Many businesses that I speak to are interested in developing KPIs (Key Performance Indicators) for their continuous improvement programmes. I’ve found that there are no right or wrong answers to this search but this article aims to help you find an answer that works for you. The key is to focus on something that is meaningful and helps you to progress your continuous improvement journey.
What makes a good continuous improvement KPI?
A good KPI can help you to stay on track and make effective decisions for your business. This is as true for continuous improvement as for any other driver in your business (including customer satisfaction, on time delivery etc…).
The KPI should be understandable by your colleagues and help them to know if they are on the right track and achieving the right results for your business.
In short, it should be useful.
Components of typical continuous improvement KPIs
Most continuous improvement metrics include some combination of the following elements:
- Number of improvements identified
- Percentage of improvements implemented
- Total savings
- Rate of improvement
- Percentage of business covered
- Time taken to deploy change
None of these are right or wrong, it depends on what kind of behaviour you want to encourage. Also, continuous improvement projects are usually a means to an end. What do you really want to achieve?
- Happier customers?
- More engaged staff?
- Higher profits?
- Fewer fires to put out?
- All of the above?
A personal selection
During one of my production management jobs I had a very simple set of metrics that I focused on, including continuous improvement. These were:
- Lead time (weeks)
- On time in full (percentage)
- Number of improvements completed (number / month)
There were other metrics being tracked in the business but these three kept me focused. They kept my colleagues focused and they kept my team focused. We covered off about thirty improvements in a six month period and dramatically changed the performance of the business:
- Turnover increased by £5M with no additional hours (40% increase)
- Lead time dropped by 80%
- Productivity jumped
- On time in full rocketed from 22% to a consistent 98%
I could get into an article about cause and effect here, but I won’t! My team put their energy into maintaining our processes whilst we deployed a barrage of changes. Results followed. Our turnover doubled over the next two years, as our business was recognised as a leading global supplier. Not bad for a six month sprint of continuous improvement, followed by a less intense approach thereafter.
What do you want to measure?
So, whilst there is no one right answer I am hoping that you might get a few ideas from reading this article. As you can see in my example above, I used my continuous improvement KPI in conjunction with my other measures. It is the same as using the rev counter and speedo in your car, they tell a more complete story. In isolation you might doing 60mph and be about to blow your engine up (get out of first gear!).
Think about the results you ultimately want to achieve and align your KPIs. I’ve seen numerous businesses measure the number of ideas generated but fail to implement them. In my example, the rate of change was a means to an end and I needed the other measures to make sure that our work was effective, generating tangible improvements.
I also acknowledge the shortcomings of the measure I used. The improvements were not all the same size. Measuring how many were implemented didn’t always feel like the right measure, when some took weeks to deploy and others took days. But that wasn’t the point. Instead of getting hung up on what was perfect we agreed on a measure that made sense to everyone, one that would indicate progress.
I hope you have the same epiphany too when you choose your continuous improvement KPI.
