Monitoring the Performance in Aluminum Production with KPIs
Aluminum manufacturing is a highly complex and demanding task. The producer of this element faces several roadblocks, both from the internal and external environment. The former covers the challenges encountered during the task of production, such as the "maximum utilization of extremely capital intensive equipments", "quality of the product", "information flow in the huge site of production". Further, the hurdles emerging from factors outside the organization comprise "volatile nature of prices of both the input and output", "large amounts of cost incurred in production and transportation", "environmental concerns", "long lead times for raw materials".
Also, the "complex path of processes involved" adds to the pool of troubles which is already brimming with similar issues. The management is expected to provide the shop-floor workers a safe place to work in, ensuring that the contingency measures are brought in use, whenever needed. Moreover, severe competition is a foe that almost all companies in this domain are dealing with.
All these "possible failure spots" create an intense need for employing a mechanism to look after the way the organizational operations are proceeding, both internally and externally. In other words, a culmination of financial and non-financial tracking is needed. This is what is known as "BSC" i.e. Balanced Scorecard. This performance management tool serves the purpose of quantifying every "aspect that counts". For instance, one can initiate with perspectives like "Financial", "Production", "Internal Processes", Environmental and Employees", and frame relevant and logical parameters under each of these.
Financial Perspective can be measured using metrics like Return on Capital Employed, Operating Profit, Free Cash Flow and Revenues. Production can be quantified by following the parameters such as amount of metal produced, cost of the material generated, % dip in the metal losses and % site utilization. Internal operations can be known via indicators like number of delayed shipments, inventory turns and number of sectors served. Lastly, the extent to which the organization is paying attention to the environment can be measured by knowing the reductions seen in harmful emissions like that of PFC, fluoride etc.
In a nut shell, a sense of "equanimity and uniformity" can be introduced in the processes by bringing this concept into action. This makes possible moving in a "coordinated and synchronized" manner to avoid wastage of resources and efforts. Also, the most significant other benefit stemming from the usage of this thought is the "better communication and information flow" among the team members. The target values which are tucked with the parameters help in giving a "countable outlook" to even those angles which were initially thought to be "qualitative" in nature. Therefore, simplification of the tasks occurs and one gets an "objective" view of the scenario. This eliminates the "seems" and "likely" approaches often adopted in the culture and thereby goes a long way in improving the process of producing aluminum in a holistic manner.
Summing it all, KPIs are the thing to be followed when the organization is facing a dis-balancing regarding the financial and non-financial aspects.
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4. Buy the full version to have KPIs in Excel with formulas and BSC file.
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