IRIS

International Railway
Industry Standard

GUIDELINE 1 : 2011
KPIs

English
We would like to thank the following people for the excellent cooperation and contribution, without which this Guideline would not have been
possible:

Technical Forum for

Improvement representatives IRIS Management Centre

Marcus Schmid (Leader) Robert Milner Bernard Kaufmann

VOITH TURBO LRQA IRIS General Manager
Cristina Bianchi Mikael Nilsson Giuseppe Greco
RINA Faiveley IRIS Senior Manager
Corine Branchet Elio Poletti Nevena Petrova
Bureau Veritas IMQ IRIS Manager
Jean-Christophe Coulaud Anne Pouyanné
Alstom Transport AFNOR
Angela de Heymer Susanne Schaub
Bombardier Transportation SBB/CFF/FFS
Bernd Diekmann Oliver Stein
Siemens Mobility Knorr-Bremse
Denis Garrigues Ursula Tacke
RATP GHH-Valdunes
Giuseppe Greco Luca Tuci
UNIFE AnsaldoBreda
Hans Jahn Dominique Sauvion
DQS SNCF
Kay Jürgensen Hans Van Mulekom
TÜV NORD NEDTRAIN
Bernard Kaufmann Klaus Wagner
UNIFE TÜV SÜD
David Martinez de Miguel
AENOR
 Guideline 1 : 2011
KPIs

The aim of this guideline is to provide guidance to all 2

organizations during the implementation and mainte- DEFINITION
nance of an IRIS Certified Business Management System
KEY: Only Key when it is of fundamental importance in
(BMS) concerning the identification of the Key Perfor-
gaining competitive advantage and is a make or break
mance Indicators (KPIs) required to comply with the IRIS
element in the success or failure of the organization.
requirements.

PERFORMANCE: Only relating to Performance when it

1
can be clearly measured, quantified and influenced by
WHY KPIs?
the organization.
Key Performance Indicators (KPIs) help an organization
to define and to measure progress toward organizatio- INDICATOR: Only an Indicator if it provides leading
nal goals. information on future performance.

Once an organization has analyzed its mission, identi-

Effectiveness and efficiency are also key parameters to
fied all its stakeholders, and defined its goals, it needs
be considered to identify the right KPIs:
a way to measure progress toward those goals. Key
Performance Indicators are those measurements.
Effectiveness: The degree to which objectives are
In process oriented organizations, the goals are reached achieved and the extent to which targeted problems
through the implementation of effective and efficient are solved.
processes, therefore it is vital to make a regular perfor-
mance appraisal for the processes and for all the aspects Efficiency: The comparison of what is actually produced
that can affect the efficiency of the business. or performed with what can be achieved with the same
consumption of resources (money, time, labor, etc.). It is
The KPI, when properly developed, provide all staff
an important factor in determination of productivity.
with clear goals and objectives, coupled with an un-
derstanding of how they relate to the overall success of
In contrast to efficiency, effectiveness is determined
the organization. Published internally and continually
without reference to costs and, whereas effectiveness
referred to, they will also strengthen shared values and
means „doing the right thing“, efficiency means „doing
create common goals.
the thing right“.
© 2011 UNIFE. All rights reserved.
4 GUIDELINE 1 : 2011 - KPIs -
In the IRIS scheme, KPIs are meant to measure the
performance of the Processes.
The KPIs usually are long-term considerations and may
differ depending on the type of organization.
The selected KPIs will need to:
1. Reflect the organizational goals,
2. Be quantifiable (measurable),
3. Be key to the organization‘s success.
Reflect The Organizational Goals
An organization that has as one of its goals “to be the
most profitable organization in the Rail Industry“ will
have Key Performance Indicators that measure profit.
On the other hand, a manufacturer of Bearings, having
one of its goals “to provide better customer service”
will set the related KPI to measure the responsiveness
performance of its Customer Service department.
Be quantifiable (measurable)
For a KPI to be of any value, there must be a way to
accurately define and measure it. “Be The Most Popular
Organization“ won‘t work as a KPI because there is
no way to measure the organization‘s popularity or
compare it to others.
© 2011 UNIFE. All rights reserved.
For a KPI of “Increase Sales“, there’s the need to con-
sider whether to measure by units sold or by value of
sales. Will returns be deducted from sales in the month
of the sale or the month of the return? Will sales be
recorded for the KPI at list price or at the actual sales
price?
Setting targets for each KPI is of fundamental impor-
tance. If one of the organization goals is “to be the
employer of choice”, the associated KPI might measure
the “employee fluctuation rate“. Once the KPI has been
defined as “the number of voluntary resignations and
terminations for performance, divided by the total
number of employees at the beginning of the period“
and a way to measure it has been set up (by collec-
ting the information in a human resource information
system), the target has to be established.
“Reduce employee fluctuation by five percent per year“
is a clear target that everyone will understand and be
able to take specific action to accomplish.
Be key to the organization‘s success
In selecting KPIs, it’s critical to limit them to those
factors that are essential to the organization reaching
its goals. It is also important to keep the number of Key
Performance Indicators small just to keep everyone‘s
attention focused on achieving the same KPIs.
That is not to say, for instance, that a organization will
have only three or four KPIs in total. Rather there will
be three or four Key Performance Indicators for the
organization and all the units within it will have three,
four, or five KPIs that support the overall organization
goals and can be “rolled up“ into them.
If an organization‘s Key Performance Indicator is
“Increased Customer Satisfaction“, that KPI will be
focused differently in different departments: the
manufacturing department may have a KPI of “Number
of Units Rejected by Quality Inspection“, while the sales
department has a KPI of “Minutes A Customer Is On Hold
Before A Sales Representative Answers“. Success by the

