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KPI (KEY PERFORMANCE INDICATORS)

KPI or the Key Performance indicator is an industrial term used to measure the success of an organization in a specified area or an activity. Success or failure does not mean to achieve the planned goal once but repeatedly achieve that goal or the target. A KPI framework is comprised of a number of things essential in the productivity and performance of an organization - goals, plans, facilitating procedures, means of measuring output quality, and the presence of competent people, of course Since the KPIs show the working of that particular operation it helps the executives to its devise future plans.Now understanding the various aspects of KPIs. The goal, in its most basic form, is the foundation of an enterprise or organization. Simply, it is difficult for a company not to have a goal or goals. After all, goals are the driving forces behind the operations of the company itself. Goals can be either short-term or long-term.. These goals direct every member in the organization as to how they should act, so as to achieve the goals that have been set even prior to the onset of operations. The plan is yet another important part of the KPI framework. No matter the goal, it is still important for employees and the like to be firm to a particular plan to achieve that certain goal. This is important in maintaining a certain flow as to how things are done within the enterprise. Moreover, having a plan makes goals easier to achieve through the identification of timeframes and strategies, and the allocation of resources. The comprehensive plan outlined then has to be put into use. For this the company has to develop a process wherein all courses of action are integrated into the plan that the organization has created towards the achievement of goals. This system has to keep in mind the daily routine of the employees and staff themselves, and this requires periodic monitoring in the form of evaluation, assessment meetings, progress reports, and the like. This is then where the importance of facilitating procedures takes place. Aside from that, there is a need to measure the quality of the output as well. The expected outputs should then be in both qualitative and quantitative formats so that a non-biased presentation can be made.

The last factor in the framework is employee performance, which is influenced by a lot of factors - skills, competence, attitude, workplace environment, benefits, and many more. Employee development should be seen as a necessary investment, rather than an expense. The sooner the organization realizes this, the better they can prepare for KPI implementation.

Characterstics of a good KPI KPI is always connected with the corporate goals A KPI is decided by the management It belongs to an individual who is accountable for its outcome They are leading indicators of performance desired by the organization Easy to understand A KPI leads to action Few in number It should be balanced not undermine each other Users can gauge their progress overtime KPIs loses its value overtime so they must be periodically reviewed and refreshed

KPI's need to be:


Specific Measurable Achievable Result-oriented or Relevant Time-bound

A KPI is associated with a specific process and is generally represented by a numeric value. A KPI may have a target and allowable margins, or lower and upper limits, forming a range of performance that the process should achieve. A KPI can be thought of as a metric with a target.

Categorization of KPI Key Performance Indicators define a set of values used to measure against. . Since in an organization different verticals are their so accordingly indicators are defined for that specified purpose. Different types of indicators are given below:

Quantitative indicators which can be presented as a number. Practical indicators that interface with existing company processes. Directional indicators specifying whether an organization is getting better or not. Actionable indicators are sufficiently in an organization's control to effect change. Financial indicators used in performance management and when looking at an operating index.

MY WORK AREA: Key Performance Indicators of Engine Shop

Key Performance Indicators play an immense role in the working of the company. It not only helps in increasing the production levels but also helps in overall management of the company through man power savings and cost savings. At MSIL Performance indicators are defined for each and every shop but broadly they are classified as under :-

FOUR PILLARS OF KEY PERFORMANCE INDICATORS

SAFETY

QUALITY

PRODUCTIVITY

COST SAVINGS

SAFETY

ZERO ACCIDENTS

TRAINING

ASSESSMENT

GENERAL PRO-ACTIVE TRAINING (KYT)


t

RE-ACTIVE (HHT)

RISK ASSESSMENT

AUDITS

LOW

MEDIUM

HIGH

EXTERNAL

INTERNAL

Safety
Safety is of the paramount importance in a workshop. To meet the desired standards for safety various training programmes are started so as to give proper knowledge to workers regarding safety precautions. Safety Index represents the overall percentage of number of points received by an engine shop to improve safety to number of points available for improving the safety of the department.

Parameter to be measured
It measures what are the available opportunities for increasing the safety on shop floor in the engine shops and how many of these were actually implemented.

