Shared KPIs and metrics are highly important to ensure alignment between corporate objectives with Business Units (Departmental) KPIs.
For example, for a corporate objective for Sales, the shared objectives for other business units could be:
- Production: Production of quantities required by sales forecast on time
- Sales: To provide accurate forecast on time
- Warehouse: To ensure adequacy of stocks and at the same time avoid overstocking and expired stocks loss
- Logistics: To adhere to delivery time promise to clients
- Finance: To ensure cash availability to procure raw materials within the supplier lead times
- Quality: No production rejects/defects
If any of the above KPIs breaks this will affect the Corporate Objective as well as other Business Units KPIs.
The same applies for identifying relevant shared metrics within a Business Unit. For example, what is required to ensure production delivers the quantities required by sales on time?
The answer could be:
- OEE (Overall Equipment Effectiveness) of 85% or higher
- Minimize breakdowns through maintenance
- Minimize rejects through effective QC
- Skilled workforce via effective training
Usually to asses shared metrics we conduct a process analysis for business units or processes within a business unit to identify inputs and outputs at the interfaces of processes.
Another easy way to identify shared metrics is to use the 5 What methodology. Asking What is required to achieve a KPI up to 5 times will provide insight for identifying shared metrics.
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Yiannakis Mouzouris
Strategy and Performance Management
Expert / Business Consultant / Trainer
B.Sc. Mechanical Engineering
M.Sc.Engineering Management, US