990624Ac.KPI.KWI001.SECONFIDENTIALThisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.KPIManualPohang,June24,1999IntroducingKPIProcesstoKangwonKANGWONINDUSTRY990624Ac.KPI.KWI001.SE2OPERATIONALPERFORMANCETEAM(OPT)•ResponsibleforupdatingtheKPImonitoringsystem(monthly)•Responsibleforfollow-upofupdatesoftheTOPimplementationmonitoringsystemmadebyTOPunits•Participateinweeklyimplementationmonitoringmeetingsattheunitlevel•Preparethemonthlymonitoringmeetingattheplantlevel•Coordinateimplementationofcross-deptideas•Interfacebetweenunits/departmentsandtopmanagement•Suggestsolutionsforimplementingdifficultideas•UpgradeITtoolstotailoredreportstomanagementandunitneedsOperationalperformanceteamC.H.Kim(teamleader)H.C.Lee,I.W.Jung,J.T.Kim+assistant+KITTopmanagement(Vice-Chairman,President,Vice-President,DirectorsUnit1Unit2Unit3Unit...Unit5Unit4RoleoftheOPTAKPImonitoringsystemshouldbebuiltintoKangwon’sregularmanagementprocess.ThisinitiativeshouldbepushedforwardandreviewedbyKangwon’stopmanagementandcoordinatedbyanoperationalperformanceteam(OPT).990624Ac.KPI.KWI001.SE3CONTENTS•IntroductionandobjectivesofKPIs•KPIdevelopmentprocess–SettingKPIs–Continuouslymonitoring,analyzingandcorrecting–Linkingtoperformance•NextstepstoimplementKPIs990624Ac.KPI.KWI001.SE4CONTENTS•IntroductionandobjectivesofKPIs•KPIdevelopmentprocess–SettingKPIs–Continuouslymonitoring,analyzingandcorrecting–Linkingtoperformance•NextstepstoimplementKPIs990624Ac.KPI.KWI001.SE5CONTENTS•IntroductionandobjectivesofKPIs–KeyPerformanceIndicators(KPIs)areavehicleforchangingtheprocessbywhichKangwon’soperationismanaged.TheKPImonitoringsystemfirstofallallowstocheckoperationalimprovementagainsttargetslinkedtoTOPideas.Moreover,KPIsprovidemeasurestoreflectchangesinKangwon’skeyunderlyingcostandprofitdriversandhelpdiagnoseareasthatneedcontinuousimprovementefforts.•KPIdevelopmentprocess–SettingKPIs–Continuouslymonitoringandanalyzing–Linkingtoperformance•NextstepstoimplementKPIs990624Ac.KPI.KWI001.SE6ROLEOFKPISYSTEMINREALIZINGTOPGOALSTheKPIsystemallowstofullyexploitthedoublegoaloftheTOPproject:ensurerigorousimplementationoftheTOPideasandtriggercontinuousimprovement.•SettargetsforKPIslinkedtobottom-upTOPideas•MonitorTOPimplementationprogressversustarget•Allowtobreakdownperformancegap(actualvs.target)involume,price,andconsumption/efficiencyeffects•Encouragecorrectiveactionwhereneeded•Providemeasurestolinkperformancetoincentives•AnnuallyresetKPItargets(afterfullimplementationofTOP)totriggercontinuousimprovement•Definewaystogettothetargetthroughteamwork•Monitoractualperformancevs.targetandcorrectwhereneeded•LinkincentivestocontinuousimprovementeffortsRealizeshort-termperformanceimprovementjumpRealizeshort-termperformanceimprovementjumpTriggerlong-termcontinuousimprovementTriggerlong-termcontinuousimprovementRoleofKPIsystemTOPgoals990624Ac.KPI.KWI001.SE7CHARACTERISTICSOFKPIsComplementusualaccountingdatainafocusedandstructuredapproachKPIsgiveinsightsthataremorefocusedandstructuredthantypicalmanagementreports.Moreover,theyaretargetedtospecificoperationareasand,therefore,naturallyleadtoa...
