Process Performance and KPI Tracking 2.0: Diabetes Measurement and Improvement Example

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This process performance and KPI Tracking 2.0 example uses a colleague’s diabetes measurement data to illustrate an enhanced statistical-based process performance and Key Performance Indicator (KPI) tracking methodology that encourages and displays results from process enhancement efforts.

Note: There is a video link  referenced near the end of this article that summarizes the following concepts.

Definitions and Observations: Process Performance and KPI Tracking

  • Process performance is a measure of process efficiency or effectiveness.
  • Process performance index is a ratio of a specification spread or how close a process mean is to a specification limit divided by six times the process response standard deviation.
  • A Key Performance Indicator (KPI) is a measurement that demonstrates how effectively a company is achieving key business objectives.

Organizations typically view and track process performance and KPI measurements differently; however, both report-outs result from executing one or more processes. Also, there can be different approaches to both process performance and KPI reporting in the same organization.

30,000-foot-level metric reporting is a Process Performance and KPI Tracking 2.0 methodology that addresses these issues and more.

30,000-foot-level reporting overview (reference to above 30,000-foot-level report)

  • Left individuals control chart assesses process stability.
  • Right probability plot is used to determine bottom-of-two-chart-pair reported prediction statement
  • If futuristic statement is undesirable, process enhancements are needed.

Will discuss 30,000-foot-level reporting in more detail  below with the application of a free app so you can create a 30,000-foot-level chart for YOUR data.

KPI Tracking

Typical KPI reports and their meeting’s discussion often

  • Give focus to achievement of arbitrary targets
  • Are unrelated to improvement efforts
  • Provide point to point comparisons; e.g., comparison to last month or a similar month in a previous year

KPI tracking and process performance reporting to improveKPI tracking and process performance reporting to improve

What actions or non-actions should be taken from these KPI reports?  Appropriate actions or non-actions are not clear. These reports do not encourage improving metric-associated processes!

It is important to note that …

That is, the output of a process is a function of its inputs and process-execution steps.

Effective Metrics

  • View the enterprise as a system of processes
  • Acknowledge the effect of process-output variation
  • Encourage long-lasting systematic process improvement

30,000-foot-level reporting provides a methodology to address all these “effective metrics” needs for KPI reports.

Process Performance Tracking

Process performance metrics are commonly reported in various formats:

KPI tracking and process performance reporting to improveKPI tracking and process performance reporting to improve

Common process performance metrics include:

  • On-time delivery
  • Efficiency
  • Productivity
  • Cycle Time
  • Lead time
  • Takt time
  • Throughput
  • Defective rate

Process performance metrics tracking:

  • The reporting of traditional process performance metrics are typically only in a “status report format” that someone may “talk to” in a meeting, where the presentation often provides little (if any) value to the organization.
  • Traditional process performance reports do not encourage undertaking process improvement efforts when a response is unacceptable and how a change affected a metric’s performance (or not).
  • 30,000-foot-level reporting provides a consistent reporting methodology that addresses these issues and often provides a prediction statement. When a futuristic estimate from a 30,000-foot-level report is unsatisfactory, a structure process enhancement effort needs to be undertaken.

Process Performance Indices Reporting

  • Process capability and performance indices (i.e., Cp, Cpk, Pp, and Ppk) are to describe how a process is performing relative to customer specifications.
  • The standard deviation denominator value in Cp, Cpk, Pp, and Ppk equations depends on the process sampling approach for data collection; e.g., an XmR control chart source is different than an x-bar and R control chart source.
  • The standard deviation source for Cp and Cpk equations  is “short-term”, while Pp and Ppk equations is “long term.”

A process is to be stable (i.e., no out-of-control data points) before conducting a process performance & capability study, for example:

This control chart has no points beyond the statistically determined upper and lower control limits (UCL and LCL); hence this process is considered in control and a process performance & capability analysis would be valid:

From this process capability report for the previously shown control chart data, we observe/conclude:

  • For a specification of 72 to 78 calculated values for Cp, Cpk, Pp, and Ppk.
  • The process capability and performance indices from this report-out are unsatisfactory according to the Cp, Cpk, Pp, and Ppk minimum-value criteria that most organizations use (e.g. 1.33).
  • However, how bad is the output of this process relative to achieving a customer specification requirement of 72-78? It is difficult to quantify.

