iris international railway industry standard · sbb/cff/ffs oliver stein knorr-bremse ursula tacke...

IRISInternational Railway

Industry Standard

English

GUIDELINE 1 : 2011KPIs

Technical Forum for Improvement representatives

Marcus Schmid (Leader) VOITHTURBOCristina Bianchi RINACorine Branchet BureauVeritasJean-Christophe CoulaudAlstomTransportAngela de Heymer BombardierTransportationBernd DiekmannSiemensMobilityDenis GarriguesRATPGiuseppe Greco UNIFEHans Jahn DQSKay Jürgensen TÜVNORDBernard Kaufmann UNIFEDavid Martinez de Miguel AENOR

Robert MilnerLRQAMikael Nilsson FaiveleyElio Poletti IMQAnne Pouyanné AFNORSusanne SchaubSBB/CFF/FFSOliver SteinKnorr-Bremse Ursula Tacke GHH-ValdunesLuca Tuci AnsaldoBredaDominique SauvionSNCFHans Van MulekomNEDTRAINKlaus Wagner TÜVSÜD

IRIS Management Centre

Bernard Kaufmann IRISGeneralManagerGiuseppe Greco IRISSeniorManagerNevena Petrova IRISManager

Wewouldliketothankthefollowingpeoplefortheexcellentcooperationandcontribution,withoutwhichthisGuidelinewouldnothavebeen

possible:

Guideline 1 : 2011 KPIs

Theaimofthisguidelineistoprovideguidancetoall

organizationsduringtheimplementationandmainte-

nanceofanIRISCertifiedBusinessManagementSystem

(BMS)concerningtheidentificationoftheKeyPerfor-

manceIndicators(KPIs)requiredtocomplywiththeIRIS

requirements.

1WHY KPIs?

KeyPerformanceIndicators(KPIs)helpanorganization

todefineandtomeasureprogresstowardorganizatio-

nalgoals.

Onceanorganizationhasanalyzeditsmission,identi-

fiedallitsstakeholders,anddefineditsgoals,itneeds

awaytomeasureprogresstowardthosegoals.Key

PerformanceIndicatorsarethosemeasurements.

Inprocessorientedorganizations,thegoalsarereached

throughtheimplementationofeffectiveandefficient

processes,thereforeitisvitaltomakearegularperfor-

manceappraisalfortheprocessesandforalltheaspects

thatcanaffecttheefficiencyofthebusiness.

TheKPI,whenproperlydeveloped,provideallstaff

withcleargoalsandobjectives,coupledwithanun-

derstandingofhowtheyrelatetotheoverallsuccessof

theorganization.Publishedinternallyandcontinually

referredto,theywillalsostrengthensharedvaluesand

createcommongoals.

2DEFINITION

KEY: OnlyKeywhenitisoffundamentalimportancein

gainingcompetitiveadvantageandisamakeorbreak

elementinthesuccessorfailureoftheorganization.

PERFORMANCE:OnlyrelatingtoPerformancewhenit

canbeclearlymeasured,quantifiedandinfluencedby

theorganization.

INDICATOR:OnlyanIndicatorifitprovidesleading

informationonfutureperformance.

Effectivenessandefficiencyarealsokeyparametersto

beconsideredtoidentifytherightKPIs:

Effectiveness:Thedegreetowhichobjectivesare

achievedandtheextenttowhichtargetedproblems

aresolved.

Efficiency:Thecomparisonofwhatisactuallyproduced

orperformedwithwhatcanbeachievedwiththesame

consumptionofresources(money,time,labor,etc.).Itis

animportantfactorindeterminationofproductivity.

Incontrasttoefficiency,effectivenessisdetermined

withoutreferencetocostsand,whereaseffectiveness

means„doingtherightthing“,efficiencymeans„doing

thethingright“.

©2011UNIFE.Allrightsreserved.

4 GUIDELINE 1 : 2011 - KPIs -


IntheIRISscheme,KPIsaremeanttomeasurethe

performanceoftheProcesses.

TheKPIsusuallyarelong-termconsiderationsandmay

differdependingonthetypeoforganization.

TheselectedKPIswillneedto:

1.Reflecttheorganizationalgoals,

2.Bequantifiable(measurable),

3.Bekeytotheorganization‘ssuccess.

Reflect The Organizational Goals

Anorganizationthathasasoneofitsgoals“tobethe

mostprofitableorganizationintheRailIndustry“will

haveKeyPerformanceIndicatorsthatmeasureprofit.

