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Targets and indicators as a tool to help improve           profits and performanceLecture for Meeting of CEOs – "Bar Lev F...
Objective: improving company profits and strength• In every company, Management is the  forum that copes with emerging mar...
Connecting employees to company objectives                 and getting them involved• However that same component which is...
MeasurementIn order to improve, one must measure.You cannot gain improvement withoutmeasurement - otherwise you willachiev...
How shall we define and select the areas for improvement?If the aim is to improve:How will we select the areas for impro...
Identifying profit leverages and setting priorities • Profit leverage indicates any small improvement in results   in any ...
Handling profit leverages: performance indicators•    Profit leverages are handled via two corresponding routes:•    In th...
Handling profit leverages: performance process• Via the second route, we shall improve the results of  performance indicat...
Improvement process with employees:• In team work, when suggestions for improvement and  corrective action come from the e...
The CEOs pivotal role in this process: We do not forget the  objective and the means                                  Eng...
CEOs pivotal role in the processOnce a month, the Management discusses meeting of targets, and eachmanager presents his/he...
Feedback, evaluation and control  Energy and focus of the team work evolves     through dialogue with CEO.  CEO monitors...
• Examples of working with targets, indicators and task teams:   13          Zeev Ronen Business Excellence M: +972.52.476...
Example of company indicators - FinanceMonthly dashboard Money wise:                               Engineering  Operatin...
Control and handling of customers debt in a small team                                                              Custom...
Examples of indicators – Operations                          Engineering         Quality         Manager                  ...
Improvement machine performance in plant with 20 CNC machines Machine effectiveness (producing good parts in gross hours t...
Improving maintenance and reducing down time due to malfunctionsDuring the machine performance improvement process, it eme...
Example of quick improvement with the help of two task teams                    consisting of employees.      Result: annu...
Inventory Management AccuracyExample of a measurement process and presentation of results for analysisand improvement proc...
Handling deviations that emerged in the inventory inspection Example of the inventory count results analysis process and i...
Example of indicators – Marketing and Sales                                 Engineering                Quality            ...
Tri-annual sales plan: selecting a target for the third         year and retroactively, up to next yearAfter a drop in sal...
2010 sales in comparison to the budget and in               comparison with 2009 (in K NIS)The target was to sell 27% more...
‫הצוותים בפעולה‬25   Zeev Ronen Business Excellence M: +972.52.4767531   19 November 2012
The End     /http://www.business-excellence.co.il26        Zeev Ronen Business Excellence M: +972.52.4767531   19 November...
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Targets and indicators as a tool to help improve profits and performance

Lecture for Meeting of CEO's – "Bar Lev Forum" - Bar Lev Industrial Park - 1 February 2012.

Quick and continuous improvement process with employees.

Lecturer: Ze'ev Ronen

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Targets and indicators as a tool to help improve profits and performance

