Key performance indicators or KPIs are fundamental when it comes to quality management. Which KPIs should be used in your quality strategy and why? After reading this article, you will be able to implement the right KPIs and therefore manage your quality.
In the early 2000s I was working as a site quality manager. At one point, we were rewriting our quality management system. During this process, we asked all heads of departments and managers to put their organisational activities into a flow chart.
Based on these flow charts, we asked them how they measured their overall performance and how they could tell it was improving or declining. With this exercise, I let them define performance indicators for their own processes.
It’s fundamental to determine the right KPIs as not all performance indicators are KPIs.
For a performance indicator to be a KEY performance indicator, you need affirmative answers to the following 3 questions:
To measure quality performance, I recommend the following KPIs:
Not all quality-related KPIs are owned nor the responsibility of the quality department. I’m a strong believer of quality ownership. This means that every employee in the organisation has to contribute to achieve that quality.
KPIs can be divided into two categories: lagging and leading indicators. A lagging indicator looks back on the situation, but never looks forward, which means this indicator won’t tell you anything about a possible future state. Leading indicators on the other hand, use data from the past to tell you something about the future.
The 'complaint rate' for instance, which is a ratio between the number of complaints received and the volume sold, is typically a lagging indicator: it tells you how good or bad the quality is of the products sold in the past.
This KPI doesn’t have a direct impact on the future nor will it tell you something about the future. The outcome of the complaint management might have an impact, when corrective actions are defined.
The 'overdue corrective action rate’ divides the number of overdue improvement actions by the number of open improvement actions. This percentage will tell you how good you are in completing improvement actions and in preventing recurring mistakes. Therefore, this KPI shows you how good your continual improvement action process is working. It’s an example of a leading indicator.
It gets more interesting if you detect correlations between different KPIs and present your data in a graph.
When we take a look at the three main quality KPIs we can establish the following findings:
The ideal situation is when the right first time metric increases and the complaint rate decreases. That’s when you created real improvement.
Improvement actions are taken to solve situations and to prevent issues from reoccurring. If an organisation is not good at executing these actions, they can expect the RFT and complaint rate to continue in the wrong direction. In this way, this metric will give the organisation the handles to start predicting how complaints and nonconformances will occur in the future.
To get the best results in analysing your KPIs, I recommend calculating the periodic KPI result, together with the ‘year to date’ and the ‘rolling moving average’ to establish the trend.
Vlitix is expert in everything to do with quality KPIs: send us your KPI challenge and we’ll discuss how to fix it.