By All Standards

KPIs Demystified: How to Set and Measure What Really Matters

• Auva Certification • Episode 9

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Summary

In this podcast, Michael Venner and Wayne Hylla discuss the importance of Key Performance Indicators (KPIs) in various sectors, particularly aerospace. They explore how KPIs can be effectively implemented to measure the performance of key processes, the significance of on-time delivery and product quality, and the need for continuous improvement. The conversation also delves into the challenges of measuring KPIs in purchasing, service delivery, and design, emphasising the importance of understanding processes and data trends to drive improvement.


Takeaways


  • KPIs are essential for measuring effectiveness in aerospace standards.
  • On-time delivery and product quality are critical KPIs.
  • Understanding processes is key before implementing KPIs.
  • Continuous improvement should be the goal of KPIs.
  • Data trends provide insights into performance over time.
  • Communication among teams is vital for effective KPI measurement.
  • Purchasing processes should have specific KPIs to track efficiency.
  • Service delivery KPIs must align with customer expectations.
  • Design KPIs should reflect the cost and timeliness of deliverables.
  • KPIs should be adjusted based on performance and business needs.



Chapters


00:00 Introduction and Recap of Previous Podcast

01:29 Understanding KPIs in Aerospace and ISO 9001

04:03 Identifying Key Processes and Their Importance

08:49 The Purpose of KPIs in Business Processes

13:34 Effective Measurement and Analysis of KPIs

17:24 Dynamic KPI Management and Continuous Improvement

25:01 Continuous Improvement Through Data Analysis

28:54 Understanding Trends and Cycles in Performance

30:43 Key Performance Indicators in Purchasing

34:43 Production KPIs: Measuring Success

42:04 Design and Development Metrics

49:17 Final Thoughts and Resources

50:46 By all standards Intro.mp4



Key Links

Auva Website: www.auva.com

Apple Podcast:  https://podcasts.apple.com/gb/podcast/by-all-standards/id1771677594

Spotify: https://open.spotify.com/show/79OUNj3vY9dmESR3okwHJa?si=871837f56dc149b6

Youtube: https://www.youtube.com/@auvacertification/podcasts

LinkedIN: https://www.linkedin.com/company/auva-certification-ltd 

Instagram: @auvacert

Michael Venner:  https://www.linkedin.com/in/michaelvenner-isocertificationexpert/ 

Wayne Hylla:  https://www.linkedin.com/in/wayne-hylla-6642ab6a/ 


Michael Venner (00:16)
Okay, welcome everyone to the next podcast. don't know why I say that every time to be honest, but there we go. we're cordially with Wayne again, Wayne Hylla who we had a couple of months ago, I guess, when we were talking about, what were we talking about? yeah, Human Factors. That went down really well actually. That's one of the most listened to podcasts.

Wayne (00:23)
Have it.

Hello.

Human factors. Yeah.

Michael Venner (00:41)
Yeah, it done well. I think everyone was just looking at your position in the hotel. I think that's what it was.

Wayne (00:41)
good.

I'm lot more comfortable this time. I'm not propped up at a weird angle against a low ceiling.

Michael Venner (00:49)
Yeah.

Yeah, you have to forgive my shininess, it's the lighted in this hotel so it's me that looks a bit funny this time.

Wayne (00:59)
You can just see see just how good-looking I am in this one

Michael Venner (01:02)
That's it.

Yeah, that's it. We'll get just added another two subscribers. Yeah. Right, cool. Yeah. So this time we're to be talking about KPIs. We only thought of this one last night on a whim or day before, think, which is a good subject. It impacts the aerospace standards considerably. It's a big part of it.

Wayne (01:05)
what my mum says anyway. I know right?

Yeah. Yeah.

Yeah, yeah.

Michael Venner (01:29)
but it also does impact ISO 9001 standards, which most people miss, don't they?

Wayne (01:36)
Yeah, because it's not actually specifically an aerospace requirement, it's in the 9001 text. It's in there.

Michael Venner (01:40)
No.

Yeah, but most people don't do it right, do they? Let's be fair.

Wayne (01:53)
Yeah, yeah,

it's definitely a conversation I've had with a lot of clients, not just 9001, but also aerospace still trying to get it right, find appropriate measures that work well and, you know, that are worth measuring as well.

Michael Venner (02:08)
so Clause 441 is 441, isn't it? Yep, within ISO 9001. That's testing me then. It's been a long day.

Wayne (02:11)
Yeah, it is. There you go. There you go.

Michael Venner (02:19)
Yeah.

Wayne (02:20)
Yeah. Yeah. Yeah, I think it's 441C isn't it? If I'm going to get really nerdy.

Michael Venner (02:27)
Yeah, if you get really nerdy yeah. Do you the exact text?

Wayne (02:30)
Yeah,

it's in brackets. I know that bit. Yeah.

Michael Venner (02:35)
Yeah, so

basically the standard refers to measuring your processes and it does mention key performance. I don't think it it meant key performance indicators or is it just say performance? I think it says performance indicators, doesn't it? Yeah. Okay. So how do we interpret that in the aerospace standard? Go on.

Wayne (02:44)
It doesn't say key performance, it just says performance in the case. It does, yeah, yeah. Yeah.

So the way we look at it in the aerospace standard is we look at what the key processes are, which are kind of divided up. It's the clause eight processes that are divided up, depending on the business, into a number of key processes. And then each one of those needs to have KPIs to measure the effectiveness of that process, which ultimately feeds into.

the mandatory KPIs within the aerospace standard, is on time delivery and product quality or service quality. yeah. Yeah.

Michael Venner (03:23)
which pretty much every organisation isn't it really. Not just aerospace but

everyone's trying to either deliver a product or deliver a service.

