Are the right performance measures driving your business?
Key Performance Indicators (or KPIs) is a commonly used term
in business. Many businesses have KPIs and use them to report on how their
business is operating. Fewer businesses use them to make decisions about how
their business is operating and to adjust and tweak their activities on an
ongoing basis.
Even businesses that don't believe that they have KPIs in
place will have some form of performance indicators in their business. There
will be some 'critical numbers' in the business somewhere, something that gives
meaning to how well the business is doing.
It's just like driving a car
There are two main types of KPI. The most common type is
'output' measures. These tell the story of what happened, things like profit,
lead time, on time delivery performance etc..
The other type is 'process' measures. These KPIs tell you
what is happening and gives you the opportunity to make changes so that you
have a better chance of hitting (or exceeding) your targets. These types of
measure are analogous to the dashboard of your car (do you need to go faster,
change gear, refuel etc..) as you make your journey.
What's important to your business?
So, using KPIs to increase your on time delivery
performance, profit and a whole raft of other performance areas in your
business is not difficult. Here are some tips for you to consider:
- Examine what you currently have in your business
and decide if you have a good balance between outcome measures and process
measures.
- Identify the key steps in your business
processes and define measures that tell you on a hourly / daily / weekly basis
if that process is working properly.
- Decide what standards are required for each
process measure. You need to know what is good and what is bad!
- Define what actions need to take place if the
KPI measurements are to the right standard.
- Get into a routine, keep the measures simple and
use them drive your business' performance.
Ready for change
We help businesses to improve their on time delivery
performance using appropriate KPIs. If you would some help in identifying the right KPIs for your business
then please get in touch using the contact form, or by phoning 0191 4283386.
