adopt world class manufacturing, they need new methods of performance measurement to check their continuous improvement.

Traditional performance measurement systems are not valid for the measurement of world class manufacturing practices as they are based on outdated traditional cost management systems, lagging metrics, not related to corporate strategy, inflexible, expensive and contradict continuous improvement1.

To know the world class performance, measurement is important because “if you can’t measure it, you can’t manage it and thus you can’t improve upon it”.

Here below in Table 1.3 is shown a brief report on different indices and indicators defined by several authors in order to “measure” WCM.

Table 1.3 Main indices/indicators defined by different authors

 However, some authors proposed only productivity as a measure of manufacturing performance. Kennerley and Neely identified the need for a method that could be used for the development of measures able to span diverse industry groups.

From this point of view we would like to note that it is necessary to develop a more systematic approach in order to improve a project and process. In particular, in WCM we can use two types of indicators: Key Performance Indicator (KPI) and Key Activity Indicator (KAI).

KPI represents a result of project improvement, e.g. sales, profit, labor productivity, equipment performance rate, product quality rate, Mean Time to Failure (MTBF) and Mean Time to Repair (MTTR).

KAI represents a process to achieve a purpose of project improvement, e.g. a total number of training cycles for employees who tackle performance improvement projects, a total number of employees who pass a public certification examination and an accumulative number of Kaizen cases.