Wayne (03:31)
Yeah, well, this is how you keep your customers happy, isn't it? If it's it's on time and the quality is right, then they've got nothing to complain about. So it's like any delivery from Amazon or anybody that you order from if it's what you've ordered, the quality is there and it was when you expected it, then everybody's happy. So, yeah, so I think that with that, think that those two those two things are definitely key to keep in mind when you're looking at that.

performance indicators.

Michael Venner (04:03)
So how does someone

go about it?

Wayne (04:07)
Um, yeah, so I guess, uh, what generally I'd say the best way to do it is just to start with on time delivering product quality and then just look at what your processes are and how that impacts that. Um, so, you know, production or service provision is, is an obvious one because if it's not delivered on time, then then there's

usually something that's caused that backlog. So you could look at adherence to schedules with things like that. But yeah, I'd say break it down, look at each process, whether that's sales, whether that's purchasing, and just look at what part, what elements of those processes impact on time delivery or product quality. It's, I'm trying to not, or definitely not having too much influence from external factors.

for sure, which is a bit of a pitfall that I see quite a few companies kind of fall into the trap of external factors, particularly when you look at sales processes and stuff, they kind of look at quote conversions and things like that, which are not necessarily measuring the effectiveness of the process because that's, you you take, for example, COVID, I tend to use that as an example when I'm discussing this is,

You might be doing everything right. Your process might be spot on, working like a Swiss watch, but through COVID nobody was buying anything. So your sales are going to be down, aren't they? On the other, on the flip side of that, you know, you could be running like a bag of rusty old nails, but you happen to be the only person that provides what you do. Or people just happen to know that you're still, you know, the quality of what you deliver is great.

but your cells is terrible. they're going to stick with that. So there's too much influence from external factors with that KPI, as an example. So trying to look internally on the process, I think, is the first thing to consider. So yeah.

Michael Venner (06:03)
suppose we should probably highlight what the processes are, shouldn't we? Which obviously every company is different. No company's processes are the same. They should focus on key processes, which are really anything that affects product or service, directly impacts the customer. So I mean, we get some clients that only have one process, don't they really? Because it's a very straightforward order comes in, shipping out. It's very, very...

Wayne (06:08)
Yeah. Yeah, definitely. No. Mm-hmm.

Yeah, yeah, yeah. Yeah, yeah, yeah.

Mm-hmm.

Yeah,

Michael Venner (06:32)
Simple.

Wayne (06:33)
yeah. So an example I've got of that, I've got a client that does honing and grinding. And so they don't really buy anything because it's all free issued parts and material. So yeah, so the process and there's a small workshop, so it's all handled by the same people. Responsibilities all sit to the same people. So they just have one key process. But then on the other side of things, you can have

places where they've got four or five key processes depending on on who's responsable and what the sort of chain of events are from the initial inquiry from your customer through to delivery.

Michael Venner (07:13)
So when I'm explaining, I always sort of say, let's take it, break it down really simple. 90 % of organizations have got sales, some kind of purchasing, then some kind of doing, and then that's it. Yeah, so it's kind of three generally. Yeah.

Wayne (07:18)
Yeah.

Mm-hmm. Yeah. Yeah, that's it.

Yeah, yeah, yeah, I tend to do the same with that and kind of I also related to the clause eight sections in the standard, those sort of big sections in there too. But yeah, one thing I do say to people is sales is a bit misleading when you look at the standard because that that kind of clause 8.2 tends to be the sales element, which tends to be more

customer communication, identifying with the needs of the customers and stuff like that. sales can be misunderstood or misinterpreted as going out and winning contracts and you know, the sales side of it. So yeah, so I always try and guide people to that. Yeah, I try and guide people to that part of it as well is that it's, it's the whole, you know, customer facing section of your business.

Michael Venner (08:10)
element isn't it?

Wayne (08:19)
So, yeah. Yeah.

Michael Venner (08:21)
So if we've got our three,

let's just go on three key processes. We'll keep it simple. It's been a long day. That's it, got a full week of this yet. Yeah, so why do we actually need them? I know the standard says we've got to have KPIs in place to measure the effectiveness. Why do we actually need it? What's the purpose of it?

Wayne (08:25)
Yeah, yeah, that works. Keep it simple for us. Yeah, it's Monday. We've got to... Yeah. I know, yeah.

So yeah, I'd say in its simplest term is to make sure that each of those processes, each of those three processes are doing what they need to do to make sure that you're delivering what you've promised when you've promised. So making sure there's no delays in anything. So, you know, if a contract review comes in, not sitting on it for weeks before giving it to...

to purchase, to buy materials and then onto production for example. Or purchasing, making sure that they're aware of lead times of materials or things like that so that they can, you know, make sure that things are ordered on time to make sure we get them in time. Because the other thing is we've beholden to our suppliers in some cases, aren't we? So just kind of managing that and it is just kind of managing

managing the processes in a way that makes sense and is effective as well because there's no point in measuring something if it's 100 % all the time. I think that's you kind of missing the point of it. You're not really getting anything out of it, you know, so I think it's good to consider what your process is and understand your process.

Michael Venner (10:05)
Yeah, I think some people rush off and they put KPIs in place without fully understanding their process of what the intent is. And then once they sort of get further down the process or an external audit comes in, we're like, this doesn't kind of work, does it? Because the KPI needs to measure that process, what that's doing. And I think a lot of people make that mistake.

Wayne (10:09)
Mm-hmm.

Yeah.

Yeah

Yeah, yeah, exactly. Yeah,

exactly. And I've seen it a lot even with the with the way you measure things. So, you know, I see it time and time again, where people are measuring monthly statistics, based on a percentage of all like percentage based on the orders versus deliveries. And you know, you could have one month, you've got two orders, the next month, you've got 100 orders.

both months you've missed, you know, you're late on one of them, but first month you're on 50 % on time delivery, the next month you're on 99 % on time delivery. So, you know, it's, it's also identifying, you know, what makes sense in how you're going to measure it. Because that sort of thing, you probably want to look at maybe a rolling target or a rolling average or, you know, extending that measurement to six months or

Michael Venner (10:57)
Yeah.