  1. 1. Targets and indicators as a tool to help improve profits and performanceLecture for Meeting of CEOs – "Bar Lev Forum" Bar Lev Industrial Park 1 February 2012 Quick and continuous improvement process with employees 1 Lecturer: Zeev Ronen Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  2. 2. Objective: improving company profits and strength• In every company, Management is the forum that copes with emerging market CEO challenges and opportunities.• On one end of the spectrum, Management is Secretary a limited body, and its members are overloaded, Marketing and Sales Operations Finance• on the other end of the spectrum, their capacity and creativity are limited and not boundless. Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012 2
  3. 3. Connecting employees to company objectives and getting them involved• However that same component which is not handled by management enables the collection CEO of a lot of money from the floor.• And at the same time, as an after Secretary effect, to connect the employees to the company objectives, enhance motivation and breathe Marketing Operations Finance and Sales new spirit at all levels.• There is a huge treasure of hidden knowledge and force of thought at the levels below management who do not take part in the thinking processes and coping with challenges. Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012 3
  4. 4. MeasurementIn order to improve, one must measure.You cannot gain improvement withoutmeasurement - otherwise you willachieve random and marginalimprovement. Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012 4
  5. 5. How shall we define and select the areas for improvement?If the aim is to improve:How will we select the areas for improvement?Areas for improvement must reflect company objectivesAdapt to given prioritiesRespective of certain criteria that are to be defined.Or in other words, it is worthwhile to select profit leverages,Profit leverages may be used as a criterion for selecting areas for improvement. 5 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  6. 6. Identifying profit leverages and setting priorities • Profit leverage indicates any small improvement in results in any subject or field, which will in turn lead to a large improvement in profits or in another objective which the organization would like to improve. • It is well known, that every NIS 1,000 that we save on expenditures goes to profits. • Or alternately, if we save 10% on Operations expenditures, we will add about 5% from sales to profits, and that is a lot (assuming a 50% net profit). • When initiating an improvement program in a company, the first task is to identify and agree upon profit leverages according to priorities. 6 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  7. 7. Handling profit leverages: performance indicators• Profit leverages are handled via two corresponding routes:• In the first route, quantitative and measureable performance indicators are selected; on the one hand, the use of these indicators may help obtain data to work on improvement, and, on the other hand, may monitor improvement processes.• It is advisable to utilize performance indicators that are the norm in international industry, with the necessary adaptions for each company.• Performance indicators are measured and handled on a daily, weekly, or at least monthly basis. Zeev Ronen Business Excellence M: +972.52.4767531 7 19 November 2012
  8. 8. Handling profit leverages: performance process• Via the second route, we shall improve the results of performance indicators.• The process is based on work in small teams of employees and on existing knowledge, both revealed and hidden.• This is how we expand the group that copes with challenges facing the company as well as increase the quantity of knowledge that is incorporated within the existing knowledge reservoir.• A significant portion of both acquired and created knowledge among employees remains hidden. The employees do not share it with each other and do not pass it on to management. Zeev Ronen Business Excellence M: +972.52.4767531 8 19 November 2012
  9. 9. Improvement process with employees:• In team work, when suggestions for improvement and corrective action come from the employees, several advantages are obtained:• Employees spread the knowledge that was hidden, and the company benefits from a wealth of untapped information.• Employees feel committed to implementing the steps they themselves proposed.• Employees motivation is enhanced.• You can work according to the aforementioned methods in small teams and small companies as well.9 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  10. 10. The CEOs pivotal role in this process: We do not forget the objective and the means Engineering throughout the entire process. Quality Manager Finance The various targets and CEO – indicators create a balance improving company in favor of the main profits objective. Human Operations Work is done in Resources collaboration, while Marketing maintaining a balance, and and Sales not through struggles. 10 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  11. 11. CEOs pivotal role in the processOnce a month, the Management discusses meeting of targets, and eachmanager presents his/her results and how he/she plans to improve results. 98% - 92% of Above 98% of target Under 92% of target target Target for Target Issuing an Down time Wage as Cash Meeting meeting Machine Sales Sales wage order percentage 2011 percentage flow target supply supply Target effectivenes Target Target 2011 target percentag according to due to of sales dates dates s e original malfunction JAN 73% 100% 131% 100% 8%- 100% 90% FEB 112% 100% 89% 100% 46% 100% 90% 45% 100% MARCH 91% 100% 100% 100% 63%- 100% 90% 33% 100% APRIL 58% 100% 174% 100% 355% 100% 69% 90% 48% 100% MAY 102% 100% 106% 100% 109% 100% 71% 90% 48% 100% JUNE 87% 100% 129% 100% 147% 100% 66% 90% 55% 100% 12% 2% JULY 93% 100% 126% 100% 3% 100% 68% 90% 97% 99% 49% 100% 14% 2% AUG 95% 100% 123% 100% 162% 100% 75% 90% 84% 99% 57% 100% 13% 2% SEP 107% 100% 98% 100% 100% 100% 73% 90% 88% 99% 62% 100% 10% 2% OCT 97% 100% 118% 100% 142% 100% 92% 90% 82% 99% 63% 100% 10% 2% NOV 122% 100% 92% 100% 52% 100% 90% 90% 91% 99% 66% 100% 8% 2% DEC 107% 100% 118% 100% 60% 100% 95% 90% 93% 99% 72% 100% 2% 2% Average 95% 100% 117% 100% 92% 100% 78% 90% 89% 99% 54% 100% 10% 2% 11 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  12. 