The many issues with Pp and Ppk reporting, which are readily available through statistical software packages, include:

  • Indices are challenging to understand and explain to others, i.e., does not simply report estimated percentage non-conforming.
  • Indices are only valid if taken from an in-control process, which does not appear structurally in the report-out.
  • Encourages “testing quality into a product,” which does not work.
  • Reporting does not structurally encourage process improvement to enhance an unsatisfactory response from a process-output point of view.
  • A retest sample from a production lot can yield significantly differing values; e.g., one test failed a Ppk acceptance criterion, while another test passed the Ppk acceptance criterion.
  • Reporting does not address situations with no specifications, noting that a goal is not a specification, e.g., product inventory.

30,000-foot-level reporting resolves all these issues with process capability/performance indices.

30,000-foot-level Reporting (i.e., Process Performance and KPI Tracking 2.0)

The Process Performance Metrics and KPI Reporting 2.0 methodology called Integrated Enterprise Excellence (IEE) 30,000-foot-level reporting resolves all the above described KPI, process performance, and process performance indices (Cp, Cpk, Pp, and Ppk) reporting issues.

30,000-foot-level reporting provides:

  • A consistent methodology for reporting that structurally inspires long-lasting process improvement, whether a specification or target exists or not
  • A structured inclusion in the measurement’s reporting of inherent process output response variation (noise) over time
  • A statistically over-time reporting that shows when process improvement occurs and quantifies the new, enhanced level of performance from an overall process-out perspective
  • A vehicle to separate common-cause process variation from “special” process-output occurrences so that the best action or non-action occurs
  • Insight into what is happening in a process and what to do to improve its performance never seen before

With 30,000-foot-level report-out there is:

  • Focus on tracking the measurement response from a process output high-level viewpoint. This high-level 30,000-foot-level statistical form of reporting provides a perspective not unlike viewing the ground from an airplane in flight.
  • If a measurement response (usually predictive) is undesirable, emphasis is given to improving the related process using a Lean Six Sigma DMAIC or another process improvement roadmap or methodology (e.g., kaizen event or PDCA [Plan-Do-Check-Act]) .
  • Traditional process performance and KPI reports do not structurally include process variability (i.e., process-response noise) in their reporting, which 30,000-foot-level reporting does.

Individuals and organizations can use a free software app to create 30,000-foot-level reports.

Enterprise Performance Reporting System (EPRS) software provides a behind-the-fire-wall organizational vehicle for providing automatic updates to 30,000-foot-level statements.

The two steps for creating a 30,000-foot-level report are:

  1. Determine if a process-output response is stable (from a high-level point of view, where data are from a long period of time – e.g., multiple years). When a process is stable, it is considered predictable.
  2. Formulate a prediction statement (when a process is considered stable) for the latest region of stability in one of the following formats: When a specification requirement exists report: nonconformance rate percentage estimate. When no specification requirement exists report: mean (or median) response and 80% frequency of occurrence rate estimates. (Note: 80% frequency of occurrence rate is a process-output variation reporting methodology which provides an expected futuristic response rate range for 4 out of 5 reported time-increments.)

A 30,000-foot-level report-out provides an easy-to-understand prediction statement at the bottom of the chart, unlike process capability indices (Cp, Cpk, Pp, and Ppk) reporting, a table of numbers, and red-yellow-green scorecards.

If a process prediction statement is considered unsatisfactory, the process needs enhancement.

Applications of 30,000-foot-level Reporting

Organizations benefit when they use 30,000-foot-level reporting techniques for tracking the following process performance and KPI metrics, where typical time-series report-out frequency is month, week, day, or batch number over a long period of time; e.g., several years:

  • Reporting dimensional compliance of a part to a specification (alternative to process capability/performance indices reporting; i.e., Cp, Cpk, Pp, and Ppk)
  • Expenses
  • Profit Margins
  • New contracts signed per month
  • Customer satisfaction
  • Net Promoter Score
  • Customer retention
  • On-time delivery
  • Supplier quality
  • Supplier on-time delivery
  • Non-conformance rate
  • Market share
  • Inventory
  • Cycle time
  • Production yields
  • Employee satisfaction
  • Employee turnover

30,000-foot-level Process Performance & KPI Tracking 2.0 and Business Improvement

With the described process performance and KPI Tracking 2.0 methodology (i.e., 30,000-foot-level report-out), there is:

  1. Focus on tracking the measurement response from a process output high-level (statistical) viewpoint. This high-level 30,000-foot-level statistical form of reporting provides a perspective not unlike viewing the ground from an airplane in flight.  30,000-foot-level reporting is NOT attempting to CONTROL a process but instead provide a high-level perspective of the output response from a process.
  2. Emphasis on improving a related process using a Lean Six Sigma DMAIC or other process improvement roadmap if the measurement response (usually predictive) is undesirable.

Traditional process performance and KPI reports do not structurally address process variation in their reporting, which 30,000-foot-level reporting does.