Ontheotherhand,amanufacturerofBearings,having

oneofitsgoals“toprovidebettercustomerservice”

willsettherelatedKPItomeasuretheresponsiveness

performanceofitsCustomerServicedepartment.

Be quantifiable (measurable)

ForaKPItobeofanyvalue,theremustbeawayto

accuratelydefineandmeasureit.“BeTheMostPopular

Organization“won‘tworkasaKPIbecausethereis

nowaytomeasuretheorganization‘spopularityor

compareittoothers.

ForaKPIof“IncreaseSales“,there’stheneedtocon-

siderwhethertomeasurebyunitssoldorbyvalueof

sales.Willreturnsbedeductedfromsalesinthemonth

ofthesaleorthemonthofthereturn?Willsalesbe

recordedfortheKPIatlistpriceorattheactualsales

price?

SettingtargetsforeachKPIisoffundamentalimpor-

tance.Ifoneoftheorganizationgoalsis“tobethe

employerofchoice”,theassociatedKPImightmeasure

the“employeefluctuationrate“.OncetheKPIhasbeen

definedas“thenumberofvoluntaryresignationsand

terminationsforperformance,dividedbythetotal

numberofemployeesatthebeginningoftheperiod“

andawaytomeasureithasbeensetup(bycollec-

tingtheinformationinahumanresourceinformation

system),thetargethastobeestablished.

“Reduceemployeefluctuationbyfivepercentperyear“

isacleartargetthateveryonewillunderstandandbe

abletotakespecificactiontoaccomplish.

Be key to the organization‘s success

InselectingKPIs,it’scriticaltolimitthemtothose

factorsthatareessentialtotheorganizationreaching

itsgoals.ItisalsoimportanttokeepthenumberofKey

PerformanceIndicatorssmalljusttokeepeveryone‘s

attentionfocusedonachievingthesameKPIs.

Thatisnottosay,forinstance,thataorganizationwill

haveonlythreeorfourKPIsintotal.Rathertherewill

bethreeorfourKeyPerformanceIndicatorsforthe

organizationandalltheunitswithinitwillhavethree,

four,orfiveKPIsthatsupporttheoverallorganization

goalsandcanbe“rolledup“intothem.

Ifanorganization‘sKeyPerformanceIndicatoris

“IncreasedCustomerSatisfaction“,thatKPIwillbe

focuseddifferentlyindifferentdepartments:the

manufacturingdepartmentmayhaveaKPIof“Number

ofUnitsRejectedbyQualityInspection“,whilethesales

departmenthasaKPIof“MinutesACustomerIsOnHold

BeforeASalesRepresentativeAnswers“.Successbythe

5

salesandmanufacturingdepartmentsinmeetingtheir

respectivedepartmentalKeyPerformanceIndicators

willhelptheorganizationtomeetitsoverallKPIs.

Example of a well defined KPI:

• TitleofKPI:EmployeeTurnover

• Defined:Thetotalofthenumberofemployeeswho

resignforwhateverreason,plusthenumberofemplo-

yeesterminatedforperformancereasons,andthattotal

dividedbythenumberofemployeesatthebeginning

oftheyear.EmployeeslostduetoReductionsinForce

(RIF)willnotbeincludedinthiscalculation.

• Measured:Thehumanresourceinformationsystem

containsrecordsofeachemployee.Theseparation

sectionlistsreasonanddateofseparationforeach

employee.Monthly,thehumanresourcedepartment

willquerythedatabaseandprovidedepartmentheads

withEmployeeTurnoverreports.Thehumanresource

departmentwillpostgraphsofeachreportonthe

intranet.

• Target:ReduceEmployeeTurnoverby5%peryear.

Example of a badly defined KPI:

• TitleofKPI:IncreaseSales

• Defined:Changeinsalesvolumefrommonthto

month

• Measured:Totalofsalesbyregionforallregions

• Target:Increaseeachmonth

What‘smissing?Doesthismeasureincreasesinsales

volumebyvalueorunits?Ifbyvalue,doesitmeasure

listpriceorsalesprice?Arereturnsconsideredandif

sodotheyappearasanadjustmenttotheKPIforthe

monthofthesaleoraretheycountedinthemonth

thereturnhappens?Howdowemakesureeachsales

office‘svolumenumbersarecountedinoneregion,i.e.

thatnoneareskippedordoublecounted?Howmuch,

bypercentageorvalueorunits,dowewanttoincrease

salesvolumeseachmonth?