Methods Adopted to Reduce Hazards


1. Training In this various programmes are started to give proper knowledge to workers regarding the safety standards. These programmes are conducted by the Central Safety Cell.These programmes are for regular workers, contract workers and apprentices.

KYT (Kikin Yochi Training)

This is also called the Hazard Prediction Training. Some workers use near at hand tools instead of proper tools, take dangerous shortcuts or work without safety equipments like helmets, safety shoes. The Central Safety Cell at MSIL appoints a Area Safety Co-ordinator who examines the whole shop floor and points out various safety hazards. These Hazards are reported to the shop floor supervisor who finds ways to eliminate these hazards by providing training training to workers or giving them required instructions.

HHT(Heiri Hatho Training)

This is also called pro active training. In this the shop floor workers give suggestions to the Area Safety Co-ordinator regarding the various hazards in the shop floor. These hazards are identified by the worker when he is affected by that hazard. This hazard did not injure him but in future can result into injury.

2. Audits

PMS Audit

This is a type of Inhouse Auditing conducted by the Production Department during working days. In this the Area Safety Coordinator reviews the whole assembly line and points out the safety hazards in the shop.Then later on he checks how many of the hazards are removed.Then he calculates the percentage of the hazards removed to the hazards originally found.

Sunday Audit

This is also a type of In-house Auditing conducted on Sundays. On Sundays mainly maintenance and repair work of the shops are done. During this time the worker is at more risk than usual because during this time he is repairing big machines, oiling the systems ,checking the assembly conveyors etc.So the Auditor notes down the various safety hazards during the maintenance work and gives the list to the shop floor incharge.Later on he checks that how many hazards have been removed and calculates the percentage of the initial hazards.

External Audit

In this audit teams from companies Cholamandalam and EQMS review the whole shop and point out various safety hazards. Then later on these teams review the progress of the closure of the safety hazard and calculate the percentage of the initially calculated.

Internal Audit

Under this an internal audit is held and points are awarded in a similar way as in external audit.

Risk Assessment It aims at identifying risks under three categories a) Major(high) b) Moderate(Medium) c) Minor(Low)

HIGH

MEDIUM

LIKELIHOOD

LOW

Low

Medium

High

Severity/Impact

Minor Moderate Major

The number of risks under the 3 categories is identified. Then the ratio of risks closed to number of risks identified is safety level under risk assessment.

QUALITY DEFECT IDENTIFICATION

PRODUCT/PART DEFECTS

PROCESS DEFECTS

QUALITY ASSURANCE

IN-HOUSE IDENTIFICATION

AFTER SALES

AUDITS

REJECTION BY WARRANTY LINE SUPERVISORS COST AND WORKERS Rejection Cost

GLOBAL CUSTOMER AUDIT DIRECT EG OK

OFFLINE REPAIR

COST OF REPAIR

REJECTION COST

It is defined as the cost of all the rejected material which cannot be repaired and reused and is sent to the scrap is called the Rejection Cost. Total cost of parts scrapped due to plants fault in the production process.

METHOD FOR CALCULATION OF THE COST


1. Rejection rack is placed in which all the rejected material is kept. 2. Workers before fitting the components on the engine check them for any defects, damage or missing parts. 3. Line supervisor checks the rejected material and segregates the defect found into Vendors fault, operators fault or consequential fault. He then tags them it for repair, rejection. 4. Tag details include Model detail,kind of defect, area and group, quantity, reason, action taken by supervisor and the signature of line incharge. 5. Every morning the material from the rejection rack is collected by a person from rejection yard. 6. If the total value(=no. Of components*price of 1 component) <300,then it is sent to scrap shop and vendor is informed. 7. If the total value (=no. Of components*price of 1 component)>300,then concerned SQA team is also informed; meanwhile vendors representative visit the rejection yard periodically to assess the nature of damage and whether any rework if possible.

