KPIs can be a powerful tool, but remember that on their own, they are simply an indicator and need powerful data analytics to allow the investigation of the issue.
KPI implementation – Business Example:
In a recent implementation project I managed, a group of managers brought forward the following business problem; stock lines were being wasted due to disposal rather than sale when expiry dates approached. From this I implemented a solution which made use of two KPIs to keep track of this issue at a simple glance.
The first worked in the style of an alert and simply indicated that some stock was near expiry. This led a user to examine which stock was involved and whether a quick sale could be made.
The second was calculated from the fraction of stock that was sold where the expiry date was within five days. This metric helped to measure the success of the program to sell older stock at reduced rates.
KPIs always come from the business need. As a consultant, I always ask how the business measures its success and failure across various metrics. This will vary from one business to another. One may say that if GP is above x% for top level product categories, then it is healthy. Another may define it as an increasing three-month average sales figure across branches. Similarly, defining problems from a business perspective helps us define and build KPIs. For example in one business it may be, if delivery time exceeds three days for a branch more than twice in a particular month it is a key metric.
Whatever the measures are for your business, defining and then implementing KPIs gives you a clear and objective picture of the business health. Of course the right tools and resources are needed to do this. Finding a team you can work with on a product which is intuitive, fast and accurate such as Qlik’s stable of applications is vital for ensuring the success of your team.
To speak with a friendly member of the Endeavour team about how we might be able to help you measure the health of your business please call 1300 583 096 or alternatively email us.