10/09/2018 Key Performance Indicators (KPIs) & Metrics Amit Chandak Director Senior Experience Owner
Profile Amit Chandak earned his LSSBB from USAA in 2016 and QAI Global Institute in 2011. Amit is pursuing a Master Black Belt designation from The Ohio State University and holds a Bachelor’s degree in Business as well as an M.B.A. Amit is currently working at USAA as Director of Experience Owners to formulate and execute Process Excellence, Agile and Risk Management strategies to deliver seamless members and employees experiences. Prior to USAA, Amit brings over 16 years Banking and Financial Service Industry (BFSI) experience – worked at Apple as an IT Project kcamit16@yahoo.com Manager, Process excellence & Business Reengineering consultant at +1 210 240 1299 Accenture, TCS and Wipro while working with various global clients https://www.linkedin.com/in/amit- chandak-62b0996/ across several business domains (Finance & Accounting, Investment Banking, Supply Chain, Consumer Banking, Insurance, HR etc) Presented by Amit Chandak at ASQ San Antonio Section 1404 2
Agenda • Difference Between KPIs vs. Metrics • Types of Metrics • Metric Test • Challenges & Tips • Identification Process & Tools Presented by Amit Chandak at ASQ San Antonio Section 1404 3
Key Performance Indicators (KPIs): Metrics vs. KPIs M ETRIC K EY P ERFORMANCE I NDICA TOR (KPI) Measurement of an Measure indicating a activity’s performance process's performance Characteristics • Measures the completion of a specific • Measures components of an activities within a business objective (Output) or desired end process Key state within a certain timeframe • Aligns to core steps in the business process • Includes thresholds of acceptability Characteristics • Informs KPIs • Informs key business decisions Key Not all metrics are KPIs, but all KPIs are metrics Presented by Amit Chandak at ASQ San Antonio Section 1404 4
Levels of Metrics M ETRIC TOR (KPI) K EY P ERFORMANCE I NDICA Measurement of an Measure indicating a activity’s performance process's performance • Identify and Measure metrics at each level of Characteristics Organization Key Metric Levels • Ensure metrics are tied at each levels; e.g. • Profitability at Executive Level • Cost per application at Manager Level • Productivity or Handle Time at Employee Level Presented by Amit Chandak at ASQ San Antonio Section 1404 5
Performance Measurement: Manage Inputs, Report Outputs What does the pilot control? Inputs Vital Few Outputs Throttle Speed Rudder Direction Elevator Altitude Predict Lagging Metrics Leading Metrics Presented by Amit Chandak at ASQ San Antonio Section 1404 6
Types of Metrics: Leading (Input & Process) and Lagging (Output) Leading Metrics Lagging Metrics Process Output Inputs On Time On Time Quality Quality Step 1 Step 2 Step 4 Step 5 Cost Complete Satisfaction Step 3 Process Metric Inputs Metric Output Metric • Processing Time, Queue Time • Timeliness (Delivery) • Volume Received • Exception Rate, Rework • Accuracy • Timeliness (Delivery) • Backlog (Volume & Time) • Satisfaction (Customer & Emp) • NIGO • Utilization, Availability • Cost of unit, Cost of Poor Quality • Average productivity per Agent • Revenue • Customer Complaints • Risk • Skill – Cross Training Leading Metrics Predicts Performance (Output) Presented by Amit Chandak at ASQ San Antonio Section 1404 7
SMART Test The performance metrics chosen must be “S.M.A.R.T.” ▪ Is it clearly defined? S ▪ Specific Can it be easily generated without complex calculations? ▪ Is it easy to collect the data needed? ▪ Can it be compared to other data? M Measurable ▪ Can the measurement be defined in an unambiguous way? ▪ Can stakeholders influence it? A Actionable ▪ Do we understand what drives the metric? ▪ If the metric changed, would anyone care? ▪ R Relevant Does it tell the whole story from a value stream perspective? ▪ Can it be measured often enough to identify problems while Time - T they are still relevant? bound Presented by Amit Chandak at ASQ San Antonio Section 1404 8
Does Your Metric Qualifies SMART Test? Poor measure SMART measure Timeliness: % of wires Timeliness: Number of wires submitted by EOD SLO. submitted by EOD SLO. ▪ ▪ No change All terms are clear ▪ S Specific Computing this is simple addition ▪ The data is ▪ No change M straightforward to Measurable collect ▪ The employee / unit is ▪ No change A Actionable in control on whether they deliver on time ▪ ▪ The score incorporates Cannot tell whether R Relevant the total number of there were any wires wires that were late ▪ ▪ Time - The number can be No change T bound calculated at any time Presented by Amit Chandak at ASQ San Antonio Section 1404 9