Rejection Cost = combined value of rejected components No. Of engines EGOK

WARRANTY COST
Warranty Cost is the defined as the cost incurred when the dealer claims for the cost of the faulty component in the vehicle during the warranty period. Whenever there is a defect in the engine and the consumer claims for the warranty then the dealer procures the cost from the company. Now the company goes into the details into the defects of the engine. The total cost of the defected components is divided with total number of engines produced to get the net warranty cost. The defects can be due to following reasons:1. Design- If there is a fault in the design of the component then the cost of that component is attributed to the R&D deptt of the Engine shop. The R&D deptt then further analysis the causes of defects and how can they be further improved. 2. Manufacturing This defect is due to some faulty manufacturing process involved or improper assembly of the components.
3. Handling of the components Sometimes during the transportation of

the component from one to another the component gets damaged. Then due to these damages their can be problems in the engine.

METHOD FOR CALCULATION OF WARRANTY COST

The cost of the component is calculated using the CL02 portal. 1. In this portal initially we enter the username and password. 2. Then we select the warranty option. 3. A window will appear in which we select the Domestic Menu 4. In the next window we enter the full details of the component i.e. the start and end date for the cost calculation, warranty party type( Dealer), code number of the component. 5. Press enter and wait for the portal to generate the report.

The formulae used to calculate the total warranty cost is given by :Warranty Cost = Total cost of the defective components Total number of EGOK engines in a month

DATA TILL OCTOBER 2010 OF FINANCIAL YEAR 2010-11

COST OF REPAIR

Cost of repair is defined as cost incurred due to the rework required to be done on the engine whenever defects are discovered in them. Any defect is a non-desired outcome of a process. The defect is detected through inspection and marked for repair, which can be done on the moving engine on the conveyor line, which in case if fails, is done in a different repair area known as Offline repair area. If the repair work is done online such as bolt tightening and adjustments, piston tightening, surface finishing of engine cover using sand paper which includes inspection as well as repair before the engine rolls out of the conveyor at the shop OK point, it is considered as a part of the process. If the repair work is done such that the defect cannot be repaired online due to tact time constraints or usage of some special tools which cannot be used on the line, the engine is taken to another area which is known as Offline repair area. The cost of repairing the defects offline is calculated and reported to SMC and this cost is called cost of repair.

METHOD TO CALCULATE COST OF REPAIR


Cost of repair if defect is captured = labour cost + cost of consumables+ cost of after EG-OK Replaced parts +cost of deputation

Total Labor cost = Total man-days x Manpower cost per day Total Consumables cost= (Amount of consumable used x Consumable) Deputation cost= Lodging expenses and travelling cost spent by the staff and transportation cost for the defective engine or parts. Cost of repair per engine= Total labour cost + Total Consumables cost + Deputation cost No. of engine at EGOK

DATA TILL OCTOBER 2010 OF FINANCIAL YEAR 2010-11

GLOBAL CUSTOMER AUDIT


Global Customer Audit (GCA) is regarded as voice of end customers to the production processes evaluated through internal agency i.e. Quality Assurance Division(QA). This auditing is done to evaluate the quality of the Engine after the EGOK stage. This evaluation is done focussing on the concerns of the customers. These audits are done to assist the designers to further improve the quality of the product.

METHOD TO CALCULATE GCA POINTS 1. The number of engines to be audited per month for various models is decided by QA-2 department based on the Monthly production volumes of each model. 2. The engine for audit is selected randomly from those which have duly passes Engine OK Inspection. 3. Auditing is conducted for the items listed and are recorded in the GCA check sheet. All the Information regarding GCA scores is entered by QA in a portal from where it is made available to the engine shops.

The results of the GCA are expressed in terms of the GCA Weighted Value. GCA weighted value = Weighted value of demerit scores per engine The formula for GCA weighted value is:GCA Weighted Value = {(No. Of 50 demerit score defect x 50) + (No. Of 10 demerit score defects x10) + (No. Of 5 demerit score defects x 5) + (No. Of demerit scores defects x1)/ no. Of engines checked in the week under observation).

DATA TILL OCTOBER 2010 OF FINANCIAL YEAR 2010-11

DIRECT EG-OK
The Direct EG OK rate means the percentage of engine that have passed the Final Check and the process checks at the first instance without any kind of defect. For MSIL plant operation, the percentage of engines with no offline defect at the end of engine assembly line and Inspection is known as Direct EG OK. Assumptions: a) If the defect is repaired during the engine assembly without offline then it is not considered as defect while calculating the percentage.

b) In case part miss is known in advance and it is still passed then it is considered as a defect.

c) Direct EG OK pass of engines is started from when they are launched.