Wayne (11:13)
however you want to do it, know, or PPM or another way of doing it. So yes, definitely understanding what the reason for your measuring and how you're measuring it is definitely key.

Michael Venner (11:24)
Yeah, so I know a lot of

people, it's a bit of a contentious issue this, but I know a lot of people will just put on time delivery on each of their processes exactly the same because the eventual goal is on time delivery and it's the wrong way of doing it because on time delivery doesn't measure an individual process, it measures all the processes together and I think that's a bit of a head scratcher for some people.

Wayne (11:34)
Yeah, yeah

Yeah.

No.

Exactly, exactly.

Yeah, yeah, exactly. again, I try and get people to understand that that's the end goal. And that is a measurable process. The same with product quality, you know, because you might have the production of made this fantastic thing. It's all shiny and sparkly and everything's great. But sales are giving them the wrong revision drawing because they didn't make sure they got the right drawing, know. So the quality is not it's not there.

you know, but it's not productions fault. It's sales, sales are responsible for that kind of thing. You know, those are, those are sort of things to be aware of. But I do think maybe controversially on that is, is using those, you know, on time delivery. Yes. But if you can identify which processes have created any delivery delays, you know, if you've, if you've got a 98 % on time delivery, what processes of course, those

Michael Venner (12:33)
Yeah

Wayne (12:41)
that 2 % and can you demonstrate you know, it's 0.5 % was sales 0.5 % was purchasing 1 % was production, for example, you know, so and I think is a great start. Yeah, I think it's a great start as well because you can still you can look at trends and stuff as well. Okay, you can look at why things are late if you starting to see things that are creating this consistent late

Michael Venner (12:53)
Yeah, that's different.

Wayne (13:10)
issues then you can put KPIs to drill down on those then you can be a bit more specific on your KPIs.

Michael Venner (13:19)
So,

okay, so if we've got sales, production, stroke service delivery, what can we do then? Have you got some ideas on what ones do work that measure those processes? Or how would an organisation go about it?

Wayne (13:35)
Yeah, so other than, like I said, the on-time delivery and product or service quality, where those processes are involved, other than that, I'd look at things like accuracy of contract review, maybe for the sales process. Have things been appropriately reviewed? Have you got all the documents? If a customer says it's got to be done in accordance with this, have we got that? Have we reviewed that? Can we do that?

can we actually achieve the tolerances they're expected for example? Have we got the terms and conditions that we read the fine print? You know, because I've seen the terms and conditions I've seen customers put in the requirement for first article inspection reports for example in the terms and conditions but it's not been picked up because some other customers might put that in as a line item on their purchase order so you know those sorts of things so maybe think something like that would be

something worth looking at or things like the, how long are you sitting on contract reviews? Is that something that can be measured? You can look at schedule adherence if you know that something takes a certain amount of time. Is that programmed? Have you got a Gantt chart? Have you got a program in place for any projects that you're doing? Do you meet in these gates? Are you meeting in full?

you are you achieving all the tasks that were set at the last gate? Have you met all of those? Have you caught up with any actions? That sort of thing. yeah, so there's this.

Michael Venner (15:11)
think a good one in

the sales depends on the business and how they structure but sometimes they create the they determine the lead time and the capacity planning and I think that's could be a good one because they'll say yeah you'll get it in two weeks and in production get it like what there's like three weeks worth of machining on this I've got to go and get it heat treated or something like that and it's like no chance but sales team sometimes promise the earth so I think that could be a good measure sometimes

Wayne (15:16)
Yeah.

Mmm, yeah. Yeah, yeah.

Yeah. Yeah. Yeah. Yeah.

Yeah.

Yeah.

Yeah, and they don't consider the fact there's a five-week lead time for the materials even, know, things like that. So yeah, I think that is a great one. think capacity planning is definitely a good KPI to look at. Yeah, and I think, again, having a look at your overall KPI results, you know, I'd also say to focus on what needs to focus. You know, if you're delivering 99.9 %

Michael Venner (15:44)
Yeah.

Wayne (16:04)
product quality and everybody is happy with the quality that you're delivering. But your delivery performance in terms of on time delivery is at 70%. You probably want to put your focus, KPI focus on the on time delivery and what the choke holds are, what your bottlenecks are. And even consider things like

like fault codes or cause codes and things like that. So you can you can bring in other other reviews of of kind of trends and stuff like that. Pareto diagrams are quite useful for that kind of thing as well. So yeah.

Michael Venner (16:37)
Yeah, I was going through that today

with a client, funny enough, looking at Pareto's on failures, things like that. I think people sometimes get sucked into reporting the good stuff. Like you say, the quality, great, great, great, but actually we're terrible at delivery. Well, as a management team, you want to know what you're bad at. And that's where your action should be. Yeah, our on-time delivery is not great. Let's focus on that. Not so much the quality. Quality is good, yeah.

Wayne (16:41)
Yeah

Yeah.

Mm.

Yeah.

Yeah, yeah, exactly. Yeah.

Yeah.

Yeah. Yeah. And I think it's like anything you do if you want to if you want to improve, there's no point in keep doing the same thing you're doing well, and keep training that you need to train the things that you're not good at and improve those. That's the only way we can improve not just as a business, but as human beings as well. Right. So

Michael Venner (17:23)
Yeah, definitely.

Wayne (17:24)
Yeah, adjusting focus and stuff like that's kind of goes back to what I saying earlier about making sure these indicators are appropriate to what you want to achieve and where your business sits and what it's doing at the moment. And also you don't have to stick with them once you set KPIs you don't have to that's not it set in stone. You know, that's, that's not, it's not the the be all and end all if you're if you set one and you think right.

for six months we've had zero complaints. Okay, well, so we can measure something else then, you know, you know, you can you can change that and there's nothing, you know, there's nothing to stop you doing that. And I think it actually shows a maturity in the business to actually be a bit dynamic with things and really focus on what you need to.