Does Your Metric Qualifies SMART Test? Poor measure SMART measure Quality: Number of errors in Quality: % of errors that are not customer submissions per year caught in the initial screen ▪ ▪ Errors are clear No change S Specific ▪ ▪ The data is straightforward No change M Measurable to collect ▪ ▪ Associates cannot prevent Associates are able to A Actionable customers from submitting control the quality of their error filled materials screening ▪ ▪ Does not provide context The % indicates the volume (e.g. if 3 fail is that a lot or a of undetected to detected R Relevant little) errors ▪ ▪ One year is required before The number can be Time - T computed as any point a poorly performing bound process for detection will be noticed Presented by Amit Chandak at ASQ San Antonio Section 1404 10
Watermelon Effect Presented by Amit Chandak at ASQ San Antonio Section 1404 11
Process Integration – Backward and Forward Marketing Acquisition Fulfillment Service Design Raw Materials Production Distribution Integrate your KPIs to get optimal business results Presented by Amit Chandak at ASQ San Antonio Section 1404 12
Best Practices for Identifying Metrics and KPIs 5 Identify and Remediate Gaps • Identify measurement gaps in current state and remediate accordingly Data Collection Plan 4 Measure & Specification Limits • Baseline information and specification limits • Identify most important indicators of successful Process performance 3 Distinguish KPIs vs. Metrics • Identify Metrics (from list created in Step 2) and document additional details to enable data collection 2 Brainstorm Metrics • Identify Input-Process-Output metrics • Brainstorm operational metrics that will help monitor and manage the process 1 Define End to End Process • Develop SIPOC or High-level process maps • Identify customer (internal/external) and suppliers Presented by Amit Chandak at ASQ San Antonio Section 1404 13
Step 1 - Define End to End Process using Gold SIPOC Process Name: Pizza Delivery Process Owner (PO): Pizza Store Manager LoB: Suppliers Inputs Input Requirements Process Outputs Customer Requirements Customers Who Uses or Who Provides the Materials, Information, How does the Process Owner Starts with: Hunger Documents, Information, How does the Customer Benefits from the want the inputs? inputs? Ideas, Labor Services, Decisions want the outputs? Output? Store Manager (PO) Menu options Full menu options Documented order Order recorded Baker Store Manager (PO) Order venue (phone, digital, Order venue (phone, digital, ,com) Order is in queue Order is in queue Baker/Hungry customer Hungry customer ,com) Accurate information (name, address) Estimated delivery time Accurate delivery lead time Hungry customer Store Manager (PO) Delivery information (name, Time order is entered Delivery information estimate Driver (Task Owner) address) Order Pizza Accurate delivery information Stated delivery Service Level Agreement (SLA= 45 minute delivery) Order Taker (Activity Owner) Documented order Accurate order Assembled pizza Pizza assembled accurately per Hungry customer Order Taker (Activity Owner) Order in queue First-in-first-out (FIFO) order order (100% of the time) 3rd Party supplier Ingredients Fresh ingredients available Assemble Pizza Pizza store Manager (PO) / Standard operation procedures Ingredients added in proper proportions Baker (Activity Owner) (SOP) Baker (Activity Owner) Assembled pizza Assembled pizza accurate Baked pizza ("done") Thoroughly baked pizza / not Hungry customer Store Manager (PO) Pizza oven Pizza oven at baking temperature Bake Pizza burnt Baker (Activity Owner) Time in oven Pizza visually appealing Scheduler (Activity Owner) Estimated delivery time On time delivery Pizza delivered On time delivery (45 minutes Hungry customer Scheduler (Activity Owner) Time in delivery queue Minimize queue time from order) Store Manager (PO) Volume of deliveries in queue Minimize queue volume Hot pizza Store Manager (PO) Thermal carrier Insulates content (keeps pizza hot) Correct toppings Deliver Pizza Delivery route Efficient route Delivery driver Available delivery driver Delivery information and vehicle Delivery staff Reliable delivery vehicle Ends with: Eat Pizza 14
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