Friesland Foods - KPI set-up and implementation

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An important topic for Corporate Operational Affairs (COA) at Friesland Foods is the setup and implementation of operational performance indicators (KPI’s). KPI’s give COA visibility into the performance of manufacturing and distribution operations at FF operating companies such as Frico, Friesche Vlag, Friesland Asia Pacific, BDI, Madibic and FDDG. Based on this information FF can analyse trends, execute benchmarks and support operating companies in improving their operational performance.
Setting-up and implementing KPI’s for a multinational is not an easy job for a business with over 80 operations in more than 18 countries world-wide. The most important questions in this KPI program were :

  • Which KPI’s are essential?
  • What KPI’s will be used by COA?
  • Which KPI’s are available and used by the operating companies?
  • How does COA receive the required KPI reports (IT support)?
  • What feedback will COA provide to the operating companies?
  • What feedback will COA provide to the operating companies?
  • How can we ensure the data quality?

To acquire experience with KPI’s quickly the following activities were executed (in parallel, in many cases):

  • Define and agree the 10 most important operational KPI’s
  • Define and agree the required calculations
  • Set-up and distribute supporting Excel sheet
  • Meetings with all operating companies to validate definitions and agree calculation and reporting details
  • Consultation with other corporate departments to achieve one standardised reporting method for all operating companies.
  • Definition deployment and translation from Excel sheet to standardised reporting tool.
    Implementation of the standardised reporting tool.

The set-up of KPI definitions and calculations in the first reporting (Excel) tool was finished within 2 months. The overall implementation including numerous discussions with operating companies, follow up on all agreements and preparation of the standard tool took much longer.

Results

Supported by intelligence for business, FF achieved an effective way of setting-up and implementing their operational KPI’s. The following main deliverables have been released:

  1. set of KPI definitions and calculations for COA
  2. defined and agreed interpretation of definitions and calculations for each operating company
  3. Presentation of KPI definitions, calculations and explanations.
  4. Excel fill-in sheet
  5. User guide
  6. Standardised reporting tool

The KPI’s are implemented successfully and after the first year the quality of the KPI reports has proven to be suitable for benchmarking and trend analysis purposes. Another achievement is that the operating companies are speaking the same language more and more due to using the same basic data provided by the KPI system. This makes internal discussions much easier and clearer.

Closing remark

Much can be said on performance measurement both positive and negative. New views will develop through time and it is important to keep up with these developments and adapt to new insights. One thing however is key as the Corporate Director Operational Affairs said : “Who measures, knows. That is why KPI’s are important for us and intelligence for business helped us to achieve the results.”