Michael Venner (17:58)
Yeah.

Yeah, some people don't change them, do they? They just leave them the same for three years and like you say, hitting 100%. What are we doing now? Well, can't change them. That's where they are. No, change them. Change them as the business changes.

Wayne (18:16)
Yeah.

Yeah. Yeah. Yeah. Yeah.

Yeah. Yeah. Yeah. Yeah. not just the not just the actual KPI, but the target as well. Like I've been into places where, know, you've you've got a target of 90 % and you have done for the last three years, but you're achieving 99%. So why is your target 90 %? You know, you need to bring that up. So

Michael Venner (18:31)
Target.

Yeah.

Wayne (18:45)
drive some improvement, drive some, you know, it might be small, finite improvement, but that's kind of what we're going for. And particularly with the aerospace industry, we're trying to, lot of the tier one guys are pushing for the zero defects and all that sort of thing. you know, we need to push that into our KPIs and the performance of our suppliers and what we're So, yeah.

Michael Venner (19:08)
Yeah, so one of the things I

say when getting a new client, it can be quite hard to get their target. So what I tend to say to them is, look, get six months worth of data, average it out, and then make a little improvement on that. That should be your target. Some people just either go shoot for the stars straight away. You're like, what are you doing? It's miles away. You're never going to hit it. Or they just oh, we're not very good. Let's lowball it.

Wayne (19:15)
Yeah.

Yeah.

Yeah.

Michael Venner (19:36)
we'll put it below where we are and I think they're missing the point that it's about continual improvement trying to get somewhere. So I think to get your first baseline, get about six months worth of data, let's just say that's 80 % on time delivery and then look for an improvement on that 80%. So years ago there was an unwritten rule that you should do 20 % improvement year on year. It's an unwritten rule, but it's one I quite like going to, so it can work quite well.

Wayne (19:36)
Mm-hmm.

Yeah.

Yeah.

Mm-hmm.

Right, okay. Yeah.

Yeah.

Michael Venner (20:06)
we use it internally type thing. that could be good. Yeah.

Wayne (20:08)
Yeah. Yeah,

yeah. And I think that's that's also like setting a target that's almost unreachable. It's then it can look bad or be disheartening if you if you set it at 90%. And actually, you're only achieving 70. You probably should have set it at 72%. You know, you know, something to to kind of creep. Yeah. Yeah, just chip away and chip away at the improvements and start to

Michael Venner (20:27)
75 or something a bit more.

Wayne (20:35)
understand how to improve it rather than thinking right well we need to step back now and drop our targets back it kind of it doesn't always look good you know even though it might make sense to you

Michael Venner (20:45)
I know it's kind of, I

know we kind of look at it that way in the UK, but I know in America they're like no, 100 % otherwise you're admitting to some of your customers that you're not going to deliver on time or something, but I think in the UK we're a bit more, well no, you've got to be little bit realistic. Where our capabilities are, we can't hit 100, we're 80. We've got to make some improvements to get there, you know, give us a few years type thing.

Wayne (20:51)
Yeah.

Hmm.

Yeah

Yeah. Mm-hmm. Yeah. Yeah.

Yeah,

and I often say that to people. say, you know, don't necessarily think of it as a target, but think of it as a trigger point, depending on where you are in your performance. In terms of if you drop below that trigger point, you then take a step back and look at your system and how you're going to improve the whole system. You know, for example, if you set a quality target at 99%, you know, the 1 % yule action

Michael Venner (21:13)
I think it's different.

Wayne (21:42)
each one individually but if you drop down to 98 % then you need to look at your system and because the example I generally give is if you if you make a million widgets in a year and you don't deliver one of them correctly that's not 100 % but if you've delivered a million you're not you're not going to lose sleep you're not going to you're not going to necessarily

change everything in your system and your process and you all that sort of thing for one out of a million. Of course, you're going to address that one. You're to fix that one because you don't want to have one, but it's not likely going to start a whole right tear up the tear up the playbook and start again. You know, yeah.

Michael Venner (22:25)
Well funny enough that's

the client I'm at today, well this week I should say. Last year they were just every month they were looking at their KPIs. It'd be red, green, red, green, red, green and they were kind of just kept taking little actions. They weren't seeing the whole trend over the year. You're kind of losing focus and you're getting a little bit too in the weeds I think. So this year they've actually plotted it over 12 months. Like I say they had the odd blip.

Wayne (22:29)
Hmm.

Yeah.

Yeah.

Yeah.

Mm-hmm.

Yeah.

Yeah.

Michael Venner (22:54)
generally

you can see their performance and have charted it and it's going up and I said that you don't worry about the little blip here and there. like you say, you've taken action to fix whatever little gripe that was but overall your improvement is going up. That's the big stuff we're looking at. It's what these projects that are going to take from 80 to 85, what are you going to change to get you there? That's the bit to focus on.

Wayne (22:59)
Yeah.

Yeah.

Yay.

Yeah. Yeah, exactly.

Yeah, exactly. And I always say to say to my clients, you know, nobody's perfect. I get bits wrong in my report. You know, I make spelling errors. I do things, you know, I make mistakes as well. You know, I'm not 100 % perfect. So I can't expect other people to be 100%. Nobody is nobody's perfect every time or all day every day. Everybody has a bad day. You know, everybody. don't

I don't care who you are, everybody has a bit. I mean, you're saying yourself you weren't too well this week. And of course, that's a perfect opportunity for something to go slightly wrong. But that's the blip that we're talking about, isn't it? That's not going to change everything that you do. You know what the problem is. You fix what the problem is. And then just have a bit more chicken soup or whatever. then you...

And then you're back on... You're not old enough yet, are you?

Michael Venner (24:06)
is mine's retired and I haven't got enough money yet. That's the only way I'm going to fix me.

