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KPIs Implementation
MeasurementPlanning
Target Setting Baselining with XMR Chart
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KPI Description and Measurement Plan
KPIs in Practice
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Measurement Planning
Objective name KPI name DefinitionCalculation
formulaMeasures used in the calculation Data source Frequency Owner Updater Scope
Increase monthly sales by 20%
Average Order Value
Average dollar amount spent
each time a customer
places an order
total revenue / total number of
orders
RevenueNumber of orders
Sales CRM MonthlySales
directorSales
manager
Reporting month 5th to
EOM
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Updating the Plan • Targets and thresholds
• At completion of initiative
• Insufficient info
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KPI Planning- DIYCreate a KPI template, add a couple of KPIs from the last lesson, add details and submit the screen shot.
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Let’s recap…• Objective (label or as is)
• KPI name (abbreviation & full)
• KPI definition
• Calculation formula
• Data source
• Frequency
• Owner
• Updater
• Scope
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The terminologies
PERFORMANCETARGETAn indicator established to determine how successful the performance is in achieving the objectives
PERFORMANCETHRESHOLDS
Maximum acceptable variances for a selected KPI/ metrics
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The terminologies
PERFORMANCEBENCHMARK
The best performance- being achieved by a competitor: a different unit, a different company or a different industry
PERFORMANCEBASELINEAverage level of performance that you are currently at, and compare the future performance levels with, to evaluate change
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Baseline• Minimum or starting point used for comparisons
• A baseline for your performance measure is the average level of performance that you are currently at, and that you will compare future performance levels with to test if performance is really changing
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Statistical Requirements• Larger the number of data points better it is
• Process should be statistically stable• No outliers
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Outliers
• Patterns in a specific & short time period
• No outliers in the data to be baselined• Special causes- environmental or
man made/ assignable
• Common causes- Random/ natural/ inherent
₹ 0
₹ 500
₹ 1,000
₹ 1,500
₹ 2,000
₹ 2,500
₹ 3,000
₹ 3,500
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
Sales
With outlier, Av= Rs. 1411
Without outlier, Av= Rs. 1106
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Control Chart- Basic Steps• Collect data
• Clean and sanitize
• Remove outliers
• Create Mean and Variance Control Charts• Calculate Centre Line, UCL, LCL
• Find outliers, special causes again, if any
• Revise CL, UCL, LCL
• Can be done in Excel or other Statistical Softwares
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Introduction to Control Charts
Common Cause Variation
Process is ‘In Control’
Special Cause Variation
Process is “Out of Control”
Special Cause Variation
Process is ‘Out of Control’
Run Chart of data points
Process Sequence or Time Scale
Lower Control Limit
Mean/ Center Line
+/-3
sigma
Upper Control Limit
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XMR Chart or IMR Chart
• when production volume is very low
• cycle time to build a product is long
• cost of sampling is high
• get individual data points only after certain period of time
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How to create baseline using X-MR Chart?
Revenue/day
Mon ₹ 1,064.1
Tue ₹ 1,623.7
Wed ₹ 1,353.5
Thu ₹ 1,253.8
Fri ₹ 1,783.5
Sat ₹ 5,783.5
Sun ₹ 1,351.1
Mon ₹ 1,905.5
Tue ₹ 1,123.8
Wed ₹ 1,623.7
Thu ₹ 1,353.5
Fri ₹ 1,253.8
Sat ₹ 1,783.5
Sun ₹ 1,353.5
₹ 0.0
₹ 1,000.0
₹ 2,000.0
₹ 3,000.0
₹ 4,000.0
₹ 5,000.0
₹ 6,000.0
₹ 7,000.0
Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun
Revenue/day
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BaseliningNext part
Excel and Sigma XL demo
Constructing XMR Chart
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BaseliningExcel and Sigma XL demo
Constructing XMR Chart
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TIP ALERT!
When to change the targets
Targets
Baseline performance
Targets
Baseline performance
Baseline performance
Targets
Revise Targets
Do it yourself Create baselines
Almost there!
Videos , Articles, Templates, Quiz, Exercises, Big Store Case study
Foundation Direction setting
Strategy & KPI planning
Implementation
✓ Definition✓ Characteristics✓ Classification
✓ Vision✓ Mission ✓ Goals✓ Strategic Objectives
✓ Establishing Strategies
✓ Selecting Key Indicators
✓ KPI Implementation planning
✓ Target setting✓ Baselining✓ Benchmarking
Finish and celebrate!
✓ Basic statistics✓ Dashboards • Tips and tricks✓ Steps to create a
dashboard✓ Excel dashboard✓ Power BI dashboard
Analysis & reporting
Performance analysis and dashboards
Next Lesson