sales and manufacturing departments in meeting their
respective departmental Key Performance Indicators
will help the organization to meet its overall KPIs.
Example of a well defined KPI:
• Title of KPI: Employee Turnover
• Defined: The total of the number of employees who
resign for whatever reason, plus the number of emplo-
yees terminated for performance reasons, and that total
divided by the number of employees at the beginning
of the year. Employees lost due to Reductions in Force
(RIF) will not be included in this calculation.
• Measured: The human resource information system
contains records of each employee. The separation
section lists reason and date of separation for each
employee. Monthly, the human resource department
will query the database and provide department heads
with Employee Turnover reports. The human resource
department will post graphs of each report on the
intranet.
• Target: Reduce Employee Turnover by 5% per year.
Example of a badly defined KPI:
• Title of KPI: Increase Sales
• Defined: Change in sales volume from month to
month
• Measured: Total of sales by region for all regions
• Target: Increase each month
What‘s missing? Does this measure increases in sales
volume by value or units? If by value, does it measure
list price or sales price? Are returns considered and if
so do they appear as an adjustment to the KPI for the
month of the sale or are they counted in the month
the return happens? How do we make sure each sales
5
office‘s volume numbers are counted in one region, i.e.
that none are skipped or double counted? How much,
by percentage or value or units, do we want to increase
sales volumes each month?
3
SMART KPIs
A KPI can follow the SMART criteria.
Specific: It has to be clear what the KPI exactly
measures. There has to be one universally-accepted
definition of the KPI to make sure the different users
interpret it the same way and, as a result, come to
the same and right conclusions which they can act
on.
Measurable: The KPI has to be measurable to define
a standard, budget or norm, to make it possible to
measure the actual value and to make the actual
value comparable to the targeted value.
Achievable: For every KPI a target value has to be
defined. It is important for the acceptance of KPIs
and Performance Management in general within the
organization that this value is achievable. Nothing is
more discouraging than striving for a goal that you
will never reach.
Relevant: The KPI provides more insight in the
performance of the organization or processes in being
consistent with its policy and business plan. A KPI
is only relevant if the organization‘s processes can
influence it.
Time phased: It is important to express the targeted
value of the KPI in time. Every KPI only has a meaning
if one knows the time dimension in which it is
realized. The realization and standardization of the
KPI therefore has to be time phased.
4
IMPLEMENTING KPIs
When an organization wants to define KPIs it has to
assure that the indicators are unmistakably defined,
objectives are in place and that the calculation can be
© 2011 UNIFE. All rights reserved.
6 GUIDELINE 1 : 2011 - KPIs -

done easily, preferably automatically. Additionally it 5.6.2)