I feel it. I do.

Wayne (24:17)
Do you? You

still look young. You still look young.

Michael Venner (24:21)
So yeah, that's all these facelifts I have.

Wayne (24:23)
Yeah,

is that what it is? Yeah, that's why I grow the beard to hide the age. Yeah, I'm I'm 40 next to this week on Wednesday. Yeah, that's it. I'll always be catching you up. Yeah. But yeah.

Michael Venner (24:26)
hundreds of pounds I spend on that.

catch your B up.

Cool, yeah, so what I say to people

on those targets actually when you sound about moving them, I kind of expect people at least every three years. I like to people improve it every year, but if they haven't changed it when I come around for the recertification, I then start asking a bit deeper questions. know, it's been 80 for three years. Where have you gone over that three year cycle? you up?

Wayne (24:47)
Mm-hmm.

Yeah.

Yeah.

Yeah.

Michael Venner (25:05)
you down, your target should be pushing you. Because it is about continual improvement isn't it at the end of the day.

Wayne (25:07)
Yeah.

Yeah, exactly. this is where finding those trends and looking at your data as a whole data set is beneficial because you can find these trends. You can put actions in to stop these trends and generally improve. And I'll go back to the Pareto diagram or model, the 80-20 theory.

And I had it recently with a client that I do some consulting with and that you actually order actually. Their on-time delivery performance was pretty... Yeah, their on-time delivery performance isn't where they wanted it to be. And all they kept saying was, it's a new project. It's the customer's design. It's a new design. They're trying to...

Michael Venner (25:40)
another one.

Wayne (25:53)
work with us, it's causing a lot of delays. But then when you actually look at the raw data, that was probably only about 2 % of the lates and the rest would yeah, the rest of you know, because it because you can often focus on things that give you the most frustration. And then you lose you lose the focus on what's really going on, which is which is what this Pareto theory diagram is, is good at is raw data, tells you

Michael Venner (26:00)
interested.

Wayne (26:18)
you know, if you've got cause codes on things, tells you exactly what you're doing. It tells you exactly what's going on and what the big players are in what's going, why you're missing your targets or how you can improve your targets. So, yeah.

Michael Venner (26:30)
Yeah, I think some people get scared

of getting in trouble for missing a target. I always say to it, it's not about missing the target. It's about what you're doing to resolve it. You'll find to miss things like you say, we're all human, things go wrong. It's being aware of the numbers, being aware of the data, where you are and what you're doing to try and improve it and get back to where you should be. Yeah, you won't get penalized for failing.

Wayne (26:37)
Yeah.

No. Exactly.

Yeah, exactly. Yeah. Yeah.

Yeah, exactly. I'd much rather. No,

no, I'd much rather see a client that's missed a target and actually doing something to really get it right. I'd much rather see that than somebody who's measuring something that's 100 % every time all the time and not changing it. Not looking at what other what other things can we look at? You know, there's there's the odd moment but gone. Yeah.

Michael Venner (27:17)
Do you test the data? So I often have that when

people keep presenting it and I'll always pick one or two of the KPIs and say show me the data.

Wayne (27:25)
Hmm.

Yeah. Yeah.

Michael Venner (27:31)
so I

can test it is that actual figure you're reporting true or are you just trying to feed me something or kid yourselves?

Wayne (27:38)
Yeah, yeah. And it doesn't help anybody. It doesn't help anybody hiding that data. I do do I do I do look at the data. I look at the you know, generally look at like the last 12 months or at least since the last audit and see what the trends are and stuff like that. And Jen, generally you see, you know, there's always a month or two that's below target. Even if you're achieving your target across the year, there's always a month or two below target, whether that's the holiday season. Yeah.

Michael Venner (28:02)
holiday season, Christmas,

end of year.

Wayne (28:06)
Yeah, yeah, and so Yeah,

and I was actually had a client recently that that interestingly enough noticed a trend a year-on-year trend over five years and You put all the data next to each other and they looked exactly the same and it turned out that they they just had this kind of cyclical performance thing with you know customer orders and

holiday periods and stuff like that so they could actually look at it in an even bigger picture not just from the year but looking at the the sort of long-term performance and trends and stuff where they could then manage that a bit better and you can see that the the year that since then that they'd looked at that it's shown a lot of improvement so yeah

Michael Venner (28:54)
I was going to say I had metal stockist and all their material through the winter

Wayne (28:58)
Yeah, exactly. Yeah, exactly. that come I was gonna yeah

Michael Venner (29:10)
took so long because of the roads being closed, like international transport. And all they'd done is they said, well, we're just going to give ourselves an extra month. So we ordered one month earlier. And then everything was getting there on time because it was just so hard for them to counteract all the weather that they just planned in a little bit more time and it worked out for them.

Wayne (29:11)
Yeah... Yeah...

Yeah. Yeah. Yeah.

Yeah, yeah, yeah. And these, and that's a great example of these fixes not needing to be rocket science. It doesn't need to be, you know, you don't need to sit there with all this data and scratching your head all the time. Sometimes it's the simplest things. I think the other, the other thing to consider is, is talking to everybody on the shop floor, people that are actually dealing with the, with what you're measuring, you know, what are they seeing? Cause

Michael Venner (29:40)
Nice.

Wayne (29:57)
you'll get great feedback and I keep going back to this like you is is that understanding that sort of ground up that bottom feeding of information because you you will you generally get good feedback from you from your guys and girls and and etc on the on the shop floor you know because they see it they you know you as especially as a manager and management you kind of overseeing the the

sort of big picture and it's not always the big picture that's showing you the problems sometimes it's the small picture that the more focused groups of your business are working with so yeah yeah

Michael Venner (30:33)
Yeah, yeah, good. Okay. So what about perching

then? That's key one. What can people measure there? Are there two obvious ones or?

Wayne (30:38)
Yeah. Okay.

