Improving the Use of Key Performance Indicators (KPIs) in Operations Management

Abstract

This thesis contributes to the knowledge of Key Performance Indicators (KPIs) with a focus on improvement for operations and maintenance.Through literature research, gaps within the use of KPIs throughout different business areas of a functioning organization were identified. Then by conducting case studies, improvement to the implementation of KPIs are suggested. A gap identified through research and observed through the authors work is how the use and even the definitions of KPIs used in operations and maintenance are not linked together for overall improvement. Conflicting KPIs can have operations and maintenance going in different directions. While working at two different operating taconite facilities, the author observed the following: operations feeds into maintenance and maintenance feeds into operation. One cannot solely dictate to the other because the operation runs better when it is a two way street. This is why there is a need to formally tie these areas of work together. This thesis offers suggestions as contributions to continuous improvement utilizing KPIs. Firstly, know your stakeholders, secondly, identify the “why” an improvement needs to be made, thirdly, describe the importance of KPIs, fourthly measure and communicate your success, and finally plan to make changes throughout your improvement process. Improving these identified factors are critical to the success of KPIs. Five case studies were presented and suggestions were given based on these case studies. The case studies vary from non-profit, volunteer, employee owned, and private company working experiences. Findings from this thesis are important to engineering management practice because the need for operational improvement continues to become more important.