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How to decompose company KPIs to position KPIs

Release date:2021-01-22

KPI is a very familiar term. Different companies have different standards and methods for setting KPI indicators.The core purpose of KPI is to link the interests of employees with the interests of the company and keep the same goal. The so-called benefits of employees, the company and shareholders are the same.But the premise of profit is to create value, the premise of creating value is to have good management.How does Zhengcun make use of the company's KPI index to improve employees' work enthusiasm and management level?The answer is index decomposition. According to the company's KPI index and specific job description, it is decomposed into several position KPI index, and the responsibility of each position is managed by using the position KPI index.This is the correlation between KPI index and operation management.

The company's KPI index includes cost index (direct cost rate), quality index (customer complaints & returns & customer complaints) and delivery index (non-timely delivery rate). The specific proportion is shown in the figure below.


1. Cost index, direct cost rate.It is directly reflected as the ratio of direct cost to output value, which fully considers the relationship between the company's output value and marginal direct cost.Cost control is the key point of this index, using this index to get two general directions of management: direct cost control and improve the qualified rate of products.Cost control and can be decomposed into the cost of materials and artificial cost, cost control, packaging, logistics, and electricity and the cost of materials can be decomposed into research and development, new materials, purchase price negotiation level management, labor costs can be decomposed into employees' work efficiency management and the management and the use of contract employees number, product qualified rate is decomposed into the product quality management and the management of employees' skills.All these decompositions correspond to clear KPI indicators for each position.


2. Quality indicators, including the number of returns, zero-return PPM and customer complaints.The quality of products is the foundation of the company's operation. No amount of sales should be based on quality sales. Poor quality can only increase the company's operating cost.The number of returns relates to the corresponding positions of technology, manufacturing and quality control, as shown in the figure below:


3. Delivery indicators and times of non-timely delivery.Reflect the company's production coordination ability and supply chain management ability.Production coordination ability includes production plan arrangement, machinery and equipment arrangement and operator personnel arrangement ability;Supply chain management ability includes warehouse management ability, purchasing planning ability and shipping planning ability.


To sum up, KPI indicators can not only objectively reflect the performance of the management, but also decompose specific KPI indicators of each position from each indicator parameter.All indicators are related to the whole process of the company's operation. Improving the quality of the position KPI indicator also improves the quality of the company's KPI indicator and reflects the improvement of the company's operation and management level.The company's KPI index has been achieved, and Suntory's target has also been achieved.The ultimate goal: create value, employee benefit, company benefit, shareholder benefit.

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