I think think purchase so the purchasing ones that I keep seeing people measure is is supplier on times of delivery and supplier quality, which is which is great because you should really be measuring that. But that's a different part of the standard. That's eight four. When we when we're talking about four four four four one, you need to measure the process. So, you know, are you raising purchase orders on time? Are they full and accurate? You've

Michael Venner (30:44)
you

Wayne (31:08)
flowing down the information correctly, know, if you've got, say, a material supplier like you were talking about, are they flowing down particular standards, like if there's with what we do with the aerospace stuff, are there ASTM standards that need to be flowed down to your supplier? You know, things like, know, especially with some of these restrictions on countries of origin and stuff like that that we've got going in the world at the moment, are we...

considering that are we checking that you know you can you can look at that but they're also depending on where your goods in process sits is goods in being is is that efficient you know you you booking things in properly is it stocked properly is it on time you know other guys getting a whole bag of bolts and wondering what the hell it is because it's not been labeled properly or you know they've got they've

miscounting things and they're having to keep going back to stock to get more bits and you know looking at these kind of things that you might fall short on as well so yeah but yeah there's this again it's going back to what what in person impacts the quality and delivery of your of what you do you know that's that's kind of where I'd stay at are you on top of lead times you know you're particularly

Michael Venner (32:20)
Yeah.

Wayne (32:24)
You know when the the the conflict in in Ukraine first started and we were having a massive problem with material supply and you know lead times were all over the place and prices were all over the place was purchase was your purchasing team on top of that you know was that was that managed effectively you know and what kpis could you put in place to make sure that is managed effectively yeah

Michael Venner (32:48)
I think

everyone jumps on the on-time delivery and quality for supplies which is okay. Sometimes I accept it and then but yeah it doesn't really measure that purchasing process does it as a whole stock shortages.

Wayne (32:51)
Yeah.

Yeah, yeah.

No, no, you could argue that it's, yeah,

you could argue that it measures your supplier approval process, maybe. But I think that's that's a bit, a bit woolly, isn't it? But being a bit woolly with you with and you're not getting anything out of it either. If you're not getting anything out of that, you know, like you say, finding the sticking points in your business, you can only look internally, you know.

Michael Venner (33:14)
Yeah.

Wayne (33:27)
because purchasing should be on top of that if you've got lead time issues if you've got supplies that are constantly delivering late I mean are they late because you've given them the wrong amount of lead time yeah yeah they they've told you that it's three weeks lead time and you've ordered it for the next day you know yeah yeah and it's funny because

Michael Venner (33:27)
Yeah.

times, wrong information, yeah.

That's it. You immediately go and blame the supplier, don't you? But you kind of got to look at yourself first sometimes, yeah.

Wayne (33:56)
clients, some of the clients I audit, they talk about our customers, they raise a purchase order and it's got the today's date on the delivery. Yeah, and if you're doing the same to your suppliers, the frustration is there as well, isn't it? So, yeah, so again, it's managing that process and taking a step back and looking at what is that process does.

Michael Venner (34:07)
Yeah.

Yeah.

reach.

Wayne (34:20)
Yeah,

exactly. Exactly. Yeah, we all try. We all try to, as I say, not as I do. That's the usual thing, right? Yeah, but we're trying not to do that. Yeah, but.

Michael Venner (34:25)
That's it. That's it. Yeah. Okay. So what about

sort of production? yeah. Maybe we could do a service as well. Just because it's not all machine shops is it that have to have KPIs. So, you know, what's some good things around there?

Wayne (34:37)
Yeah. No.

Yeah, so

I think, yeah, you could look at what your deliverables are. Are they delivered in full on time to schedule? Like I said earlier, if you've got a customer that says, right, we've got this project, I had an audit a couple of weeks ago actually, and their design department work within their customer's design department and the customer's giving them a Gantt chart.

Michael Venner (34:52)
paperwork, all the paperwork there.

Wayne (35:10)
and you know their internal gunshot was actually a bit tighter than the customer's one. They kind of made sure they're on top of it which was good but you know I've also seen it the other way around where you kind of your customer's saying we want this and then you've planned it late already it's already in the planners late you know so that's that's kind of maybe something else you could look at and so like yeah adherence to schedule

maybe if it's kind of like more of a word document or PDF or something that's a deliverable, you know, the accuracy of that is it, you know, does it get rejected by by the customer for spelling mistakes and stuff like that? I've got a exactly. Yeah. So but again, being careful not to blame all right first time on production because if something's been missed,

Michael Venner (35:49)
right first time, isn't it, at the customer, you know.

Wayne (36:00)
earlier down the line then production would be kind of blindly going into it without realizing what was going on.

Michael Venner (36:08)
I've had that before where they

failed production because things were going out wrong and it was the wrong revision and it was made with the wrong material and things like that and they kept penalizing production but when you actually looked at it it's because Contract Review had given them the wrong information in the first place. They can only make what they're given. It says use aluminium 6082 so I used it. Well actually it should have been 7075 you know.

Wayne (36:13)
Yeah.

Yeah. Yeah.

Yeah, exactly. Yeah. Yeah.

Yeah, exactly. Yeah. So yeah, so and I think that's the that's the key thing with production is not blaming production. That's, that's kind of the thing I see more often than not is blaming production for everything that goes wrong. And I think generally KPIs production are not not too bad. It's just they can be a bit hard on production.

for that reason, because you are, you know, like going back to the time thing, if you're, if you're only passing the job to production with two weeks left, and it's a four week long job, then you've already they're already on the back foot, there's no way they're going to catch up on that.

Michael Venner (37:08)
everyone

a couple of months ago and it was everything was set up issue set up issue or set up errors so let's have a look at this we started going through it okay set up that was programmed wrong that's programmed wrong that's programming it was yeah set up was wrong because they were given a wrong program it was yeah the wrong day terms or it kept crashing and something like that no they didn't set it up wrong with the production

Wayne (37:14)
Yeah. Yeah.

