KPI efficiency and OEE
There are a number of ways to express and measure efficiency but, boiled down to it's core, what is aimed to achieve with an efficiency measure is to understand actual performance against potential or target performance.
Key performance indicators (KPI) can be a measure for anything imaginable where a target can be expressed and performance in relation to the target can be measured. Expressing KPIs in monetary value often makes sense, as the performance can be easily distinguished in the accounts, given that the data is clean and the data collection points are structured correctly.
Soft KPIs* , like work place observations or near misses, may have to be expressed in incidents as the monetary value of this target is measured in accident outcomes, but the cost of accidents will not directly identify the amount of workplace observation or the corrective actions put in place to remedy any safety hazards.
Overall Equipment Efficiency/Effectiveness, OEE is a combined measure of availability, performance and quality. The advantage of this measure is that it identifies where the bottlenecks are in attaining the target efficiency.
Availability can be translated into; how well the engineering team is performing their planned preventative maintenance (PPM) and making sure that the line is available to run.
Performance; can be translated into how well is the production team utilising the availability. Is the production team making sure that the production line is continuously full of product and that the line is not stopped due to operational mistakes?
Quality can be translated into; out of the units produced, how many are to a standard that are withing specification and saleable at full price.
Each of these efficiency measures are weighed against a 100% target. The results of each area of performance are multiplied to give you the overall score.
The OEE model has potential to give clarity around ownership, however the run OEE in a larger operation you will be relying on SCADA, and MOM to give you the required information to perform the calculations.
Where possible AFSI would implement efficiency measures based on monetary values. i.e., target spend divided by actual spend equates to efficiency. Measuring the performance in value, rather than rates of production, ensures that all peripheral activities are included in the measure. The ownership of the various elements of the efficiency can still be identified through SCADA and with a MOM report the value of the availability, performance and quality can still be expressed. However, it will be presented in a gap (to standard) value, that the KPI owners will have to map out how to close.
What ever you want to create a measure for, AFSI can help you create targets that are relevant for you to progress continuous improvement journey.
*Soft KPIs, in this context, expresses less tangible KPIs where a hard monetary outcome is difficult to quantify. Customer satisfaction, engagement rates or workplace observations have significant potential to affect hard targets like revenue or labour efficiency, but are difficult to link a cost in the accounts to. In contrast, hard targets is anything that can be directly quantified as an amount of money.