3SMART KPIs

AKPIcanfollowtheSMARTcriteria.

Specific:IthastobeclearwhattheKPIexactly

measures.Therehastobeoneuniversally-accepted

definitionoftheKPItomakesurethedifferentusers

interpretitthesamewayand,asaresult,cometo

thesameandrightconclusionswhichtheycanact

on.

Measurable:TheKPIhastobemeasurabletodefine

astandard,budgetornorm,tomakeitpossibleto

measuretheactualvalueandtomaketheactual

valuecomparabletothetargetedvalue.

Achievable:ForeveryKPIatargetvaluehastobe

defined.ItisimportantfortheacceptanceofKPIs

andPerformanceManagementingeneralwithinthe

organizationthatthisvalueisachievable.Nothingis

morediscouragingthanstrivingforagoalthatyou

willneverreach.

Relevant:TheKPIprovidesmoreinsightinthe

performanceoftheorganizationorprocessesinbeing

consistentwithitspolicyandbusinessplan.AKPI

isonlyrelevantiftheorganization‘sprocessescan

influenceit.

Time phased:Itisimportanttoexpressthetargeted

valueoftheKPIintime.EveryKPIonlyhasameaning

ifoneknowsthetimedimensioninwhichitis

realized.Therealizationandstandardizationofthe

KPIthereforehastobetimephased.

4 IMPLEMENTING KPIs

WhenanorganizationwantstodefineKPIsithasto

assurethattheindicatorsareunmistakablydefined,

objectivesareinplaceandthatthecalculationcanbe


6 GUIDELINE 1 : 2011 - KPIs -


doneeasily,preferablyautomatically.Additionallyit

isnecessarythattheorganizationidentifiesitselfwith

theKPIsandisawarehowtoinfluencethem.Notthe

quantityofKPIsbutthequalitydecides(“twentyis

plenty”).

5 MEASURING KPIs

FormeasuringKPIsseveralprerequisitesmustbe

fulfilled:

• DefinitionofcalculationofKPI(e.g.(valueX/value

Y)*100;(actualvalue)-(plannedvalue));

• Unitofmeasurementmustbedefined(e.g.

percentage,Euro,quantities);

• Adequatereportingintervalmustbefixed

(e.g.monthly,quarterly);

• Presentationformmustbechosen(e.g.piediagram,

barchart,spiderdiagram);

• Targetforthereportingperiodmustbedisplayed

(e.g.deliveryperformancetothecustomer95%);

• Datasourcemustbechosen(e.g.tableXYZfromthe

ERP-system);

• AccuracyoftheKPIdatamustbeknown;

• Datacollectormustbenominated(e.g.Mr.Xfromthe

salesdepartment,Ms.Yfromprocurement);

• KPIownermustbenamed;

• TrendsoftheKPImustbeinterpretable(e.g.sales

increasesduetoanewsalesrepresentativeordueto

asalescampaign);

• Guidancefortakingactionsmustbeinplace(e.g.

salesdecreaseisanalyzedbymeetingwithsales

representative)

• Allprerequisitesmustbedocumentedinanagreed

format(e.g.inaKPIprofile)

6HOW TO DEAL WITH IRIS KPIs

6.1 Mandatory IRIS KPIs

• Customerontimedeliveryperformance(IRISclause

5.6.2)

• Nonconformitiesraisedbythecustomerthroughout

theentireProjectLifeCycle(IRISclause5.6.2)

• Tendermanagement(IRISclause7.2.4)

• Designanddevelopment(IRISclause7.3)

• PurchasingProcess(IRISclause7.4.1)

• ProjectManagementornewProductdevelopment

(IRISclause7.7)

• ProjectManagement–Costmanagement(IRISclause

7.7.4)

6.2 Recommended IRIS KPIs

• Internalandsuppliernonconformitiesthroughout

theentireProjectLifeCycle(IRISclause5.6.2)

• Supplierontimedeliveryperformance(IRISclause

5.6.2)

• Responsetimeonnonconformitiesraisedbythe

customer(IRISclause5.6.2)

• QualityDeficiencyCosts(IRISclause5.6.2)

• ReviewofrequirementsrelatedtotheProduct(IRIS

clause7.2.2)

• FirstArticleInspection(FAI)(IRISclause7.9)

• Customersatisfaction(IRISclause8.2.1)

• Analysisofdata(IRISclause8.4)

TABLE 1: KPI definition table

KPI Description: ... Process: ...

