Key Performance Indicators

will:

Provide performance measurements for all

core processes.
Add value for our customers and the
company.
Support company objectives.
Provide performance goals for each
department.
Be owned, maintained, reviewed and acted
on by each department.
Provide balanced performance measures.

Establishing KPIs
Using a SIPOC Diagram

SIPOC Diagram?

A SIPOC diagram is a Six Sigma tool used to

identify relevant elements of a process.

It is similar to Process Mapping, but provides

additional detail.

The SIPOC tool is particularly useful in identifying:

Suppliers of the Inputs for the process?
The process output requirements.
The internal and external customers of the
process.
The requirements of the internal and external
customers?

Step 1 -Flow Chart

Start by Flow Charting the process.
From the 30,000 ft level
Only 5 or 6 steps are needed
Example: Placing a Purchase Order
Purchasing
Department
receives quote
request from
Customer Service

Purchasing gets
bids from
Approved
Suppliers

Purchasing
Selects
supplier

Purchasing
Obtains
work order and
creates PO

Engineering or
Quality reviews
and approves PO

Purchasing
sends PO to
the supplier

Step 2 - SIPOC

upplier

Use a flip chart with headings (S-I-P-O-C)

written on it, or.
Use post-it notes posted to a wall.
Create an area that will allow the team to
post additions to the SIPOC diagram.

nput

rocess

utput

ustomer

Step 3-Breakdown the Process

Identify the Suppliers of the Inputs of the

Process.
Identify the Inputs required for the Process to
function properly.
List the name of the core process.
Identify the Outputs of the Process.
Identify the Customers that will receive the
Outputs of this Process.
Discuss with Facilitator, Team Leader and other
involved stakeholders for accuracy.

Step 4 - Add information to the

SIPOC Diagram
Example: Placing a Purchase Order

Step 5 - Add KPI Information

Process Owner
Key Performance Indicator
Source of Data
Measurement Method
Established Goal
Example: Placing a Purchase Order

Completed SIPOC Diagram

with KPI Information

Purchasing
Department
receives quote
request from
Customer Service

Purchasing gets
bids from
Approved
Suppliers

Purchasing
Selects
supplier

Purchasing
Obtains
work order and
creates PO

Engineering or
Quality reviews
and approves PO

Purchasing
sends PO to
the supplier

Action and Follow-up

After the process has been broken down and the elements
identified using SIPOC. The KPI's can be monitored and
acted upon using the model shown below.

NOTE: Actions may be

taken on the Inputs and /
or the process.
Controlling the inputs and
the process is key in
ensuring an acceptable
output

Connection to
Company Objectives
Customer Benefits

Company goals

Faster

On Time

Service

Delivery

Individual
Key Performance Indicators
Reduce time to release shipping documentation?
Reduce time to release a Shop Order?
Reduce Shop Throughput Time?
Reduce time to place a purchase order

Reduce time to create a CAD Drawing

Higher
Quality

Increase
Internal and
External
Quality

Reduce defect rate?

Reduce outgoing defect rates /Final Inspection?
Reduce Scrap?
Improve Supplier Quality?

Lower
Costs

Reduce

Reduce Rework Costs?

Rework

Reduce Costs due to Shop Order Errors

Reduce
Waste

Reduce Non Value Added Process Steps?

Reduce Material Usage?