Yeah.

Mm-hmm.

Yeah. Yeah. Yeah.

Michael Venner (37:37)
that was the engineering department that produced the program. Yeah, The guy's a lot, I don't know, I'll just set it up where it says it.

Wayne (37:37)
Yeah.

Yeah, got the wrong information. Yeah. Yeah. Yeah.

And doing exactly what it says on the tin. It's not my fault the tin isn't right. But yeah. But yeah, I think in terms of like, KPIs to set for production, I'd say, you know, if you've got that capacity or, you know, is the capacity plan followed?

Michael Venner (37:51)
Exactly. Yeah.

Wayne (38:07)
you know, are you on time with your schedule? you, you know, are you working the machines at the right, whatever it might be? Yeah, yeah, exactly. You know, you know, there's, there's a whole raft of things you can do for production or service provision. And it really depends largely on, on

Michael Venner (38:16)
speeds, feeds, cycle times,

Wayne (38:31)
Yeah, what it is, you know, there's a client of mine that makes carpets and the key thing for them would be the loom setup, you know, the loom setup accurate because that can take them weeks to set up that loom. And then if they start weaving a carpet and there's something out of place, then that's set everything back, you know, because then they've got to unpick a whole line of

of thread or whatever it might be that's wrong, know, so that yeah, yeah, or just a white, you know, cream carpet with a white thread down this down the center or something, you know, so, yeah, so again, looking at what the importance of is the within the process is definitely, definitely a key thing. Yeah.

Michael Venner (38:58)
cream carpet with one red thread right in the middle of it.

So I've got someone that does

asbestos surveys and they're deliverable. Is the report at the end? And their measure is the quality of the report. A big part of it is for asbestos. Is it reported correctly? Is it risk assessed properly? How's it presented? Is it accurate? If they start getting phone calls from the customer that they've sent this report going like this wrong building or the dimensions are wrong or what's this? tie up. Then obviously

Wayne (39:22)
Okay.

Yeah, yeah, yeah.

Mm-hmm.

Yeah.

Yeah.

Yeah. Mm-hmm. Yeah.

Michael Venner (39:47)
you know, that's problem that they've got in their reporting process.

Wayne (39:50)
Yeah, yeah, absolutely. I think that's also considering the process as well in terms of what you measure with your KPIs. So I've got a similar example where a client I have that does technical publications. But the process they've got catches any errors within that publication.

And there's because it's people typing things up, there's going to be errors. So rather than measure every single thing, doing a nonconformance report for every single thing, they'll have like a log that just kind of logs here. And then if there's anything that comes back from customer, then that becomes a problem. So the back and forth is not necessarily measured to the same degree, but the customer stuff is measured. So yeah.

Michael Venner (40:24)
Yeah.

Wayne (40:38)
So this, yeah, it's, it's interesting when you kind of think about the different types of businesses out there and what they deliver and what, what you can say as KPIs, there's an awful lot that you can kind of go to easy ones like reworks and product quality and the things we think about tend to be, because we see a lot of machine shops tend to be that kind of related, but it's not always not always that easy, I suppose.

Michael Venner (41:04)
You said go

to what you're trying to deliver. What's important to the customers? Work your way back. How can we make sure we achieve this? How we should do? Work it back into your system.

Wayne (41:07)
Yeah. Yeah. Yeah, exactly.

Yeah.

Yeah, because your product is your deliverable. know, like for what we do, our product is the audit report and the certificate. know, that's so we need to make sure that that is delivered correctly, you know, and making sure that is. Yeah. Yeah.

Michael Venner (41:27)
You'd be amazed how many auditors don't think that way. Through the report rejects, it's like, what is this? It's, yeah.

Wayne (41:37)
But it's but it's that's what it is. You know, we can

Michael Venner (41:37)
Yeah. Yeah.

Wayne (41:39)
we can be amazing auditors. But if our reports are terrible, it doesn't mean anything. So we need to make sure we deliver our reports effectively with minimal call ups at technical review. know, so yeah, so it depends on what you're delivering, doesn't it? I try and I try and see things as what is the deliverable because that's your product. It doesn't matter what it is. Your deliverable is your product.

Michael Venner (42:04)
Yeah, definitely. So good ones design. A lot of people struggle with design and development. one of the ones I, obviously it depends on the organization and what they're doing. One of the ones that I kind of not suggest that people come up with quite often is.

Wayne (42:05)
Yeah. Yeah. Yeah.

Yes. Yeah.

Hmm.

Michael Venner (42:24)
Does the design, well first of all does it meet the inputs obviously? Does it achieve what it was supposed to achieve? But was it designed on time? Yeah, because there's usually a product and I know that can move its goalpost quite often with projects but another good one is the cost of the product. Yeah, so if initially right we've got to build this, it's got to be about £5,000. Does your design make that

Wayne (42:31)
Yeah.

Mm-hmm.

Yeah.

Yeah.

Michael Venner (42:54)
product £5,000 at the end. Some of those things can be quite useful but it is a tough one design, can be challenging.

Wayne (42:57)
Yeah.

Yeah, yeah, I agree. again, with design, it's such a huge, huge range of things, even within one company. Like I was with a client in Northern Ireland that they could have a design that was a you know, widget for Jeff. Yeah, Jeff down the road. And then you've got things for

Michael Venner (43:19)
fag packet.

Wayne (43:24)
big aerospace companies and the design process is going to be hugely different. So trying to come up with effective measures of that is often challenging for sure. And I do think, like you say, things like, you know, have you achieved what you're supposed to? Have you met the inputs? you know, going back to like the Gantt charts, you know, have you achieved what you're supposed to for each gate?

you know how many how many actions have you got left over from what you've been expected to deliver you know and that can be difficult even with depending on who's who's the kind of driver of the design because quite often with the aerospace clients that we see the driver of the design is is often the customer so it's yeah yeah exactly yeah and and and one

Michael Venner (44:10)
That's where the goalpost can move quite a lot, can't it?