12. Feedback, evaluation and control  Energy and focus of the team work evolves through dialogue with CEO.  CEO monitors meeting of targets and team work.  CEOs involvement connects the entire company to the improvement process and underscores the importance of team work.12 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  13. 13. • Examples of working with targets, indicators and task teams: 13 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  14. 14. Example of company indicators - FinanceMonthly dashboard Money wise: Engineering  Operating profit Quality  Net profit Manager Finance CEO –  Cash flow improving company  Incomes and Expenditures profits Human  Market share Operations Resources  Collection Marketing and Sales 14 19 November 2012 Zeev Ronen Business Excellence M: +972.52.4767531
  15. 15. Control and handling of customers debt in a small team Customers debt exceeding• Each week the customers debt current month or in arrears, for a period not exceeding one month is reviewed.• Problematic debts are identified, and tasks are distributed, with implementation monitored. Improvement gained:significant decrease in debt, and improvement in cash flow.Graphic display of the data facilitates monitoring trends and provides clear feedback oncorrective activity, sharing the results with everyone and providing energy to continue. 15 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  16. 16. Examples of indicators – Operations Engineering Quality Manager Finance CEO – improving company profits Human Operations Resources Marketing and Sales16 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  17. 17. Improvement machine performance in plant with 20 CNC machines Machine effectiveness (producing good parts in gross hours that the machine works in comparison to the quantity that may be theoretically produced) was reviewed during daily morning meetings and once a week in the task team; the result is presented to Management every month. Changes at the beginning were more essential and created the infrastructure upon which improvement was made later on. 100 Machine monthly efficiency 90 80 Target 70 64.9 60 Actual 56.6 59.7 55.9 50 43.6 51.5 40.2 44.4 40 49.9 29.9 42.8 30 20 10 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 17 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  18. 18. Improving maintenance and reducing down time due to malfunctionsDuring the machine performance improvement process, it emerged that the low output wassignificantly influenced by various types of down times (preparations and start-ups,malfunctions, lack of operators, quality problems, and others).Here we have an example of handling malfunctions. Great commitment on the part of theentire system has been developed; each malfunction has been immediately forwarded to theperson in charge of maintenance, preventative maintenance, inspections, rethinking of partsinventory and more.All the changes were a result of work at daily and weekly meetings. Machine down-time percentage due to malfunction. 16 14 14 13 12 12 10 10 10 8 Actual 8 6 Target 4 2 2 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 18 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  19. 19. Example of quick improvement with the help of two task teams consisting of employees. Result: annual savings amounting to NIS 2 million.After very slow progress,without a breakthrough, we Percentage of raw materials and packagingimplemented two task in 58%June 2009 teams and 56.7% 57% 57%headquarter work. 56% 56%Savings in half a year: NIS 1million,The investment: NIS 90,000 %2 55% 54% 53% 52% 52% 51% 50% 49% II-09 I-09 II-08 I-08 19 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  20. 20. Inventory Management AccuracyExample of a measurement process and presentation of results for analysisand improvement process Materials inventory reliability 100% 91.7% 90% 80.5% 80% 65.0% 70% 60% 54% 50% 40% 30% 20% 10% 0% Sep Aug Jul Jun 20 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  21. 21. Handling deviations that emerged in the inventory inspection Example of the inventory count results analysis process and implementation of corrective measures. The result: annual savings of NIS 170,000. Sesame: difference between the inventory in the books and the actual inventory as a percentage of monthly use. Sep Aug Jul Jun 0% -3.7% -4.7% -10% -16.0% -20% -30% -40% -50% -54% -60% 21 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  22. 22. Example of indicators – Marketing and Sales Engineering Quality Manager Finance CEO – improving company profits Human Operations Resources Marketing and Sales22 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  23. 23. Tri-annual sales plan: selecting a target for the third year and retroactively, up to next yearAfter a drop in sales for 3 years, some of the customers disappeared, or transferredto imports, target set for 2012 to achieve 80% above the best year in 2007.• Challenging tri-annual Annual sales: history and tri- budget established. annual plan• From which the 2010 budget was derived. 200%• A designated team %2 180% 160% 140% headed by the CEO in 120% collaboration with 100% 80% various employees held 60% a strategic meeting 40% 20% about new sales niches 0% and targets. 2012 2011 2010 2009 2008 2007 23 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  24. 24. 2010 sales in comparison to the budget and in comparison with 2009 (in K NIS)The target was to sell 27% more than last year. In reality, they reached 42%extra compared with the previous year.The 2010 budget was converted 2010 Budget 1,200into a monthly budget and amarketing strategy and work 2010 ‫ביצוע‬ 1,000plan were determined. 2009% 2 800 600The team monitors orders andsales on a weekly basis. 400 200The team reviews monthly sales targets, 0undertakes tasks and implements aweekly follow-up. 24 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  25. 25. ‫הצוותים בפעולה‬25 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012
  26. 26. The End /http://www.business-excellence.co.il26 Zeev Ronen Business Excellence M: +972.52.4767531 19 November 2012

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