Post on 06-Apr-2018
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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 KPI’s 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 stillimportant 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.
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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
• KPI’s loses its value overtime so they must be periodically reviewed and refreshed
KPI's need to be:
•
S pecific• Measurable
• Achievable
• R esult-oriented or Relevant
• Time-bound
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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.
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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 :-
SAFETY QUALITY PRODUCTIVITY COSTSAVINGS
FOUR PILLARS OF KEY PERFORMANCE INDICATORS
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SAFETY
TRAINING ASSESSMENT
GENERAL PRO-ACTIVE RE-ACTIVE RISK AUDITS
TRAINING (KYT) (HHT) ASSESSMENT
t
LOW MEDIUM HIGH
EXTERNAL INTERNAL
ZERO ACCIDENTS
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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 regardingsafety 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.
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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.
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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
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PRODUCT/PART DEFECTS PROCESS DEFECTS
QUALITY ASSURANCE
IN-HOUSE AFTER SALES AUDITS
IDENTIFICATION
REJECTION BY WARRANTY GLOBAL
LINE SUPERVISORS COST CUSTOMER
AND WORKERS AUDIT
Rejection Cost DIRECT EG OK
OFFLINE REPAIR
COST OF REPAIR
REJECTION COST
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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 vendor’s 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
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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.
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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
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COST OF REPAIR
Cost of repair is defined as cost incurred due to the rework required to be done on the enginewhenever 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
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DATA TILL OCTOBER 2010 OF FINANCIAL YEAR 2010-11
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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).
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DATA TILL OCTOBER 2010 OF FINANCIAL YEAR 2010-11
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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
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The Direct EGOK target is usually above 90% for all the shops for financial year 2010-
11.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:
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PRODUCTIVITY
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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)
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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
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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.
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
Daily
punching
of
attendan
ce
ERP
System
Data of
HPE and
Non-HPE
man-
hours
Calculatio
n of HPE
by Engine
shop
MSD
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