Objectiveoftheprocess: ...

Processowner ...

PredictionoftheKPI: ...

Unitofmeasure: ...

Targetandreportingperiod: ...

CalculationoftheKPI: ...

AccuracyoftheKPI: ...

Datasource: ...

Reportinginterval: ...

Frameworkcondition: ...

InfluenceonKPI: ...

Datacollectedby: ...

KPIreportedto: ...

Actions: ...

7

ANNEX 1: IRIS KPIs


KPI or Process name IRIS clause

Status Definition examples Target value Process target Reporting interval

Reference to Annex

Customerontime

deliveryperformance

5.6.2 Mandatory (sumdeliveriesontime)/

(sumdeliveries)x100

X% Tobecompliant

withconfirmed

deliverydates

Monthly

X

Nonconformities

raisedbythecustomer

throughouttheentire

ProjectLifeCycle

5.6.2 Mandatory Customernonconformity

costpermonth

or

Warrantycostbyproject

or

(Claimedparts)/(delivered

parts)x100

X/Month

or

Z/project

or

Y%

Toreduce

variationand

wasteinsupply

chain

Monthly

Tendermanagement 7.2.4 Mandatory Costdeviation

toestimatedbudget,

withoutcustomer

causedchangerequests

X% Tomeet

customer

requirements

Monthly

or

Project

milestone

Designand

development

7.3 Mandatory Numberofdesign

changes,without

externalcaused

changes

or

(sumofdesignchanges

afterdesignfreeze)/(sum

ofdesigndrawing)x100

Numberof

changes

or

X%

Tobeontime

bykeepingcosts

andquality

criteria

Monthly

or

Quarterly

X

PurchasingProcess 7.4.1 Mandatory (Nonconformpurchased

productdeliveries)/(sumof

receivedpurchasedproduct

deliveries)x100

or

(Nonconformpurchased

products)/(received

purchasedproducts)x100

or

Costdeviation

toestimatedpurchase

budget

X% Toimprovethe

supplierdelivery

quality

or

toimprovethe

budgetcontrol

Monthly X

8




Reference to Annex

ProjectManagement

ornewProduct

development

7.7 Mandatory (RealizedMilestone)/

(PlanedMilestone)x100

or

deliverytime

deviationconcerning

finalcustomer

acceptance

X%

or

numberof

days

Tomanage

Project

deliverables

Monthly

or

Project

milestone

ProjectManagement–

Costmanagement

7.7.4 Mandatory (Estimatedcosts)/(final

costs)x100

X% Tomanage

Projectbudget

Monthly

or

Project

milestone

Internalandsupplier

nonconformities

throughouttheentire

ProjectLifeCycle

5.6.2 Recom-

mended

Internalandsupplier

reworkcosts+internaland

supplierscrapcosts

Costs/Month

or

Costsper

category

or

Costsper

supplier

or

Costsper

project

Toreduce

variationand

wasteinthe

entireProjectLife

Cycle

Monthly

or

Project

milestone

Supplierontime

deliveryperformance

5.6.2 Recom-

mended

(sumdeliveriesontime)/

(sumdeliveries)x100

X% Toensureon

timedeliveryof

suppliers

Monthly X

Responsetimeonnon

conformitiesraisedby

thecustomer

5.6.2 Recom-

mended

Responsedateofnon

conformities–issuedateof

nonconformities

Xdays

or

Xhours

Toimprove

customer

support

Monthly

9



Reference to Annex

QualityDeficiencyCosts 5.6.2 Recom-

mended

Internalreworkcosts+

internalscrapcosts

Costs/Month

or

Costsper

category

or

Costsper

supplier

or

Costsper

project

Toreduce

variationand

wasteinthe

entireProjectLife

Cycle

Monthly

or

Project

milestone

Reviewof

requirementsrelated

totheProduct

7.2.2 Recom-

mended

Numberofchangesdue

tononproperlyidentified

requirements

Numberof

changes

Toproperly

identify

customer

requirements

Monthly

or

Quarterly

FirstArticleInspetion 7.9 Recom-

mended

(Sumofsuccessfully

performedFAIs)/(sumof

performedFAIs)x100

X% Toensure

astable

productionstart

Monthly

or

Quarterly

X

Customersatisfaction 8.2.1 Recom-

mended

(Sumofcustomersincluded

incustomersatisfaction

measurement)/(totalsum

ofcustomers)X100

or

Correlationbetween

customerperception

andinternallymeasured

deliveryperformance

X%

correlationin

X%

Tomonitor

andreview

information

relatingto

customer

perception

Yearly

Analysisofdata 8.4 Recom-

mended

(amountofdataanalysed)