Let’s again consider that the output of a process is Y and the inputs to this process are the Xs. Mathematically this is Y=f(X); i.e., Y is a function of Xs. If the Y response is undesirable, the organization needs to improve the process associated with the Y.  For example, an organization that wants to improve its profit would, with a 30,000-foot-level type report-out, report its monthly profit over several years.

This organization would then determine what to do differently from a big-picture sub-process inputs perspective so that the whole organization has an improved Y response (i.e., profit). The reason for multiple years of data for KPI tracking 2.0 is that things do not magically change (from a process input perspective) from the last fiscal month to the first month of the next fiscal year. The Integrated Enterprise Excellence (IEE) business management system includes enhancements to the Xs of a Y response process from process improvement efforts to its documented (and followed) process. This KPI Tracking 2.0 methodology provides a system thinking approach for evaluating and improving an organization.

With KPI Tracking 2.0, organizations do not attempt to manage the organization by emphasizing only the Y’s with a minor, if any, emphasis on improving associated processes (which is often done with traditional KPI reporting). “Y-response-management” can lead to much firefighting and unhealthy behaviors that KPI Tracking 2.0 avoids.

KPI Tracking 2.0: Identifying a Process Output Response Change and Quantifying Improvement

John (colleague’s name) described an experiment that he conducted which evaluated whether a medication change improved his blood sugar levels (BSL).

Below is described a KPI Tracking 2.0 methodology using a free 30,000-foot-level app to address this measurement-improvement-assessment objective.

Physician Diabetics Test Data Source and 30,000-foot-level Reporting Methodology

In addition to blood sugar level (BSL) tests that a person with diabetes can self-administer one or more times daily, physician-prescribed laboratory tests occur less frequently.  One of these tests is the Hemoglobin A1C test, which reflects an average blood sugar level for the past two to three months. An A1C between 5.7 and 6.4 is an indicator of pre-diabetes. The diagnosis for Type 2 diabetes is when A1C is over 6.5.

Over the years, John’s Hemoglobin A1C blood-lab test results were:

Date Hemoglobin A1C
7/26/2001 8.5
10/30/2001 7.7
1/25/2002 8.0
3/26/2002 7.0
6/19/2002 6.2
10/17/2002 6.7
1/15/2003 6.5
4/15/2003 7.0
7/17/2003 6.7
10/15/2003 7.2
1/9/2004 6.5
4/9/2004 6.8
7/23/2004 7.0
10/27/2004 6.7
1/25/2005 6.5
4/28/2005 6.6
7/24/2005 5.9
11/9/2005 6.5
2/10/2006 6.5
5/26/2006 6.1
8/15/2006 6.2
11/3/2006 6.3
1/31/2007 6.1
5/1/2007 6.2
7/30/2007 6.6
10/29/2007 6.6
1/15/2008 7.1
3/15/2008 6.2
7/7/2008 5.8
10/24/2008 6.0
5/10/2009 6.2
11/2/2009 6.3
3/24/2010 6.6
6/25/2010 6.3
10/12/2010 6.6
3/23/2011 6.5
6/29/2011 7.3
10/7/2011 7.1
1/5/2012 6.8
4/11/2012 6.3
7/1/2012 6.5
10/1/2012 7.0
1/10/2013 6.1
4/12/2013 6.4
7/26/2013 5.7
10/28/2013 6.4
1/27/2014 6.2
6/9/2014 6.2
9/15/2014 6.2
12/15/2014 6.2
3/20/2015 6.0

The 30,000-foot-level reporting process that occurs automatically in this free app for this dataset is:

  1. Each value is plotted on an individuals control chart to determine if the process response is stable over time.  The process is considered stable and predictable when no data points are above or below the statistically determined upper and lower control limits (UCL and LCL). When a process change occurs, the individual chart is staged to separate process-response shifts. Data from the current stage determines this region’s control-chart limits.
  2. For this diabetes dataset, there are no “specifications;” hence, for any recent region of individuals-chart stability, a mean and 80% frequency of occurrence is determined from a probability plot of the data from this stable-process region.
  3. Documenting the process-response prediction assessment at the bottom of the two-chart pair in words that everyone can easily understand (e.g., no confusing and hard to understand process capability/performance Cp, Cpk, Pp, and Ppk indices).

Establishing and Achieving Process Performance and KPI Reporting 2.0 Goals and Targets

In process performance and KPI reporting 2.0 (i.e., 30,000-foot-level charts), whenever a metric is not achieving a goal or target, there is a focus on the execution and timely completion of structured process enhancement efforts to enhance a 30,000-foot-level response reporting. There can be a monetary value estimation for the completion of the project.