Wayne (44:15)
pitfall I did see quite often is, is on time delivery with design, because they've said, well, we're going to do the design, it's going to take three weeks, but then it's taken two and a half weeks for the customer to respond to the first bit. So yeah, so how do you, how do you manage that? How do you, how do you take that into account? And one thing I tend to tend to think about with that one is, you know, what do you manage? So

pausing pausing that design process you know as as your elements the design process been done within the two weeks even if the date is beyond yeah yeah yeah yeah exactly so yeah so yeah exactly cost of the design can be can be a factor you know but but managing it so that you're not not doing yourself a disservice because the customer's taking their time to

Michael Venner (44:48)
the cost, cost of design, know, because you do it by hour, you can track the hours can't you?

Wayne (45:05)
They're sat on your design for weeks before they say, actually, can you change this? Because I've seen that so many times, so many times. the client I was with, had a very similar thing. In fact, exactly that thing. They've set a three week goal, but the customer's been sat on it for two weeks. So they're already behind. And then you saw the data, which again was skewed from the

Michael Venner (45:09)
Yeah.

Wayne (45:31)
One month they had five products, another month they had two, another month they had 15. So the data is skewed from that. And then it just takes one or two in the low volume months to completely screw up the data really. So yeah.

Michael Venner (45:51)
That's why it's important

to understand your data and what you can measure. Don't just rush into it, measure it because you can. It's got to some benefit to the business.

Wayne (45:56)
Exactly. Yeah, exactly. Yeah.

Yeah, it's kind of almost like it's been, you know, you've gone on to Google and said, what what KPI is going to measure, which is great to give you some ideas. But really, you need to you need to understand what you're measuring what your processes are. And I think a good way to manage that is if you've got process owners, just get them to come up with it, you know.

get them to think about what it is, give some ownership of the system to the people that are working within the system. And KPIs is no different. Yeah, KPIs are no different to that. It's, you know, especially when you've got targets that don't make sense. Like I remember I had targets that didn't make sense to me in any way whatsoever because I had no influence on them, but we were being measured on them.

And that was what my performance would be measured on. I can't do anything about that. I'm either... Yeah, so I can't improve or not. And that's what most people want to improve. Most people want to do a good job. And most people want to get it right. yeah, I think...

Michael Venner (46:53)
becomes meaningless, doesn't it?

Wayne (47:09)
going back and I think we just talked about this last time as well actually is is talking to people talking to talking to your workforce and understanding from from them as well. You know, what you can do.

Michael Venner (47:22)
Well can tell

them the overall vision and goal is to get it on time and quality just for our given sake. What do you do that impacts that and how can we measure that?

Wayne (47:27)
Yeah.

Yeah, exactly. Exactly.

Yeah. So it's Yeah, and it can be an easy as easy as that conversation as easy as that, you know. But also, yeah, it's understanding that

you what the figures are what they look like if you're measuring ppm if you're measuring percentages if you're measuring whatever else you know I do tend to I do tend to say to avoid financial targets if you're going to set a financial target try and turn that into a percentage or or you know that kind of value mostly because we can't report any financial details

Michael Venner (47:57)
this.

It's not measure of quality is

it really? That's what they say, money's not quality. Quality should come first. Take that as you will. One thing I do when people do put financials sometimes is on the sales element. they want to, I'll just argue and say grow into automotive or grow into aerospace. So they sort of say, right we want 500,000 or something. like, well just flip that and put it into a percent.

Wayne (48:11)
It's not, yeah, it's not.

No. Yeah, exactly. Yeah, exactly.

Yeah

Michael Venner (48:34)
if it's 500,000 and you're turning over a million, yeah, well then you say you want to put 50 % into automotive because it's about diversification. It's not the money, it's about diversifying and risk averse and things like that. You can move it around that way, can't you?

Wayne (48:39)
Mm-hmm.

Yeah.

Yeah, exactly. Exactly. Yeah, you can. Yeah, exactly what you said. You can change it into. Yeah, changing the percentage change into something that works for you and that you can report, you know, because and going back to money doesn't mean quality. You just have you just look at the the counterfeit business is worth billions. But it's not quality is it? So

Michael Venner (48:58)
it work. Yeah, can make it work.

That's true.

Wayne (49:17)
Yeah, so it's yeah, they're not worried if it's if it's the highest quality or not are they? So yeah, it's but yeah, I think that the main thing is is to keep keep in mind your on time delivery and product or service delivery quality sorry and really kind of drive that I think.

Michael Venner (49:18)
Yes, a very wealthy counterfeiters out there.

You

Cool. That probably wraps it up. Is there anything you wanted to add as a last minute kind of thing?

Wayne (49:40)
Yeah. Yeah. Yeah.

Just

yeah the usual stuff you can find me on LinkedIn and drop me message on there or yeah.

Michael Venner (49:59)
put your links

in the show notes.

Wayne (50:04)
Yeah, yeah.

Yeah, so if anybody wants to ask me anything or pick my brains or anything like that, or need any assistance with anything, then just more than happy to help.

Michael Venner (50:13)
Well, thanks for doing this. been fun again. Especially as a last minute thing.

Wayne (50:17)
That's right. Yeah, anything for you. You know that. I

know. Yeah, I think we did all right considering this is cooked up the other night. Yeah, yeah. I know. Zero prep time just goes straight in. Eyes closed feet first. What's the worst that could happen?

Michael Venner (50:29)
Yeah, yeah.

Makes it sound like we know what we're doing. That's it. Straight in.

That's it, yeah. Cool. Okay, well, appreciate your time. Cheers. Yeah, cheers. Bye.

Wayne (50:41)
Yeah, all right. Thanks very much, Mike. Yeah, it was good to talk to you. All right.


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Michael Venner

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Wayne Hylla

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