KPIs (key performance indicators) are indispensable tools for assessing and improving performance in the industrial production sector. Creating relevant KPIs, whether industrial KPIs or production-specific ones, may seem complex, but it is essential for optimising your processes and achieving your objectives. In this article, we will explore the fundamental steps for building KPIs suited to industrial production and ensuring effective performance monitoring.
1. Defining strategic objectives for industrial production
Before creating KPIs, it is indispensable to identify your strategic objectives for industrial production. An industrial KPI must be designed to answer a precise strategic question: do you want to improve the efficiency of the production line, reduce production costs, or optimise overall equipment effectiveness (OEE)?
Involving stakeholders in this process is crucial. For example, if your objective is to improve the output of your machines, KPIs such as cycle time, breakdown rate or equipment efficiency may be relevant. To optimise the use of KPIs, make sure they address the company's real needs.
2. Aligning KPIs with company strategy
Aligning industrial KPIs with the company's overall strategy is crucial to ensuring their effectiveness. If your company is focused on the continuous improvement of production, your indicators must follow this logic. For example, KPIs such as scrap reduction, optimisation of production costs per unit or lowering the defect rate must be directly linked to the company's mission.
By aligning your KPIs with your long-term objectives, you guarantee that every decision based on these indicators will have a direct impact on the growth and competitiveness of your industrial production.
3. Creating actionable and measurable KPIs
An industrial production KPI must be not only measurable but also actionable. This means it must generate concrete actions when results fall short of expectations. To achieve this, apply the SMART method (Specific, Measurable, Achievable, Realistic, Time-bound) when creating your KPIs.
For example, instead of simply tracking overall production cost, a more actionable KPI would be: "Reduce production costs per unit by 5% within the next six months." This type of indicator not only measures precise performance but also guides corrective actions.
Make sure your industrial KPIs rest on reliable and accessible data. Using software solutions such as integrated management systems (ERP) can facilitate the collection and analysis of this data, thereby guaranteeing continuous and precise monitoring.
4. Sharing, evaluating and regularly reviewing KPIs
Another essential aspect of KPI management in industrial production is the regular sharing of results with the teams concerned. A KPI will only have an impact if the managers are informed and understand the objectives they must achieve.
Create a culture of transparency around KPIs by communicating results frequently to all staff. This will not only motivate teams but also ensure better coordination in achieving strategic objectives.
Furthermore, it is crucial to revise your KPIs regularly. The industrial production sector is constantly evolving, and your indicators must follow this dynamic. If a KPI becomes obsolete or no longer reflects the company's priorities, it is time to adjust or replace it.
By following these four principles – defining clear objectives, aligning your industrial KPIs with your company strategy, creating measurable and actionable indicators, and finally sharing and regularly revising your KPIs – you can turn your indicators into genuine performance levers for your industrial production.
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Xavier Schuster
Consultant at SXE Consulting. Industrial consulting firm based in Luxembourg, 25 years of experience in operational excellence.
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