Whilst I have to admit that there is some great KPI presentation software out there, all too often I see companies spending far too long on the cosmetics but far too little time at ensuring their KPI’s are adding value to their organization and are driving continuous improvement.
business most firms understand how vital having some form of Key Performance indicators is, the tricky bit of what exactly to measure unfortunately passes many by. Firms focus on inappropriate measures which then feature as a box-ticking exercise and of course taking up valuable time for the people that collate them.
The thing is – without great KPI’s how do you know how your performing against your goals?
Business is generally about taking series of actions that help deliver your goals, but how do you know you’re taking the right on-time without looking at what they are doing to your business.
For example, one action you might take is procuring goods that help you build and deliver your end product. Many firms look at KPI’s like Supplier delivery on-time, and of course, that’s important but if you cant’ relate that to your business goal then measuring it is pretty pointless.
And that’s the trick, KPI’s isn’t necessarily about the numbers they are about the actions that gave you the numbers. For example, you might have a supplier on-time delivery of 45% but if you do nothing about it then measuring it is pointless.
KPI’s help you to keep focussed and if used as part of a regular review cycle can help tune the business to target a course of action to meet your specific business goals.
But how should you construct your KPI’s and how many should you have.
You’ll often see acronyms that describe your KPI construction, for example, one of the more common ones is SMART.
These attributes allow you to tune your approach to deliver KPI’s that add value.
But how many KPI’s should you have? That’s often up to the business. Most organizations have a cascade of KPI’s, some which are reviewed by the senior management which is then cascaded down into KPI subsets.
A good example might be to look at Customer on time performance. This is a great KPI focussed on how the business adds value to its customers, but it depends on a number of other attributes that can be reviewed at various levels within the business, for example, stock accuracy might be a particular driver or on-time delivery from the supply chain, these lower level KPI’s are still important but get reviewed by a lower level within the business. So how many? Clearly too many can swamp the business and the KPI’s themselves then lack focus, too few means you miss important aspects.
The answer is whatever appropriate for your business, there is no point measuring things that won’t have an impact on your business, the bigger the business usually the greater the number of KPI’s but the answer keeps them focused and keep them in the context of your business goals, remember that you are not tied to keeping metrics for ever and you can swap and change as you finesse your business.