/(amountofdatacollected)

x100

or

(amountofdatacollected)/

(amountofdatarequested)

x100

X% Todetermine,

collectand

analyse

appropriatedata

todemonstrate

thesuitability

and

effectivenessof

theQMS.

Yearly

NOTE 1: The definitions given in Annex 1 (IRIS KPIs) are for examples only. The organization may choose a different definition for the men-

tioned KPIs, if preferred.

10

ANNEX 2: KPI examples

KPI Description:Customer on-time delivery

performanceDesign and Development Purchasing Process

Process: productionandserviceprovision designanddevelopment purchasing

Objectiveofthe

process:

tobecompliantwithconfirmed

deliverydates

tobeontimebykeepingcostsand

qualitycriteria

toimprovethesupplierdelivery

quality

Processowner pleaseenterprocessresponsiblehere pleaseenterprocessresponsiblehere pleaseenterprocessresponsiblehere

Predictionofthe

KPI:on-timedeliverytocustomer

qualityofdrawingsandbillof

materials

amountofdeliveriesthathavetobe

claimedatsupplier

Unitofmeasure: percentage(%) percentage(%) percentage(%)

Targetand

reporting

period:

pleaseenteractualcompanytarget

here


here


here

Calculationof

theKPI:

(sumdeliveriesontime)/(sum

deliveries)x100

(sumofdesignchangesafterdesign

freeze)/(sumofdesigndrawing)x

100

(nonconformpurchasedproduct

deliveries)/(sumofreceived

purchasedproductdeliveries)

x100

Accuracyofthe

KPI:

pleaseenterheretheaccuracywith

whichtheKPIcanbedetermined





Datasource: ERP-systemERP-System,manualrecords,PDM-

systemERP-system;manualrecord

Reporting

interval:monthly monthlyorquarterly monthly

Framework

condition:none none none

Influenceon

KPI:

deliveryperformanceofsuppliers,

maintenanceofequipment

contractclarification,qualificationof

staff,newtechnologies

newitem,newsupplier,product

modificationatsupplier,uncertain

purchasinginformation,other

problemsatsupplier

Datacollected

by:

pleaseenterheretheperson

responsibletocollectthedata





KPIreportedto:

pleaseenterheretowhichpartof

themanagementthe

KPIisreported


themanagementthe

KPIisreported


themanagementthe

KPIisreported

Actions:rootcauseanalysis(bottleneck)and

actionplan

meetingswithsupplier,strong

incominggoodsinspection

11

KPI Description:Supplier on time delivery

performance First Article Inspection (FAI)

Process: Purchasingfirstarticleinspection(internaland

external)

Objectiveofthe

process:

toensureontimedeliveryof

suppliersToensureastableproductionstart

Processownerpleaseenterprocessresponsible

here

pleaseenterprocessresponsible

here

Predictionofthe

KPI:

statementofthecomplianceof

supplerconfirmeddeliverydates

assessmentoftheachievementof

firstarticleinspections

Unitofmeasure: percentage(%) percentage(%)

Targetand

reporting

period:

pleaseenterprocessresponsible

here


here

Calculationof

theKPI:

(sumdeliveriesontime)/(sum

deliveries)x100

(sumofsuccessfullyperformedFAIs)

/(sumofperformedFAIs)x100

Accuracyofthe

KPI:





Datasource: ERP-system;manualrecords ERP-system;manualrecords

Reporting

interval:monthly monthlyorquarterly

Framework

condition:none none

Influenceon

KPI:

newitems,newsupplier,product

modificationsatsupplier,purchase

ofprimarymaterial

qualityofcontractreview,

qualificationofstaff;capabilityof

measuringequipment

Datacollected

by:





KPIreportedto:


themanagementthe

KPIisreported


themanagementthe

KPIisreported

Actions:meetingswithsuppliers,strong

expeditingofsupplier

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Therailindustry

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Therailassociations

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