Last updated 2 September 2022 ·
OKRs, objectives and key results are a flexible, industry-agnostic system designed to help organisations to set, align and achieve goals.
The two components of OKRs are:
Objectives - the main goals that a company or team wish to achieve.
Key results - the stepping stone measures that allow the company or team to signify progress towards each objective.
OKRs are often compared with KPIs, key performance indicators; however, they are complementary ideas that differ in several ways. Firstly, OKRs include objectives and active targets, not minimum standards or passive measurements. KPIs focus on business as usual, whereas OKRs look to future development and are used to drive improvement. OKRs are typically set and reviewed quarterly, whereas KPIs are monitored continuously. The two frameworks, OKRs and KPIs, can be used together to achieve great results.
While OKRs can be used in any industry, they can be instrumental in manufacturing, as they are often used to drive a culture of continuous improvement. This impact is assisted by the availability of large amounts of data produced by modern manufacturing processes, which facilitates goal-setting and progress tracking. Below we will focus on the specifics of OKRs in the manufacturing industry, using our award-winning 1-3-5® planning methodology, which includes setting one vision, three mission-critical objectives, and five key results per objective. The three objectives will enable the delivery of the vision, and the key results will help us to achieve these objectives.
Below you will find some OKR examples used within a manufacturing business following the 1-3-5® planning process.
Vision: We are officially recognised as the market leader in our sector, ranked #1 by revenue and quality across all our product lines.
Objective 1 (Sales): Increase revenue growth.
- Acquire at least 10 new customers in the Asia-Pacific region, with a minimum order volume of £20,000 per month each.
- Increase revenue from the current customer base on existing product lines by 5%.
- Generate £500,000 of revenue from new products launched this quarter.
- Reduce key account churn rate by 5%.
- Increase total average revenue per customer by at least 7%.
Objective 2 (Quality control): Reduce nonconforming outputs under ISO 9001.
- Reduce defects per million opportunities (DPMO) below 3.4
- Increase first pass yield by 5%
- Eliminate failed customer audits (rejections by the customer due to faulty final goods)
- Achieve 100% of equipment passes internal audits
- Reduce denials of raw materials due to quality deficiencies by 30% by improving our working relationships with key suppliers.
Objective 3 (Production): Increase production output by 5%.
- Reduce downtime for unscheduled maintenance by 25%
- Increase utilisation rates for essential equipment by 10%
- Reduce machine set-up time by 5%
- Increase mean time between failures by 15% for crucial equipment
- Eliminate downtime from inventory inaccuracy.
Using this unique 1-3-5® OKR framework to optimise the goal-setting process and enhance productivity, efficiency and effectiveness can impact the organisational output.
To see these benefits in action, look at our customer story from Neutronics Technologies and find out how they used OKRs to drive substantial performance improvements.
If this sounds beneficial for your business, download our free OKR Builder™ today. It includes a step-by-step guide on creating your OKRs that will cascade effectively through different levels of your organisation.