METHOD FOR CALCULATION OF DIRECT EG-OK PERCENTAGE


Direct EG OK is used to calculate the process efficiency of manufacturing engines right from the first time after the engine assembly start.

Frequency of calculation:

a) Daily b) Weekly c) Monthly

The Direct EGOK target is usually above 90% for all the shops for financial year 201011.Target is calculated based on the previous year as base figure. Relevant Data of the number of Direct EG OK engines i.e. the engines with no offline defect at the first instance for different engine shops, also the total FCOK number for respective plant is collected. For absolute accuracy, punching using bar code should be done whenever a engine goes offline for repair. Punching will remove the human factor and will lead to more accurate recording of data.

Shop Direct EG OK = no. of engines with no offline defect EGON to EGOK stage Total EGOK ENGINES

Overall Monthly Direct EG OK = (Total no. of engines (ES1-2 +ES3+ KB shop) with no Offline defects)

Total EGOK Engines (ES1-2 + ES3+ KB shop)

DATA TILL OCTOBER 2010 FOR FINANCIAL YEAR 2010-11:

PRODUCTIVITY

HPE TREND
HPE or Hours per Engine is defined as the ratio of total manpower hours required to assemble all the engines to the total Number of Engines manufactured.

Folowing are the categories of manpower employed to manufacture engines


1) Regulars: - All regular Employees working in shop from TT1 to SFMGR1 to be included in HPE report. Total Man days to be recorded in HPE sheet 2) Apprentices: - All apprentices working in shop ( Total Man days for the month multiplied by 0.8 Factor) 3) Contract Workers MSIL: - Average man days of the contract employees for the month ( Total Man days in payment report/ working days)

4) Contract Workers Vendors: - Contract Workers working in shop on contractor behalf such as LPG fitting persons, Gypsy Hard Top, Glass, Paint Supplier persons. Not considered in HPE man hours

5) Absenteeism: - Total absenteeism of the month for regular employees & Total absenteeism of the apprentice multiplied by 0.8 Factor. 6) Manpower temp taken from other Depts.:- Both regular & apprentices to be considered in HPE calculation if taken from other deptts. 7) Manpower Given to Other Depts.:- Both regular & Apprentice Manpower to be reduced for HPE calculation if given to other deptts. 8) Overtime Man-hours for regular, apprentices & Casuals to be considered in HPE calculation & Apprentice factor to be taken as 0.8 9) Training Man-hours for 21 days to be reduced in HPE calculation for New Apprentices & New casuals. 10) Spares Man-hours: - Man hours employed in preparing spares are reduced for calculation of HPE, Spares man hours are calculated as: - Standard man minutes required to prepare spares as received from PE multiplied by quantity of spares produced as per PPC figure. 11) Dismantling Man-hours are reduced from total man-hours in HPE calculation. 12) Working Day: - Working days as per PPC calendar

NON-HPE manpower is defined as that manpower which is not related to vehicle manufacturing/repair directly will be considered as NON-HPE e.g. Supervisors, kaizan

METHOD TO CALCULATE HPE


HPE measures average number of man hours taken for manufacturing one EGOK engine for the assembly.

Data regarding the number of man hours for respective category can be directly retrieved from the ERP system.

Daily punching of attendan ce

ERP System

Data of HPE and Non-HPE manhours

Calculatio n of HPE by Engine shop

MSD
HPE Calculations Total Man-Hours for HPE is as =(Regulars +Apprentices*0.8+Contract Workers MSIL + Man power temp taken from other Deptts + Overtime Man-hours for Regular, apprentices &Casuals) (Man power Given to Other Deptts + Training Man- hours for 21 days for new apprentice and new casual + Spares Man Hours + Dismantling Man Hours). HPE = Total Man-hours for HPE(monthly)/ Production excluding Spares(monthly)

DATA TILL OCTOBER 2010 FOR FINANCIAL YEAR 2010-11