is necessary that the organization identifies itself with • Non conformities raised by the customer throughout
the KPIs and is aware how to influence them. Not the the entire Project Life Cycle (IRIS clause 5.6.2)
quantity of KPIs but the quality decides (“twenty is • Tender management (IRIS clause 7.2.4)
plenty”). • Design and development (IRIS clause 7.3)
• Purchasing Process (IRIS clause 7.4.1)
5 • Project Management or new Product development
MEASURING KPIs (IRIS clause 7.7)
• Project Management – Cost management (IRIS clause
For measuring KPIs several prerequisites must be 7.7.4)
fulfilled:
6.2 Recommended IRIS KPIs
• Definition of calculation of KPI (e.g. (value X/value
Y)*100; (actual value)- (planned value)); • Internal and supplier non conformities throughout
• Unit of measurement must be defined (e.g. the entire Project Life Cycle (IRIS clause 5.6.2)
percentage, Euro, quantities); • Supplier on time delivery performance (IRIS clause
• Adequate reporting interval must be fixed 5.6.2)
(e.g. monthly, quarterly); • Response time on non conformities raised by the
• Presentation form must be chosen (e.g. pie diagram, customer (IRIS clause 5.6.2)
bar chart, spider diagram); • Quality Deficiency Costs (IRIS clause 5.6.2)
• Target for the reporting period must be displayed • Review of requirements related to the Product (IRIS
(e.g. delivery performance to the customer 95%); clause 7.2.2)
• Data source must be chosen (e.g. table XYZ from the • First Article Inspection (FAI) (IRIS clause 7.9)
ERP-system); • Customer satisfaction (IRIS clause 8.2.1)
• Accuracy of the KPI data must be known; • Analysis of data (IRIS clause 8.4)
• Data collector must be nominated (e.g. Mr. X from the
sales department, Ms. Y from procurement); TABLE 1: KPI definition table
• KPI owner must be named;
KPI Description: ...
• Trends of the KPI must be interpretable (e.g. sales
Process: ...
increases due to a new sales representative or due to
Objective of the process: ...
a sales campaign);
Process owner ...
• Guidance for taking actions must be in place (e.g.
Prediction of the KPI: ...
sales decrease is analyzed by meeting with sales
Unit of measure: ...
representative)
Target and reporting period: ...
• All prerequisites must be documented in an agreed
Calculation of the KPI: ...
format (e.g. in a KPI profile)
Accuracy of the KPI: ...
Data source: ...
6
Reporting interval: ...
HOW TO DEAL WITH IRIS KPIs
Framework condition: ...
Influence on KPI: ...
6.1 Mandatory IRIS KPIs Data collected by: ...
KPI reported to: ...
• Customer on time delivery performance (IRIS clause
Actions: ...

© 2011 UNIFE. All rights reserved.

 7

ANNEX 1: IRIS KPIs

KPI or Process name IRIS Status Definition examples Target value Process target Reporting Reference
clause interval to Annex

Customer on time 5.6.2 Mandatory (sum deliveries on time) / X% To be compliant Monthly

delivery performance (sum deliveries) x 100 with confirmed X
delivery dates

Non conformities 5.6.2 Mandatory Customer non conformity X / Month To reduce Monthly
raised by the customer cost per month or variation and
throughout the entire or Z / project waste in supply
Project Life Cycle Warranty cost by project or chain
or Y%
(Claimed parts) / (delivered
parts) x 100
Tender management 7.2.4 Mandatory Cost deviation X% To meet Monthly
to estimated budget, customer or
without customer requirements Project
caused change requests milestone

Design and 7.3 Mandatory Number of design Number of To be on time Monthly

development changes, without changes by keeping costs or
external caused or and quality Quarterly
changes X% criteria
or
(sum of design changes
after design freeze) / (sum X
of design drawing) x 100

Purchasing Process 7.4.1 Mandatory (Non conform purchased X% To improve the Monthly X
product deliveries) / (sum of supplier delivery
received purchased product quality
deliveries) x 100
or
(Non conform purchased
products) / (received
purchased products) x 100
or or
Cost deviation to improve the
to estimated purchase budget control
budget

© 2011 UNIFE. All rights reserved.

8

KPI or Process name IRIS Status Definition examples Target value Process target Reporting Reference
clause interval to Annex

Project Management 7.7 Mandatory (Realized Milestone) / X% To manage Monthly

or new Product (Planed Milestone) x 100 Project or
development or or deliverables Project
delivery time milestone
deviation concerning number of
final customer days
acceptance

Project Management – 7.7.4 Mandatory (Estimated costs) / (final X% To manage Monthly

Cost management costs) x 100 Project budget or
Project
milestone

Internal and supplier 5.6.2 Recom- Internal and supplier Costs / Month To reduce Monthly
non conformities mended rework costs + internal and or variation and or
throughout the entire supplier scrap costs Costs per waste in the Project
Project Life Cycle category entire Project Life milestone
or Cycle
Costs per
supplier
or
Costs per
project

Supplier on time 5.6.2 Recom- (sum deliveries on time) / X% To ensure on Monthly X

delivery performance mended (sum deliveries) x 100 time delivery of
suppliers
Response time on non 5.6.2 Recom- Response date of non X days To improve Monthly
conformities raised by mended conformities – issue date of or customer
the customer non conformities X hours support

© 2011 UNIFE. All rights reserved.

