Performance Management: Productivity Improvement Through Transparency, Control, And Leadership
Increasing data volumes and more detailed reports, yet you have less control over your business?
The reason for this trend often is due to a structural gap between measurement and control. In many production facilities, a detailed system of key performance indicators (KPIs) has evolved over the years. While each KPI was introduced with a clear purpose, they were never consolidated into a coherent system. Dashboards show every deviation, and performance meetings are an established part of the management process.
However, this level of transparency does not lead to faster decisions or better results. Why? Because KPIs are collected without influencing control or decision-making.
We use effective performance management to close this gap.
It serves as an active leadership and control system that connects strategic goals, operational key performance indicators, and management responsibility across all levels, down to the shop floor. A collection of KPIs is used to create a comprehensive system that increases operational readiness of your company, safeguards your decisions, and paves the way for productivity improvement on the shop floor.
What are the benefits of performance management in production?
Performance management translates a shared target vision into key performance indicators (KPIs) at every level of the organization. That enables plant management and shop floor personnel to work with a single, connected KPI system, quickly identify deviations, and take targeted corrective actions to increase productivity and OEE while reducing lead times.
How We Establish Performance Management as an Integrated Control System
A performance management system is successful when it combines the derivation of objectives from corporate and operations strategy (top-down) with feedback from actual shop floor performance (bottom-up).
Performance management and the control system are closely related areas of expertise. Performance management captures the right key performance indicators; such as production line capacity utilization, while the control system translates them into actionable responses.
An efficient performance management system can be established in two ways: either by developing a completely new key performance indicator system or by revitalizing an existing one by checking whether the variables measured daily in the company contribute to success.
From the Current System to a Consistent Control Logic
We start by examining the continuity and completeness of your existing system in both directions. We analyze the structural integrity of the KPI system (i.e., its alignment with the production and organizational structure), and from an outside-in perspective, compare it with best-in-class performance systems as a gap analysis to reveal any resulting discrepancies and optimization opportunities.
This forms the basis for a consistent control logic that combines strategy and operational implementation and aligns all levels through a common target and KPI system.
What Distinguishes Performance Management from Classic Reporting?
Performance management is an active management tool that is used to measure and analyze only the KPIs relevant for control.
Increase Your Productivity with a Partner Who Combines Strategy and Shop Floor Execution
Whether cascading goals across all levels or developing a reliable KPI system, we provide a sustainable and transparent end-to-end view of value creation and organization, combined with a root-cause approach that addresses the true drivers behind production variances rather than applying generic measures.
As a vendor-neutral partner with over 45 years of experience, we use benchmark KPIs from real-world projects across companies of all sizes and production types. Based on this, we develop a performance management system that clearly improves the productivity, equipment effectiveness, lead time, and processes of your company.
Key Figures & KPIs
Key Figures & KPIs
The Right KPIs For Every Level: KPI Governance and KPI Cascading
Effective management starts with focusing on KPIs that drive decisions at the right level.
Consistent KPI cascading translates overarching goals into operational drivers. Strategic targets at plant and company level are broken down into departmental targets and ultimately into actionable control variables on the shop floor. Clear KPI governance creates consistency and accountability at all levels of the company. The established KPIs enable cross-site management and reliable benchmarking.
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KPI Optimization for the Plant and Strategy Level
At the highest level, aggregated target metrics are considered, which reflect the contribution of production to the operating results, e.g., average productivity and overall equipment effectiveness in a plant, or compliance with overarching delivery and quality targets. They combine the operations strategy with the corporate strategy to form the framework which integrate all downstream KPIs.
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KPI Optimization for the Sector and Department Level
Here, the overarching goals are translated into actual controllable drivers: Capacity utilization, lead time, output, and quality KPIs for each area. This level is the interface between strategy and day-to-day operations. It highlights where an overarching goal could be missed and enables the implementation of targeted countermeasures before variances accumulate.
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KPI Optimization on the Shop Floor
A few direct and controllable variables are important. They must be available in real time and integrated into daily routine communication. Most importantly, each KPI follows a clear action logic. Shop floor managers can immediately identify variances and know the next required action.
Implement Performance Management to Optimize Productivity, OEE, and Lead Times
A consistent performance management system demonstrates its impact through measurable KPI improvements. As real-time data highlights variances that are linked to responsibilities, the control loop of detection, decision-making, and action becomes shorter. As a result, this increases productivity, improves overall equipment effectiveness (OEE), and reduces lead times.
We typically achieve the following results for our clients by establishing a consistent and transparent performance management system:
- Productivity improvement: +15-20 %
- Increase in OEE: +10-15 %
- Reduction in lead time: 15-20 %
- Increased transparency in reporting
- Clear derivation of necessary measures and levers
- Significant improvement in control and leadership
- Fixed assignment of responsibilities
These improvements are the result of a modified management system that clearly defines responsibilities and connects them to real-time data.
Variance Management: Why KPIs Must be Linked to Responsibility
KPIs lead to long-term improvements when they are connected to management responsibility. Effective performance management connects each relevant KPI to a clear role and makes variance management an integral part of your leadership culture.
Performance Management in Synergy with Other Services
Operational Excellence
How strategic goals are transformed into sustainable, high-performance production processes.
Cost Optimization
Targeted cost reduction without compromising quality, through redesign-to-cost, make-or-buy, and more.
Operations Strategy
How to develop a viable vision for your operations based on your corporate strategy.
Digital Production & New Technologies
How digital technologies are becoming enablers of transparency, control, and effectiveness.
FAQ - Frequent Questions About Performance Management in Production
Which KPIs does production truly need?
Establishing the right KPIs that are relevant for management is crucial. High data quality enables fast responsiveness. Whether productivity, OEE or lead time, these are derived from the company's goals through KPI cascading, ensuring each level receives exactly the metrics it can influence.
How can goal cascading from strategy to the shop floor be achieved?
Cascading is achieved through a consistent KPI system (e.g., using Hoshin Kanri), which systematically structures strategic goals across all levels. Top management goals (EBIT, market shares) are translated into operational drivers (OEE, lead time, quality). It is vital that every employee on the shop floor understands how their own daily performance influences the overarching strategy. We refer to this as KPI cascading with purpose.
How does digitization support a modern performance management system?
Digitization is the process accelerator in managing daily operations on the shop floor and an enabler for transparency. Automated data availability eliminates manual data maintenance. Digital dashboards and KPI systems also enable cross-site comparability and create the basis for forward-looking management instead of reactive crisis management.
Why aren't our KPIs working?
Often the actual KPIs are not the problem, but a missing link between the number and the action. An impact only occurs when each relevant KPI is linked to a clear role and translated into decisions through variance management.
Why do many performance management systems fail in practice?
The main problem is rarely the technology, but a lack of leadership culture or insufficient management commitment. We establish KPI systems with clear roles and responsibilities, a culture of continuous learning from variance management, and empowered managers (leadership excellence) who use data as a basis for decision-making. As a result, we can either revitalize existing control systems or develop new ones specifically tailored to your company’s requirements.