Example goals and targets in process performance and KPI tracking 2.0 are:

  • Increase monthly KPI reported profit by 5% in six months from improving twelve process performance responses. The value for completion of this high-level project is 40 million dollars annually. Six of these process performance 2.0 metrics to improve are:
  1. Reduce mean monthly non-conformance reported rate from 6.3% to 5.0% in six months. The estimated value for completing this project is $5,000,000 annually.
  2. Improve product market share by 5% in six months. The estimated value for completing this project is $6,000,000 annually.
  3. Reduce inventory by 10% in six months. The estimated value for completing this project is $4,000,000 annually.
  4. Improve production yields by 10% in six months. The estimated value for completing this project is $4,000,000 annually.
  5. Improve supplier on-time delivery by 10% in six months. The estimated value for completing this project is $4,000,000 annually.
  6. Reduce employee turnover by 10% in six months. The estimated value for completing this project is $4,000,000 annually.
  • Improve monthly KPI reported customer-satisfaction net promoter score by 5% in six months

Process Performance and KPI Tracking 2.0 using a free 30,000-foot-level app

A free 30,000-foot-level reporting app (coded in R) is available (for your dataset, too). Using this Integrated Enterprise Excellence (IEE), Chart Builder KPI Tracking 2.0 app for our diabetes dataset resulted in the 30,000-foot-level reporting shown on the right side of this report-out. One can right-click on the chart and save the graphic as a PNG file for use elsewhere.

Note: The video below shows how to use the app to create this 30,000-foot-level report.

 

process performance and KPI tracking 2.0

 

The individuals chart in this report-out indicates that John’s diabetes measurements improved (reduced according to control-charting statistical rules) and are stable for the reporting period since January 10, 2013.  The current measurement level estimation (bottom of the graph statement) is a mean of 6.16, expecting that 80% (4 out of 5 future responses) will be between 5.88 and 6.43.

For this A1C measurement, one could expect a similar futuristic response if John maintained a consistent process relative to controlling his diabetes through exercise, medication, and types of low glycemic-level food eaten (which he did to improve his A1C measurements).

Application Opportunities: Operational and KPI Tracking 2.0

The 30,000-foot-level metric reporting methodologies and app usage described in this diabetes dataset illustration applies to traditional operational and KPI metric such as:

  • Reporting dimensional compliance of a part to a specification (alternative to process capability/performance indices reporting; i.e., Cp, Cpk, Pp, and Ppk)
  • Expenses
  • Profit Margins
  • New contracts signed per month
  • Customer satisfaction
  • Net Promoter Score
  • Customer retention
  • On-time delivery
  • Supplier quality
  • Supplier on-time delivery
  • Non-conformance rate
  • Market share
  • Inventory
  • Cycle time
  • Production yields
  • Employee satisfaction
  • Employee turnover

 

Additional How-to Information: Descriptive Articles and Videos

A video that summaries this post and shows the ease to create the above app 30,000-foot-level chart is:

For additional information about 30,000-foot-level reporting see:

More How-to Information: Descriptive Books and Setting Up a Zoom Discussion

Integrated Enterprise Excellence (IEE) is an enhanced business management system that provides a means where organizations can orchestrate their 30,000-foot-level reporting.

Management 2.0: Discovery of Integrated Enterprise Excellence Leadership System 2.0: Implementing Integrated Excellence describes many applications of 30,000-foot-level reporting for both when there is a specification and no specification.

 

process performance and KPI tracking 2.0

 Management 2.0: Discovery of Integrated Enterprise Excellence discusses applying 30,000-foot-level metrics to seven situations in a novel-book format. At the same time, Leadership System 2.0: Implementing Integrated Enterprise Excellence discusses thirteen 30,000-foot-level reporting situations in a novel-book form.

The concepts described in Chapter 6 of Leadership System 2.0: Implementing Integrated Excellence depicts a methodology of integrating 30,000-foot-level metrics reporting throughout a business for the incorporation of an enhanced Business Process Management (BPM) and Management Information System (MIS), which addresses the objectives of Deming’s philosophy, Malcolm Baldrige criteria, Shingo Prize, and ISO 9001 – at the same time.

 

business management system meeting

 

Contact Us through an e-mail or telephone call to set up a time for a discussion on how your organization might gain much from an Integrated Enterprise Excellence Business Process Management system. Or, a Zoom meeting can be schedule directly:

E-mail ([email protected]) or call us (+1.512.918.0280), if you encounter difficulties setting up a Zoom session directly or want to schedule another time that is not available in the Zoom-meeting calendar.

 

 

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