 9

KPI or Process name IRIS Status Definition examples Target value Process target Reporting Reference
clause interval to Annex

Quality Deficiency Costs 5.6.2 Recom- Internal rework costs + Costs / Month To reduce Monthly
mended internal scrap costs or variation and or
Costs per waste in the Project
category entire Project Life milestone
or Cycle
Costs per
supplier
or
Costs per
project

Review of 7.2.2 Recom- Number of changes due Number of To properly Monthly

requirements related mended to non properly identified changes identify or
to the Product requirements customer Quarterly
requirements

First Article Inspetion 7.9 Recom- (Sum of successfully X% To ensure Monthly X

mended performed FAIs) / (sum of a stable or
performed FAIs) x 100 production start Quarterly

Customer satisfaction 8.2.1 Recom- (Sum of customers included X% To monitor Yearly

mended in customer satisfaction and review
measurement) / (total sum information
of customers) X 100 relating to
or customer
Correlation between perception
customer perception correlation in
and internally measured X%
delivery performance

Analysis of data 8.4 Recom- (amount of data analysed) X% To determine, Yearly

mended / (amount of data collected) collect and
x 100 analyse
or appropriate data
(amount of data collected) / to demonstrate
(amount of data requested) the suitability
x 100 and
effectiveness of
the QMS.

NOTE 1: The definitions given in Annex 1 (IRIS KPIs) are for examples only. The organization may choose a different definition for the men-
tioned KPIs, if preferred.
10

ANNEX 2: KPI examples

Customer on-time delivery

KPI Description: Design and Development Purchasing Process
performance

Process: production and service provision design and development purchasing

Objective of the to be compliant with confirmed to be on time by keeping costs and to improve the supplier delivery
process: delivery dates quality criteria quality

Process owner please enter process responsible here please enter process responsible here please enter process responsible here

Prediction of the quality of drawings and bill of amount of deliveries that have to be
on-time delivery to customer
KPI: materials claimed at supplier

Unit of measure: percentage (%) percentage (%) percentage (%)

Target and
please enter actual company target please enter actual company target please enter actual company target
reporting
here here here
period:

(non conform purchased product

(sum of design changes after design
Calculation of (sum deliveries on time) / (sum deliveries) / (sum of received
freeze) / (sum of design drawing) x
the KPI: deliveries) x 100 purchased product deliveries)
100
x 100

Accuracy of the please enter here the accuracy with please enter here the accuracy with please enter here the accuracy with
KPI: which the KPI can be determined which the KPI can be determined which the KPI can be determined

ERP-System, manual records, PDM-

Data source: ERP-system ERP-system; manual record
system

Reporting
monthly monthly or quarterly monthly
interval:

Framework
none none none
condition:

new item, new supplier, product

Influence on delivery performance of suppliers, contract clarification, qualification of modification at supplier, uncertain
KPI: maintenance of equipment staff, new technologies purchasing information, other
problems at supplier

Data collected please enter here the person please enter here the person please enter here the person
by: responsible to collect the data responsible to collect the data responsible to collect the data

please enter here to which part of please enter here to which part of please enter here to which part of
KPI reported to: the management the the management the the management the
KPI is reported KPI is reported KPI is reported

root cause analysis (bottleneck) and meetings with supplier, strong

Actions:
action plan incoming goods inspection
 11

Supplier on time delivery

KPI Description: First Article Inspection (FAI)
performance

first article inspection (internal and

Process: Purchasing
external)

Objective of the to ensure on time delivery of

To ensure a stable production start
process: suppliers

please enter process responsible please enter process responsible

Process owner
here here

Prediction of the statement of the compliance of assessment of the achievement of

KPI: suppler confirmed delivery dates first article inspections

Unit of measure: percentage (%) percentage (%)

Target and
please enter process responsible please enter actual company target
reporting
here here
period:

Calculation of (sum deliveries on time) / (sum (sum of successfully performed FAIs)

the KPI: deliveries) x 100 / (sum of performed FAIs) x 100

Accuracy of the please enter here the accuracy with please enter here the accuracy with
KPI: which the KPI can be determined which the KPI can be determined

Data source: ERP-system; manual records ERP-system; manual records

Reporting
monthly monthly or quarterly
interval:

Framework
none none
condition:

new items, new supplier, product quality of contract review,

Influence on
modifications at supplier, purchase qualification of staff; capability of
KPI:
of primary material measuring equipment

Data collected please enter here the person please enter here the person
by: responsible to collect the data responsible to collect the data

please enter here to which part of please enter here to which part of
KPI reported to: the management the the management the
KPI is reported KPI is reported

meetings with suppliers, strong

Actions:
expediting of supplier
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The rail industry

The rail operators

The rail associations

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