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Do you need 'special' KPIs in your business?

How do you measure your business processes?

Do you have a good feel for how well things are going, or does your experience tell you something else?

Many businesses have Key Performance Indicators (or, KPIs) in their business already.


Two types of KPIs

Some have KPIs that allow then to report on what happened, how they did.

A smaller section of businesses have KPIs that tell them how they are doing.

The first set of KPIs are usually quite standard between businesses - things like profit margin, delivery performance and customer satisfaction.

The second set are very much specific to how your business is set up and designed to operate.

When you create KPIs at the process level you are in possession of two things:
  1. A measure that is meaningful to the people managing the process.
  2. Information that can help you change the outcome.

You need a mix of the two types

Having a mixture of both 'process' and 'output' metrics can make a big difference to how well your business processes perform, and ultimately the performance of your business overall.

One of my favourite examples of this was at a manufacturing client of mine and they figured out the following metric:

The number of manufacturing orders that weren't launched yesterday (that should have been).

How's that for non-standard?

This measure allowed them to see how many troubled orders needed to be looked into and 'massaged' into production each day.

By reacting so quickly they were able to affect their final on time delivery performance to their customer. Not bad for such a simple measure.

The real upside was that this measure was meaningful to the material controller and he was able to take ownership of this daily number.


What gets measured...

As the saying goes - 'what gets measured gets managed' - and that's what happened; on time start of production orders improved as a result, he didn't want to declare anything other than a zero!

So, does your business need to have some 'special' measures to go alongside the more traditional business measures that we are so used to?

A handful of the right measures have the power to transform the performance of your business.

Food for thought?


Giles



Designing Key Performance Indicators

If you would like a step-by-step method to help you define and design KPIs that can help your business to improve how it performs then check out my e-book.

The book also offers advice on tracking and managing business processes through the use of the KPIs you have defined.

It is available for the Amazon Kindle, Apple iPhone / iPad, or as a PDF download.
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